Archive for the ‘News’ Category

The future of purchasing technology lies beyond the war of words between Coupa and Ariba

February 26, 2010

Over at Spend Matters (here and here), there’s a heated debate over Coupa’s recent marketing campaign and it’s claims to better Ariba in many areas. Now I’m not going to jump into that fray – I’ve spent too many years as a copy writer and music critic to bother with marketing claims and hyping the flavor of the month.

In my mind, the one thing that stands out in differentiating purchasing software is ease of use. End-users don’t care if they work for a multi-national, multi-billion dollar company or if they work for a local firm with single-digit FTEs. They are users of a system and by default they expect things to work easily, smoothly and efficiently. It’s as simple as that. Just because you work for a multi-national doesn’t mean you should expect that the tools you use should be complicated.

Bizconnect’s recent poll shows just this (albeit that their research might be a bit shifty):

43 percent of the respondents said the most important feature they look for when evaluating new purchasing software is ease of use.

So what exactly is ease of use.

Well, today many purchasing software developers look at what Google is doing in the domain, or the major internet webshops. I would say that strategy is rather reactive. In an increasingly mobile (in all senses of the word) world – anything developed with a laptop or stationary computer in mind is going to be second-tier by the time they’re closing in on their release date. If your not convinced, check out this blog-post at Google Mobile; Smarter Shopping with Google Moblie to see where internet commerce is heading.

With smart phone sales boosting the entire mobile phone market in 2009, up by 23.8 percent year over year according to Gartner it’s a no brainer to see where development budgets should be going in the future.

Smartphone sales to end users continued their strong growth in the fourth quarter of 2009, totalling 53.8 million units, up 41.1 per cent from the same period in 2008. In 2009, smartphone sales reached 172.4 million units, a 23.8 per cent increase from 2008. More at Gartner.

It’s a fair guess that many a smart phone ended up in the pockets of business managers looking for ways to better manage their daily work (whilst keeping a front of success and innovation). Smart phones are ease of use. Mobile, simple, efficient and always online.

No matter where the war of words between Coupa, Ariba and the numerous commentators end up – purchasing software providers that do not support smart phones in the near future will not be seen as front runners or purveyors of ease-of-use. They’ll just be more of the same old that we are struggling to leave behind.

Successful spend management – big and small

June 1, 2009

Booz&Co. Strategy+Business provided a set of downturn toolkits (distributed by e-mail but available online at the Booz&Co. website) to their subscribers over the weekend and for purchasing professionals Booz&Co. had packaged an leaflet-like memo to the CPOs along with a free digital download of their recent book Sourcing Reloaded: Targeting Procurement’s New Strategic Agenda. Good stuff for anyone willing to get some external input into their current struggles.

On the other end – the smaller scale if you will – let me share the recent downturn and spend management development of Lux Stockholm, one of only 14 restaurants in Sweden with Michelin stars. Lux Stockholm is just a stone’s throw away from both my apartment and office (midway to be precise) located on the diminutive Lilla Essingen in Stockholm. Now, Lux Stockholm isn’t exactly cheap – and the Michelin star does somehow explain that one shouldn’t expect it to be. As one of the leading restaurants in Scandinavia one might also suspect that they don’t cut back on spend much even in the face of recession.

So deem my surprise that as I rode my Pinarello up the street I passed a photocopied A4 poster taped to the garage elevator door (punk-rock-stylee) advertising Lux Stockholm’s waterfront grill patio. Now some might think this is below par what might be expected out of advertising from a restaurant whose dishes start at €20 and go up, but I beg to differ.

Lux Stockholm has just taken Booz&Co advise for CPOs just a tad bit further (though I suspect that the staff at Lux Stockholm have no clue about even the existance of Booz&Co. or any of their insights). Number one on the Booz&Co. CPO memo list is: Aggressively negotiate lower pricing and improved terms in nonstrategic spend categories.

