Before we get under full steam in looking at identity issues, let me address the 800 lb gorilla in the room – the acquisition of Sun by Oracle.  Remember, these opinions are my own and not part of Sun’s Official position on the acquisition.

But have no fear, you are not going to learn anything earth shattering here.  Just want to let everyone know my thoughts on what may be going on in the background.

First, we are ready to go here at Sun. As one person said, we are a excellent software company inside a large hardware company.  Once the acquisition is done, we will be a small hardware company inside a huge software company. So, sure, there will be some culture shock, but working with the Oracle team which is software focused is going to be invigorating.

We are still busy, though Gartner has recommended a wait and see on newer Sun software purchases, there are still a lot of activity on identity projects within my client base.  If you have provisioning, you are working on rolling out Role Management, which is now more important.  Agree with Gartner’s position; they are analysts and nobody would recommend a client spend six and seven figures for new software when within a short time, the questions will be answered and you can move forward with confidence.

So, my point, even if we were purchase this afternoon by Oracle, tomorrow morning, I would still be selling the same Sun software stack I have today.  It takes time to assimilate software stacks.  And Oracle would be foolish to go to Sun Identity Manager Customers and tell them they are dropping Sun IDM.  Many of our customers have millions of dollars and years of investment into their stacks and would not respond well to such a edict from Oracle.

Oracle themselves have a great record of maintaining acquired software stacks as independent entities within the Oracle software family. Peoplesoft and Siebel still address the needs of their respective client bases.  And for all of the EU’s concerns about MySQL, they only have to look at InnoDB and SleepCat’s record since they donned the red logo.  They are still strong and having new versions being released. Gee, a database surviving in the Oracle family?  Wake up EU.

Oracle has stated publicly that the road map of overlapping products will be dictated by customers, not by Oracle.

So, lets look at an example.  If we are acquired, Oracle would have two provisioning tools, Sun’s Identity Manager and Oracle’s OID based access management under Fusion.  As mentioned, just dropping Sun IDM would infuriate a large, loyal customer base and would not be an option.

Maybe they might sell this business off. But why?  We have given Oracle a strong challenge in the market for a long time (okay, we have won quite a few of the hockey skirmishes we have gotten into). Why give a new competitor the same weapons? Doesn’t make sense.

So eventually, market forces would dictate the products would merge sometime in the future.

Ok, lets play the tape.  We (Sun Engineering) are working on the next version of Sun IDM with a release date of early next year.  I am sure the Oracle software engineers are doing the same for their products. All the features for the next version are locked in and being built and tested. So its going to be six months to a year before the actual wizards who design and write the code can come up for air and even think how they would merge the two code bases.

Then you have to go through learning each other’s code base. First time code melds are usually done through API on the fringes of the code base. Given major redesigns and releases usually come every 1.5 to 3 years, its at least 2-4 years before we see this version of merged IDM come out.

Finally, at that point, the two code bases are better understood and new features are needed that would warrant a final completely merged product.  Again, this would involve another major version rewrite of 1.5 – 3.0+ years, so we are now in the 5.0+ year time frame where Sun IdM customers would have to migrate to something fairly mutated from the current software line.

Five years is a long time in this business. Most software purchased today is at best viewed as having a current life of 5 years. At least 5 years the current management teams needs to worry about.

So, once the EU comes to its senses and they agree with just about everyone else on the planet the acquisition should go forward, we can get back to solving identity problems.  Yeah, its a little frustrating (a partner called it the Sun Identity “Nuclear Winter”) but the end is in site (end of January) and we are ready to start working with those clients who are playing the wait and see game.

So, the gorilla isn’t really all that threatening right now.  He just eats a lot.

Volunteers. Love them or hate them?

Love them of course.

If you let them spend time in or on behalf of your organisation – then you have to love them. If you didn’t really want to use them but you did – tough. You still have to love them.

How do you do this.? Well I have been doing lots of thinking about this and reckon I have an awesome idea. It is called a Volunteer Relationship Management approach. It must be good because it has an acronym already – VRM.

Apparently you can already take courses in it.

Courses… really?

VRM for me is doing a review of my SRM (Supporter Relationship Management) approach and adapting it for Volunteers.

