acquiring e-sourcing and e-procurement technology · 2014-02-26 · • building should cost...
TRANSCRIPT
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Acquiring e-Sourcing and e-Procurement Technology
What Questions Should You Really Ask?
by Michael Lamoureux, Ph.D.
Editor-in-Chief, Sourcing Innovation
http://blog.sourcinginnovation.com/
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Webinar Overview
• The e-Frenzy, in Review
• The e-Platforms of Major Concern
• Your e-Journey
• The e-Platforms Addressed
• A Note of Caution
• Vendor Selection
• Key Questions for S&P Technologies
• One Final Point of Advice
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It’s an “e-” frenzy out there!
e-Sourcing e-RFX
e-Invoicing
e-Procurement
e-Auction
e-Contract
e-N
ego
tiatio
n
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e-Contract
Management
Decision
Optimization e-Auction e-RFX
Spend
Analysis
Invoice
Goods
Receipt Reconciliation
Purchase
Order Payment
Approval Tax
Reclamation
Requisition Analysis
e - Sourcing
e - Procurement
© Sourcing Innovation, 2007, 2013
e-Negotiation
So
urc
e-to
-Pa
y
But not all e-’s are the same!
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The e-Platforms of Major
Concern
• e-Sourcing
• e-Procurement
• e-Trade
• e-Logistics
• P2P
• S2P
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Your e-Journey
• Start at 30,000 feet and identify challenges
• Dive to 10,000 feet and identify cause(s)
• Glide to 1,000 feet and find the process and technology gaps
• Identify the e-Solutions that may be capable of filling the
process and technology gaps
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Your e-Journey explained
For example, if your biggest challenge is:
identifying savings opportunities & categories for sourcing events
then you need to determine if this is because you have a problem
• gathering data,
• analyzing data,
• building should cost models, or
• identifying category targets.
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Your e-Journey explained
If your problem is:
gathering data?
you might need a data store or integration effort
analyzing data?
you likely need a good spend analysis solution
identifying category targets?
you might need category expertise and a BI solution
building should-cost models?
you might need a decision optimization solution
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… will often lead to a Major “e-”
• e-Sourcing
• e-Procurement
• P2P (Procure-to-Pay)
• S2P (Source-to-Pay
… and these are the solutions we will focus on in this
presentation.
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A Note of Caution
• Vendors use the same e-Terms differently
• There are commonalities between use, but they are not
always consistent
• It’s important to understand what is common and what is not
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Vendor Selection – The “Real” Overview
• Key Points of Consideration
• List the Potential Vendors
• Send them the Business Needs RFI
• Disqualify those that can’t serve the business
• Define the Functional Needs
• Send those that remain the Full RFP
• Disqualify those without core functional abilities
• Build the Cost Models
• Judge the Responses
• Meet with the Top X that make the cut
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Key Points of Consideration
• C-Suite Support is Vital
or you won’t get past the requirements gathering
• Don’t Forget IT
or don’t be surprised when you get backstabbed
• Preferred Vendors are best organizationally,
not who is best for Engineering, Marketing, etc.
• Trade Rags & Analysts Give you Bad Vendor Lists
they have to promote who pays them
• There’s always multiple options (BoB, BoB-on-ERP)
and multiple delivery methods (On-Site, ASP, SaaS)
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Key Points of Consideration
• It doesn’t matter how strategic the vendor is
only how strategic its solution is to your business
• It’s not best practices
it’s best-fit practices
• Never disqualify for minutia
only for megutia
• Stakeholders don’t know what they need
only what they need done
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List the Potential Vendors
• The Vendors should advertise
even in a down market
• … and be on the tips of peers’ tongues
and be given some positive promotion
• … and be mentioned by the analysts
with some not-negative comments
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The Business Needs RFI
• What countries do you do business in?
• What currencies, laws, and regulations need to be
supported?
• What languages do your, and your supply base, need to be
supported?
• What support services do you require?
• What geographies do you need help in?
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The Business Needs RFI …
Continued
Supplier Qualification. What is the supplier’s
• background? (formation, product history, etc.)
• ownership and financial situation?
• office situation?
• operating culture?
and who are the supplier’s
• competitors?
• customers (that you can talk to)
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The Functional Needs
• From a back-office perspective
(Finance, Procurement, & IT),
• From a stakeholder perspective
(Engineering, Marketing, etc.), and
• From your supplier perspective
(What is the Tech. Level of Competence)
And Chuck the Checklist.
RFP Templates are Poison Pills.
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The Full RFP
• Outline the full RFP selection process
• Outline the Functional Needs focus on the processes that must be supported
• Define any necessary integrations and any standards that must be adhered to
• Ask what is required to get the full benefit 3rd party system integrations, specialized training, supplier onboarding, etc.
• Where will you likely be in 6, 12, 24, 36 months?
• Who needs to be trained and how long will it take?
• What is the full cost breakdown over 1, 3, 5 years?