Let’s break this down:

  1. Aggressively negotiate lower pricing – using the company photocopier for advertising is as close to free as you’re going to get, so it’s aggressive alright. Taping the ads to public buildings using staff (I suspect, some of them live in the neighborhood) is probably the cheapest distribution method available. One out of three.
  2. and improved terms – talk about print on demand. The distribution is also taken care of. Two out of three.
  3. in nonstrategic spend categories – one can argue about the strategic nature of advertising, but since Lux Stockholm already received their star in Guide Michelin, most of the strategic advertising and brand awareness could be seen as taken care of. Strategic spend categories for Lux Stockholm is with high probability food related and by cutting down on the costs of nonstrategic categories the staff probably still use the best sources available. Three out of three.

Posting flyers on lampposts and in public places might not be what is expected from luxury restaurants but from a spend management point of view it’s spot on.

Protectionism starts to factor into supply risk management

March 16, 2009

A few weeks ago BDO Seidman, LLP released the results of their annual BDO Seidman Technology Outlook Survey and some of the results were quite startling (worrying even, if you see it from a free trade vs. protectionism angle).
According to the survey; 62 percent of the responding US companies outsource services or manufacturing. A pretty typical number according to our experiences from the European perspective; the startling results come when the respondents were asked where they will go to find the market for this outsourcing:

  • 22 percent answered the US
  • 16 percent answered China
  • 13 percent answered India

Douglas Sirotta, a Partner in BDO Seidman’s Technology Practice explained the numbers by saying the following:

“This year we are seeing three global factors that are causing U.S. technology companies to pull back from traditional outsourcing locations, led by the recent boom and bust of the worldwide economy. Satyam’s fraud case and the terrorist attacks in Mumbai are causing a lot of companies to reconsider operating in India. And supply chain and shipping cost issues in China are negatively impacting the attractiveness of outsourcing technology operations to the Far East.”

But that’s not the only reasons for the backshoring; Business Week reported that the Indian government is worried that protectionism and the regulations that rule the US stimulus package (as well as tax-reforms) are also part of the equation.

Whilst I can agree with the worries expressed by the respondents of the BDO survey; supply chain risk must be part of the equation when one seeks to outsource even non-core categories; the worries of the Indian government is of even greater importance. Protectionism should not have to be a factor that has to be considered when managing a global supply chain.

The sourcing window of opportunity

March 5, 2009

Yesterday Markit Economics published their PMI for the services sector and if the record lows are not attention grabbing enough, the data also show that suppliers are acting quickly to offset plummeting demand.

The eurozone PMI slumped to 39,2 in February (from 42,2 in January) as the composite employment submeasure hit a survey low of 40,8. While this will place additional strain on already tight government budgets (a great overview of the state of the European deficits is available here); it also shows that the window of opportunity for sourcing services is closing rapidly.

It’s been said numerous times in the last few months, but it is definitely time for action.

Purchasing ExpertPage

December 4, 2008

With the Spend Matters navigator somewhat offline it’s great to see some other projects picking up where Jason Busch’ rather ambitious project left off.

Purchasing Transformation contributor Robin Titus has been devoting some late nights to The Purchasing ExpertPage; a stylish and very smooth rss-style aggregator picking up news from all the leading sector blogs and news sources.

The Purchasing Expertpage aggregates news and information about Purchasing from different sources. Expertpage is a private project with the main target to make daily blog research easier and faster.

Forrester’s view on the e-purchasing market

October 7, 2008

Despite being published nearly a month ago; I’ve yet to see any comments on Forrester’s e-purchasing market overview: Holistic View: The ePurchasing Software Market (authored by Andrew Bartles with Ellen Daley and Madiha Ashour).

While the authors have not really unearthed any market shocking news, the report gives the readers a holistic view; as the title promises; on the e-purchasing solution landscape. The report concludes that although Ariba, Oracle and SAP are clearly the largest vendors with wide offerings they control less than half of the total market. So there are plenty of alternatives out there for those who venture beyond the obvious.

