Insight. That’s What Marketers Should be Marketing in 2020.

Because that’s what you need. In this day in age, any platform should be capable of implementing a digital process that accomplishes a basic sourcing, procurement, catalog buying, or contract negotiation process … this technology has existed for almost two decades. So if an organization is going to spend money on marketing, it should be marketing something more than just basic digital process support as dozens of vendors have that (as evidenced by the participation of over 75 vendors in Spend Matters SolutionMaps with more in the wings). And if the organization doesn’t have anything more to market, then it shouldn’t be marketing at all — and investing those pesos in product development until it has something worth marketing.

Now that we are in the third era of Procurement, we should be looking for solutions that enhance our processes, not systems that just digitize them. And for systems to enhance our processes, they need to do more than digitize them or automate them with fixed rules. They need to provide relevant insights at key stages of each process to help a buyer make good decisions in an efficient manner.

For example, when a buyer selects a category or set of products / services for a sourcing event, the system should automatically highlight current and past suppliers, suppliers who responded to previous events, and new suppliers who have matching products or services. Furthermore, if there is any risk or environmental data associated with those suppliers, it should also be highlighted. When all the bids are in, it should automatically highlight the lowest-cost award, the incumbent award, the best award with a preferred number of suppliers, and any other relevant out-of-the-box scenarios.

During contract time, if there is an appropriate template, it should present that to the project lead as well as highlight any clauses that might be missing or any clauses that might need to be addressed.

When an organizational buyer needs to make a requisition, and logs into the catalog, the system should guide the buyer to the on-contract product for requisition. If that product is unavailable, then it should guide the buyer to the next preferred option. If there is no on-contract or preferred product, then the system should recommend the product that provides the best overall value to the organization (which balances cost, quality, volume requirements on general product/service contracts, etc.).

When an invoice comes in that doesn’t precisely match the purchase order, but is within what could be considered a reasonable tolerance or has an extra charge that could be considered reasonable under the circumstance, the system should immediately point out the discrepancy and whether or not an approval should be given or denied. For example, if there was an expediting charge because the order was shipped same-day (when the contract required three days notice) that is relatively low value, or extra units were shipped and received (and billed at agreed upon rates) (and needed anyway), the system can point out the discrepancy and recommend approval. If the surcharges exceed typical amounts or a significant number of units were marked damaged on receipt, the system can recommend rejecting with a request for more information or invoice reduction.

Similarly, before an order is placed, the system should highlight any suppliers that have become more risky in the past month or performing poor on OTD.

While the talk of Procurement 4.0 might be more autonomous systems that do more of our work for us, that’s at least five, and most likely, ten years away. Right now, what we need are systems that allow us to make good decisions efficiently. And that means presenting the right information at the right time. If the system can’t do that, then don’t bother. Seriously.

Digital. Digitized. Digitization. Digitalization. Don’t Get Fooled by the New Buzzwords for Outdated Tech!

Leave it the moronic marketers to come up with the most brain-dead buzzwords to launch us into the new decade. Over the past year, these have been on the rise despite the fact that you should NOT even be looking at any vendor building an entire marketing campaign around this gibberish in 2020. (The only exception is if they open up about how useless the word is and instead lay out a roadmap which defines the many possible levels and how they intend to get there, but this is a topic for a later post.)

Why do these buzzwords make the doctor sympathize with Kuni from UHF who had to keep screaming they’re so stupid every time he got a new batch of students? Because it seems the doctor has to keep screaming it every time we get a new batch of marketers that couldn’t tell a calculator from a computer.

Let’s look at the definitions of these terms.

Digital: displaying a readout in numerical digits or available in electronic form; readable and manipulable by computer
This means that, technically, a vendor who sells you a process that can be performed on a calculator or any system that works on a computer, including e-mail and a two decades old spreadsheet, can claim to have a digital Procurement Solution. Moreover, technically, the earliest MRP was “digital” in the Procurement world. Do you really want to be stuck with four decades old technology? Because that’s digital!

Digitized: to convert (data) to digital form for use in a computer
This means that if the digital solution includes the ability to handle document scans, which may or may not be processable, then the solution is digitized. E-mail that can handle attachments and a decades old spreadsheet solution still qualifies.

Digitization: the process of converting (data) to digital form
This means that if the solution comes with the ability to integrate with the output of scanning technology, it qualifies. So, email, a decades old spreadsheet solution, and a UX for the scanner driver qualifies.

Digitalization: the process of converting (data) to a digital form that can be processed by the application
This actually brings us up to the nineties, because now you need a system that supports OCR and can convert that scan into a spreadsheet with numeric and textual values for processing in the decades old spreadsheet solution.

Just like the imbeciles who brought back infinite scroll (because it’s theoretically easier to scroll on mobile devices — but that’s only the case if the page fits in memory and, more importantly, can actually load — which isn’t the case when you put a whole website with heavy graphics onto a single page), these moronic marketers should also be tar-and-feathered. Dumbing down technology by decades doesn’t help anyone, and the doctor is fed up of this data dung and is going to rip into any vendor who continues to peddle this tomfoolery.

Is this the year CLM breaks the bank?

Or at least the deal?

Last year Icertis raised over 100 Million at a valuation that allowed it to become the next unicorn and Coupa bought Exari to fill the hole in their suite. Seal Software raised another 15 Million just to power contract discovery and a new startup, Lexion, raised 4.2M to bring AI to contract management.