Meet them – make sure you get their details and assign tasks based on what they’re good at and their availability

Understand them – make sure you know why they’re interested in your organisation, and create the relevant feedback communication (guess what – it will probably be similar to the stroy you used in your latest SRM communication).

Value them – Make sure that the tasks are meaningful, appropriate, and that you explain the worth of their efforts to the organiation’s success…. and the beneficiaries. And say thank you. And personalise that thank you.

Remember them – send them an update reminding them what their efforst achieved. And stay in touch with opportunities of how they can help again.

Check out this report on volunteering to get some more evidence of why you should treat your volunteers nicely. More than one third (36%) of volunteers reported they had not had any recognition for their good work in the last month of their volunteering

By Scott Walls

In the past week alone, two readers have asked about UNSPSC codes (universal product coding scheme) and Don Sweeney, Partner at Emerging Solutions, forwarded a related question he noticed via a Yahoo Group seeking assistance re UNSPSC codes as PeopleSoft categories.  For these reasons and because UNSPSC codes offer amazing value, I thought it would be helpful to write a quick BLOG about UNSPSC codes, their government equivalent NIGP codes, and three examples of how these codes can be very useful to today’s best in class procuring organization.  For more information, please email me directly at scottwalls@srm-plus.com.

UNSPSC & NIGP Codes

Definitions via Wikipedia:

• UNSPSC – the acronym for the United Nations Standard Products and Services Code. UNSPSC is a coding system for the classification of both products and services for use throughout the global marketplace. It is managed by the GS1 US, which is responsible for overseeing code change requests, revising the codes by interfacing with industry projects, issuing regularly scheduled updates to the code, communicating with members, as well as managing special projects and initiatives as determined both by the UNDP and by member requests.
• NIGP – The NIGP Commodity/Services Code is an acronym for the National Institute of Governmental Purchasings Commodity Services Code. The NIGP Code is a coding taxonomy used primarily to classify products and services procured by state and local governments.

While I have known about UNSPSC codes for much longer, their adoption has picked up dramatically over the past 5 years.  I am seeing NIGP more and more now that the predominant amount of work being sold is in the United States government arena.  From a 10,000 foot level, I attribute the rise in popularity of these universal coding mechanisms to the need to identify common items and their attributes among buyers, suppliers, and third-parties.  For more on buyer, supplier, third-party connections, see Supply Integration Solutions. 

3 Major Advantages Offered by UNSPSC/NIGP Codes

Because all serious marketplaces and suppliers provide this information for free and it is relatively accurate, here are a few great ways to take advantage of your procurement partner’s efforts.  The following three sections provide a high level overview of the advantages offered by universal coding schemes such as UNSPSC and NIGP:

1. Assign set downstream defaults with little to no effort.  When using an external organizational marketplace (SaaS marketplaces, AKA content management, are a best of breed must for every company) these values come back automatically assigned and all setup/maintenance is performed by the marketplace/supplier.  All marketplace items are assigned a UNSPSC code.  The SRM application uses those codes to set its downstream defaults.  Here are a few valuable examples
   1. Use universal codes to set the asset profile – determine depreciable life, capitalization, and more
   2. Use universal codes to set the asset tracking information – require receiver to tag and note ID in SRM app
   3. Use universal codes to set a default GL account – requester gets the correct GL account without any accounting knowledge
   4. Use universal codes to set the NIGP Code (Periscope and others translate UNSPSC to NIGP codes)
2. Real-time acquisition (requests/purchases) reporting with little to no effort.  Again, when using an external organizational marketplace, the purchasing/reporting categories (in PeopleSoft these are called categories and required on ALL requisitions) within the SRM application can be setup to mirror the UNSPSC/NIGP codes.  Using the SRM application to set the category, or a portion of it, to the SRM category allows for an easy, free classification for all acquisitions.
3. Identify items for special routing automatically.  Items requiring imaging, special workflow, safety concerns, etc can be identified at request, purchase, receipt, etc. via their UNSPSC/NIGP code.

I would be remiss if I didn’t mention that UNSPSC has some complications; which version suppliers use, keeping current, cross referencing.  However, the benefits almost always outweigh the related costs.

About SRM Plus

SRM+ is a boutique procurement business consulting firm.  We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP).  Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers.  Visit us at www.srm-plus.com.