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The Cost Models
• On-Premise, Hosted ASP, and SaaS/Cloud require different
cost models
• The cost should be computed for 1 year, the number of years
you expect to keep the platform, and +/- 2 years to
understand the total cost of ownership
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On-Premise Cost Model
• License Cost (Up Front)
• Maintenance & Support (Annual)
• Dedicated Server Costs
• Supporting Software Costs
• Implementation & Customization Costs
• Integration Costs
• Training Costs (Up-Front)
• Internal Support Costs
• Major Software Upgrade Costs
• Hardware Upgrade Costs
• (Re)Training Costs (on Upgrade)
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Hosted ASP Cost Model
• Annualized License and Maintenance Cost
• Annualize Hosting Cost
• Major Software Upgrade Costs
• Implementation & Customization Costs
• Integration Costs
• Training Costs (Up-Front)
• (Re)Training Costs (on Upgrade)
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SaaS / Cloud Cost Model
• Annualized License, Hosting, and
Maintenance Cost
• Implementation & Customization Costs
• Integration Costs
• Training Costs (Up-Front)
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Judging the Responses
• Core solution litmus test
• Willingness to adapt
• End-to-end total cost of ownership elucidation
• Third party claim verification
• Open-book negotiations
• Open finals
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Don’t Forget the “Gotchas”
• e-Sourcing and e-Procurement Technology is mature and most functions commoditized
• The ROI of any solution should be quantifiable, measurable, and known to the vendor
• An Uncombed Contract is Full of Thorns - toothless SLAs - exorbitant gratuities for that “free-lunch” - hidden future costs - meaningless escrow
• The “Big Lie” asking a vendor if they can provide “X” after they are shortlisted will almost always elicit a “yes” even if the vendor cannot; always ask how they solve “X-Prime”
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Key Questions for S&P
Technologies
We will cover some key questions for:
• Spend Analysis
• RFX and Auction
• Optimization
• Contract Management
• e-Procurement
• Supplier Networks & Catalogs
• e-Payment
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Spend Analysis Questions
• How much flexibility do I have in spend cube creation?
• How should I deploy spend analysis?
• What if I am resource constrained, and I need to outsource spend cube services?
• How much reporting flexibility do I have?
• What should I know about data cleansing?
• Does the tool support derived and ranged dimensions?
• Can the user fix any desired set of filters while pivoting and drilling?
• What if I have multiple accounting systems?
• How easy is it to get data in and out of the system?
• How much knowledge is captured in the application?
• How easy is to to change and add reports on the fly?
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RFX & e-Auction Questions
• How much flexibility do I have in form definition?
• Can I build advanced sourcing grids?
• Can the forms be completed by the vendors off-line?
• Are the forms secure and uniquely identified?
• How easy is it to export the response grids for analysis?
• Can I define my own bid type(s)?
• Can the tool support complex formulas, splits, and cross-
lot rankings?
• Does the tool integrate with an optimization solution?
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Decision Optimization
Questions
• Are the four pillars of strategic sourcing decision optimization satisfied?
1) Sound & Complete Mathematical Foundations
2) True Cost Modeling
3) Sophisticated Constraint Analysis
Capacity/Limit; Basic Allocation; Risk Mitigation; Qualitative
4) What-if Capability?
• Does the application support the creation and comparison of multiple what-if scenarios?
• Does the application automatically identify the most constraining and costly constraints?
• Does the application support the automatic creation and solution of relaxed and perturbed scenarios?
• Does the application support make-vs.-buy and arbitrary product substitution?
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Decision Optimization
Questions … Continued
• How fast is it for different average model sizes?
• If it supports "real-time" is it "true" real-time or "near" real-
time?
• What situations have you encountered where you could not
model the situation exactly?
• Can we do a pilot project before committing to a long term
license?
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Contract Management
Questions
• Does it allow you to define your own meta-data dimensions?
• How easy is it to export the meta-data, or any desired subset, in a standard format recognized by other Sourcing/Procurement apps?
• Does it support free text search? And does free text search work?
• Does it support proactive alerts - on contracts NOT composed using the standard templates or built-in functionality?
• Does it support buy-side and sell-side contracts?
• Is it easily accessible and usable by everyone in the organization?
• Does it support the creation and management of initiatives such as risk management and IP-based revenue generation around your contracts?
• How hard is it to get the data AND contracts out of the solution?
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e-Procurement Questions
• Does it support requisitions, orders, goods receipts, invoices,
and m-way matching in an integrated fashion?
• Does it integrate with a modern supply/commerce network
offering that lets you and your suppliers manage your
catalogue and pricing?
• Does it integrate with your payment system and allow
payments to be correlated to invoices?
• Does it support true end-to-end invoice automation?
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Supplier Network / Catalog
Questions
• Does the solution support integration with your suppliers'
current solutions? What's involved?
• Does it support the integration of multiple catalogues into one
coherent view?
• Is it expensive for suppliers to use the supplier network /
catalogue management solution?
• How did you amass all of the suppliers currently in your
network?
• Does it allow for override pricing based on business rules?
• Can the solution be integrated into our current e-Procurement
platform?
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e-Payment Questions
• Does it integrate with our ERP and/or e-Procurement
Platform?
• Does it integrate with our AP system?
• What level of volume can the system support?
• Does it detect duplicates?
• Does it support early payment discounts?
• What is the true cost of the system?
• How are rejected transactions managed?
• What types of payment are supported?
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One Final Point of Advice
Make the Decision Committee-Based
Don’t be ruined by Maury the Management Moron
Look at that nice flash interface with fancy dashboards and full
color graphical reports. It’s obviously a superior product. After
all, how else would MoneyPit have all of our "big-name"
competitors as customers?
http://blog.sourcinginnovation.com/2012/10/23/why-your-peers-buy-stupid-
products.aspx
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And If You Need RFP Help
Sourcing Innovation
would like to remind you that there’s
RFP HELP HERE!
http://blog.sourcinginnovation.com/2008/09/10/reminder-rfp-help-is-
here.aspx
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Thank You!
Any Questions?
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Have a Great Afternoon!
the doctor has left the building!