The report also points out; in line with similar findings from other firms; that e-procurement and e-sourcing are now mature products which are experiencing slower growth rates than solutions for spend analysis, e-invoicing and matching, services procurement and supplier management.

Forerunners in purchasing are focusing on the front (spend analysis) and rear (invoicing and settlement) of the purchasing process; and rightly so.

When Kids Get Stuck in the Struggle over CGF Supply Chain

September 16, 2008

As the rest of the world is struggling with a volatile raw materials market, Sweden is experiencing a never seen before battle for power in the super market aisles. And the battle grounds are kid favourite’s meatballs and tomato ketchup.

Little over two weeks ago, ICA (one of three major super market chains, the others being Coop and Axfood) declared open war on Procordia, the maker of Felix products, due to disagreements over the price of tomato ketchup. In a display of brute force, ICA took a wide variety of Felix tomato based products off their shelves as part of the negotiation process.

Yesterday, Coop followed suit, and stopped the classic Swedish Scan meatballs due to a similar negotiation breakdown. Pushed into a corner, Scan has sent out warnings to the market that it might have to cut down on personnel.

At the moment, there is no clear winner in the battles of the super market aisles, although doomsday prophets see a ketchup crisis on the horizon. It’s a great thing that the summer bar-b-que season is over; otherwise kids all over Sweden might be rioting due to ketchup shortage.

And You Thought Youtube Was Just For Kicks – Think Again – Supply Chain Video

September 3, 2008

One of the great things about user created content and the so called web 2.0 technologies is when these tools and ideas are picked up by professionals and used for non-entertainment purposes.

My favourite pastime at the moment is checking out the supply chain videos compiled Ehsan Ehsani on Supplychainer.com. Most of the content linked from youtube.com and have been published by a wide array of publishers big and small.

If you have been led to believe that web sites such as Youtube is for kids or for after curricular activities; think again. If you don’t believe me, just check out how online publishers such as GasgooTV  use Youtube as the medium to provide indepth analysis of the Chinese automotive industry.

BMW Number One – half year results update

August 11, 2008

 Following up on the latest press release – the half year result of BMW dropped by 35% compared to last year – this was announced 1st of August by Dr. Norbert Reithofer Chairman of the Board at BMW. The announcement  resulted in a 10% drop of BMW stocks. Yes, even an apparently safe bank like BMW is struggling with the current market developments (rising prices for raw materials, dropping sales in US and Asia). 

It seems that the ambitious savings program “BMW Number One” (see my previous posts) has been started for a good reason. Reithofer also gave a quick status update on the progress of the savings program pointing out that the long term strategy  will remain unchanged and  that a first impact on results is expected in 2010.  The pressure for success is high - or should we hope for a rising dollar? 

European Top Managers Refocus on Expense Reduction

July 2, 2008

According to Germany’s leading business newspaper “Handelsblatt” European top managers shift their attention more towards the reduction of expenses again. In the Handelsblatt Business Monitor, 1170 European Top Managers answer, on a regular basis, questions regarding future strategies.

This result is a major turnaround. Only one year ago the strategic focus on the acceleration of growth had a share of 49%, this time only 36%. The focus on the reduction of expenses increased to 31% (last year 25%). A balanced importance for both areas see one third of the participants. 

The reasons for the increasing cost focus are obvious: the high prices for raw material (especially steel and oil), increasing costs for energy and logistics, the enduring weakness of the dollar and the associated decreasing market growth in general. The question is: how will the corporations achieve the savings targets?

Of course, we will see again some restructuring projects, which will lead to mass layoffs (Siemens, RWE, Volvo already started). But: according to Handelsblatt, this time the main focus will be on the improvement of global raw material purchasing, replacement of actual used raw materials as well as re-design of the supply and value chain. This sounds like there are some promising opportunities at the horizon, to prove the value of the purchasing function …

In the Handelsblatt Business Monitor 401 Top Managers from Germany, 250 from the U.K., 207 from France, 153 from Italy, 103 from Switzerland and 56 from Austria are included.


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