The business relationship has changed between the buyer and seller with the advent of Saas.  Businesses need to adopt a different mode of communication with their buyers if they wish to stay competitive.

First there was contact management.  A sales person used this glorified cardfile to manually track calls, personal details, followups, clues, and hits that would enhance their ability to sell more.  Then came SFA sales software which organized the data into categories, shared the data with other sales reps, required more details to be posted about the relationship and was integrated into the PIM (personal information management) system.  This migrated into CRM for now the contact/lead/opportunity needed to also be a service and support customer.

Today,  we have SaaS.  Software as a service puts the pressure back on the relationship because there is far less initial investment by the “customer”.  No longer is there a need to for a $1M upfront investment in services and software.  A company can adopt a solution for 10k and be up and running in a few weeks.  This also means that the same customer can abandon that choice just as easily.  The customer – vendor relationship has become much more dynamic.  Instead of  “buy, implement, and support”,  today its, pay, configure, use, and upgrade or downgrade each month.  100 users today can become 200 or 75 next month with ease. 

Businesses need to address the issue of converting the relationship from a Customer into a Subscriber or be at risk of falling out of favor in a shorter cycle than the initial sale. 

So what is the difference between a Customer and a Subscriber? 

Customer’s buy with the intent that the product is relatively static and may just need support in the future.  A customer has a limited expectation as to the amount of interaction he may have with his vendor.  User groups, clubs, or customer feedback sessions may be the only way to request an alteration to the product.

Subscribers invest in a product and a vision.  A subscriber knows that he is not forced to stay with the product any longer than he is happy.  Subscribers use the solution until their needs change and then leave unless the vendor makes those changes in short order. 

Where a customer may look at the abandoning of a product as a loss,  the subscriber looks at the change as a modification and expected growth step.  The vendor must now reach out to the client base monthly (at minimum) and share new ideas, offer new services, and promote changes just as it would to its own staff.  If a client wants to change the payment method, payment cycle, product bundling, or make service plan changes of any form, the vendor must be prepared for those requests and be able to instantly react or suffer the chance of losing the business.

The telecom industry has known about these needs since the birth of long distance services.  Phone companies know that if they dont keep their subscribers happy,  the subscriber will leave overnight.  Airlines saw this need to solidify the relationship with their flyers and subsequently created the flyer programs which instituted the customer loyalty they needed.  Credit card companies, internet service providers, even power companies have begun the conversion from customer facing to subscriber communicating. 

All businesses who have looked at ways to create customer loyalty have realized that there needs to be some way to establish some form of subscription model.

The next issue is the need to change the software used to manage the new relationship between subscriber and vendor.  Today we have the birth of SRM.  Subscriber Relationship Management makes the process of bringing a new subscriber into the company more focused on project management, service requests, work orders, and most importantly Billing.  SRM also tosses out the concept of “products” from the data model.  A product is a now a Service Plan with components like services, rates, and items.  Subscribers expect to be able to adjust their usage and commitment every month so vendors need to offer multiple different bundles and even allow the subscriber to pick and choose their own solutions.

Moving from customer management to subscriber management is a complex change in process and procedures.  Most importantly,  vendors need to change the tools they use to mange their subscribers.  Without the proper tools and the ability to dynamically change and bill for their products,  there can be no migration from Customer to Subscriber.

By Scott Walls

Third-party settlement service providers will pay you for the privilege of settling your transactions.  This BLOG details basic third-party settlement concepts and links to related BLOGs explaining their integration with larger procurement strategies.  

Third-party settlement refers to the third-party tools, applications, and services used by procuring organizations to electronically receive payment requests from, approve payment requests to, and transmit payments to suppliers.  These tools, applications and services are not to be confused with licensed “eSettlement” applications which simply allow suppliers to electronically transmit invoices to procuring organizations.  Both eSettlement applications and third-party settlement services should be part of any procuring organization’s overall procurement strategy (for more on strategies leveraging third-party solutions, see the BLOG entitled Total Supply Integration Paradigm). 

Although there are numerous providers of third-party settlement services, they all essentially work in the same manner.  The settlement service provider (typically a banking institution) provides the procuring organization with account numbers its suppliers can request payment from using their credit card terminal(s).  The actual account numbers are presented to the supplier, either during negotiations or at the point of purchase.  At one (or several) point during the year, the third-party settlement service provider issues a small percentage of the overall dollars spent on each account back to the procuring organization in the form of a “rebate”.  Rebate percentages typically vary based on volume and card type.