Pure-play CLM, and its precursor technology, has been around for a long time. Exari was founded in 1999 and Selectica, which rebranded as Determine after it acquired b-pack and Iasta, dates back to 1996 when it offered a CPQ (configured price quote) solution. Not long after, Nextance (which was acquired by Versata) was founded in 2000. And the saga continued from there.

But we won’t bore you with a detailed recounting of providers that have come and gone over the past 20 years. The point was merely to make it clear that while CLM has been around for a long time, it hasn’t been very successful. The majority of providers have been acquired, acquired, and/or morphed into different solution providers in order to survive.

But this is the year CLM may finally come to the forefront. With risks increasing, costs escalating, and supply chains lengthening, contracts, and associated obligation and liability management, are becoming ever more important. It’s not just negotiating a good deal, it’s ensuring that deal is adhered to. That’s more than just loading the items into the catalogue with agreed to pricing and ensuring the invoices match the purchase orders, it’s ensuring the items are bought when they are supposed to be (so the company keeps its end), delivered when they are supposed to be, at the quality level they are supposed to be at, and free of the risks they are supposed to be free of.

This requires not only careful monitoring of execution, but careful construction and review (are there any clauses with ambiguous interpretations or would counter-party suggestions increase risk), and this is a capability most Source-to-Pay providers don’t have. When most vendors advertise contract management, what they really have are contract meta-data management — the system can track contracts, products and services, pricing, promised demands, and associated contract documents, but can’t suggest templates, analyze them, or intelligently determine when an obligation isn’t being met by either party. The systems can’t intelligently manage clause libraries or help with intelligent contract drafting, comparison, or exception management.

But if contracts are the only cure to the ills of risk and obligation management, considering the difficulty most organizations have in finding and getting a handle on them, then this might be the year that CLM finally comes into its own. It may not break the bank, but it may start being the differentiator in deals. And that may just be enough.

Tailoring in 2020 …

Even though bespoke tailoring didn’t come into vogue in the UK until the early 1700s, the modern art of tailoring is an age-old practice that dates back to at least the 1200s when skilled garment makers would make custom attire for the royalty in their realms. These tailors would provide a “made to measure” service would insure that each garment, original and unique to each customer, would fit perfectly.

Tailors understood the value of service, so the question is, why don’t your platform providers. They all promise the perfect fit, but most don’t deliver. Why?

Well, there are a slew of reasons. Many providers claiming to be Procurement 3.0 are actually still delivering hacked together 2.0 solutions with limited capability and even more limited customization. But will this change?

With some providers, especially those with platforms with true 3.0 foundations who are embarking on completing their journey with the hopes of someday embarking on the Procurement 4.0 journey (which right now is unobtainable* despite the proclamations of the futurists), it will.

Platforms will not only be more configurable, but they will be configurable by you and, more appropriately, as they get more complete, and smarter, they will begin to adapt to you. Smart assistants will learn your grammar and usage patterns and immediately guide you to what you ask. Augmented intelligence will provide you insights you need where you need them … not 3 reports and 6 drill-downs away from where you need the insight.

Basically, what we are saying is, now that we are into the third decade of stand-alone best-of-breed Procurement technology, it’s time that the technology works for you. No longer should you be burdened with technology that makes you work for it. So when you are looking for a platform, look for one offered by a tailor, not by a one-size-fits-all milling machine.

* For reasons that we’ll discuss in the near future …

Supply Chains in 2020 …

… are going to be hard to predict, and more complex than even the true experts are predicting. Why?

1. Tariffs, Trade Wars, and Escalating Tensions

Once upon a time, tariffs were well understood, changed rarely, and could be easily calculated into total cost of ownership equations. This allowed an organization to make long term sourcing decisions with a solid understanding of long term costs. But with trade wars on the rise, tensions escalating, and tariffs being introduced and increased on an almost daily basis … no sourcing decision is safe beyond the minute it is made.

The situation is not going to get any better, and, in fact, might get worse. As a result, the ability to track not only costs, but tariffs, tensions, and risks thereof is going to get more complex than even the average expert expects.

2. Carrier Complexity

Carriers continue to come and go at the regional and local level (as a result of recently introduced or increased insurance requirements in some countries), ocean carrier availability depends on overall demand, suitability depends on costs which depend on availability and unpredictable energy costs, and air carrier availability depends on plane availability (which is affected when planes get grounded), weather and the non-occurrence of natural disasters (such as volcanic eruptions and hurricanes and severe thunderstorms that ground airplanes), and, of course pilot availability (impacted by strikes).

Then we have the risks of war closing off routes and even downing commercial planes. The risks of regulation limiting driver, pilot, conductor, and captain availability and/or putting carriers out-of-business. And of course the risks of escalating high-tech theft, including theft from moving vehicles.

3. Automation and AI

Automation is taking humans out of the equation, and AI is threatening to take even more out. This isn’t a good thing. Automation can streamline tactical processing and information gathering and processing, but not strategic decision making. And despite what some enthusiasts may claim, AI does not improve the situation … in fact, it makes it worse.

You see, with so many unknown variables across such a broad spectrum, no AI solution can even know all of the data to monitor, yet alone interpret it all properly when there is no foundation to measure against with so many new situations cropping up daily. AI will work the 90% to 95% of the time that the statistics says it will, but will fail in the remaining situations, and fail miserably. All of the savings or efficiencies the solutions will deliver across the first 19 solutions will be undone, and then some, in the 20th situation when the solution goes unchecked.

Even without getting into specifics, supply chain complexity will be a challenge in 2020. And, if things get worse, it could be a nightmare. We hope you’re ready.