The two obvious benefits of third-party settlement services are the reduction of buyer/supplier administration (complying transactions do not require invoice/payment creation) and the rebate (ranging from 1.3 to over 2%).  Both the services and its benefits are essential solutions within the Total Supply Integration Paradigm.

Third-party settlement accounts are continuously evolving, but all accounts fall within one of four types; person-specific, supplier-specific, group-specific, and transaction-specific accounts.  Each account type is profiled below:

1. Person-Specific – these accounts are the more traditional accounts.  Often referred to as p-cards, purchasing cards or procurement cards, these accounts are created to allow select employees to purchase goods and services without going through onerous procurement processes (requests, approvals, orders, invoices, and payments).  Employees are given a physical card and use it like a credit card with the bill going to the company.  The “bill” comes electronically to the company and each transaction receives a default GL coding (often incorrect, but close or even to a suspense account).  Employees must review, and amend if required, every transaction prior to it being able to be recorded in the General Ledger.  This review step often creates delays in the reconciliation of p-card transactions.  Person-specific accounts were setup for high transaction volume, low dollar, but the administration requirements previously mentioned and the potential for fraud make them less effective.   
2. Group-Specific – these accounts were created to allow any number of users within the procuring organization to make transactions.  Each account issued a physical card which can be used by anyone within the procuring organization/company.  They are usually used by a department or procuring organization and reconciled by someone at that level.  As with p-cards, these accounts offer some basic controls (MCC code limitations, daily/monthly dollar limits, etc.), but the possibility for fraud and reconciliation issues still exist.  Group-specific cards often have an internal set of P&P associated with them.
3. Supplier-Specific – these newer accounts have been created to provide a settlement vehicle specific to a given supplier.  Like the p-card above, the supplier knows the card number (usually revealed as part of the contracting process) and charges the card using the supplier’s credit card terminal as appropriate per the contracted terms.  These accounts rarely issue a physical card.  Transactions related to this card typically must provide the bank and the procuring organization with a purchase order number; negating the need for GL coding once transaction comes back to the procuring organization (unless it has changed since the issuance of the purchase order).  These represented a dramatic improvement over the person-specific cards, decreasing fraud and administration.
4. Transaction/Event-Specific – these are the latest and greatest accounts and they represent a new direction for settlement.  They allow for a single transaction or single event (company party, annual electric bill payments, etc.) to be settled via the third-party mechanism.  They can now be used in completely different ways such as a blanket order, drawn down, declining dollar order payment vehicle (good for certain amount, over a certain time, until completely drawn down).  In addition, they are now being created automatically at the point when the purchase order is created via a programmatic call out to the banking institution.  These new vehicles represent a new and exciting shift for electronic settlement.

As mentioned, these accounts and services will continue to evolve.  Third-party settlement services, in particular, are one of three new revenue-generating tactics being deployed by best in class organizations.  When used correctly, they are resulting in the creation of multi-million dollar revenue streams.  As with all tactics, third-party settlement must be heavily integrated with all related business processes, applications, and reporting in order to achieve maximum organizational benefits.

About SRM Plus

SRM+ is a boutique procurement business consulting firm.  We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP).  Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers.  Visit us at www.srm-plus.com.

IPOMS & Arrow Consult present:

Workshop Supply Chain Management
4 Days (3,4,5 dan 6 December 2009)

Saat ini customer mengharapkan produk dengan kualitas yang tinggi, harga rendah dan tepat waktu pengiriman. Agar dapat bersaing dengan baik, perusahaan meningkatkan kemampuan supply chain. Untuk itu dibutuhkan professional yang memahami supply chain untuk meningkatkan daya saing perusahaan.

Materi yang akan dibahas :
I. Supply chain management fundamental meliputi:
II. Building Competitive Operations, Planning and Logistic
III. Managing Customer & Supplier Relationship
IV. Using Information Technology to enable supply chain management

Objective
Dirancang bagi para Professional yang bergerak dalam bidang supply chain untuk:
- meningkatkan skill
- menciptakan & melaksanakan strategy supply chain yang memenuhi permintaan customer, mengurangi cost & meningkatkan profit
- meningkatkan value Anda dimata employer

Outline
Hari 1. SCM Fundamental ( Hari Kamis , tanggal 3 Desember 2009)
- Overview SCM
- Aligning corporate strategy with SC strategy
- Managing SCM
- Continuous improvement
Ditargetkan dengan mengikuti Supply chain management fundamental peserta mengetahui:
o Bagaimana SCM menambah value bagi perusahaan
o Memahami 8 proses kunci dalam SCM
o Mengembangkan SC strategy yang sesuai dengan strategy perusahaan
o Mengukur efektifitas dari supply chain
o Merancang continuous improvement bagi supply chain
o Memahami pentingnya design supply chain & bagaimana mengantisipasi perubahan market

Hari 2. Building competitive infrastructure ( Hari Minggu, tanggal 4 Desember 2009)
- Demand planning
- Forecasting
- SC dynamic
- Collaboration
- Product design
- Operation planning & control
- Logistic
Ditargetkan dengan mengikuti Building Competitive Operations, Planning and Logistic peserta mengetahui:
o Memahami dinamika supply chain & bagaimana meningkatkan performance supply chain
dan meningkatkan profitability
o Mengevaluasi demand dan bagaimana mengurangi komplesitas dalam demand planning
o Membuat kolaborasi untuk memperbaiki estimasi demand
o Memasukkan unsur supply chain dalam perancangan produk
o Alignment distribusi & transportasi dalam strategy supply chain
o Membuat perencanaan dalam menggunakan jasa 3PL dan 4PL service provider
o Memahami pentingnya reverse logistic

Hari 3. Managing Customer & supplier relationship ( Hari Jum’at, tanggal 5 desember 2009)
- Relationship Management in Supply Chain
- Definition of customer relationship
- Customer Relationship Management (CRM)
- Definition of supplier relationship
- Supplier Relationship Management (SRM)
- Role of IT in CRM
- Strategic sourcing
- Alliances
- Implementing SRM strategies
Ditargetkan dengan mengikuti Managing Customer & Supplier Relationship peserta mengetahui:
o Membuat kategori customer berdasarkan profil dan kebutuhannya
o Memahami customer loyalty dan life time value dari customer
o Membuat cara mengukur customer satisfaction
o Memahami pentingnya strategi membina hubungan dengan supplier dan customer
o Membuat supplier rating system
o Memanfaatkan data customer dengan baik untuk meningkatkan service dan menambah
value kepada customer

Hari 4. Using IT to enable SCM( Hari Minggu , tanggal 6 Desember 2009)
- Role of IT in SCM
- ERP (Enterprise Resource Planning)
- Innovative technology & their use
- Using IT to improve SC performance
Ditargetkan dengan mengikuti Managing Using Information Technology to enable supply chain management peserta mengetahui:
o Memahami peran data dan IT dalam mendukung supply chain
o Mempelajari bagaimana teknologi memudahkan supply chain dan mendukung strategy
bisnis
o Mengungkapkan infrastruktur IT dalam hubungannya dengan supply chain
o Memahami innovative technology dalam kolaborasi dan global visibility
o Menggunakan teknology dalam meningkatkan d istribusi, reverse logistic dan global supply
chain communication

Workshop Leader
Ir. Iwan Nova MBA, CPIM, CSCP
· ITB: Electronic Engineering, MBA from Monash University, CPIM in 2005 (Certified Production & Inventory Management) from APICS (Association for Operation Management), CSCP in 2008 (Certified Supply Chain Professional) from APICS
· Pengalaman sejak 1988 pada beberapa perusahaan MNC seperti: Mistubishi Electric, Sony, Mattel, Pirelli Cables
· Mengikuti berbagai training di mancanegara seperti: Malaysia, China, Jepang, Italy & USA

Venue
Workshop ini akan diadakan di Jakarta (Pulomas Jakarta)

Training Fee
· Rp. 2.800.000,- (Registration 3 person/more ; payment before Dec 1th, 2009)
· Rp. 3.000.000,- (Registration and payment before dec 1th, 2009)

CONTACT US
Arrow Consult Training
Telp : (021) 93701129
HP : 0815 8562 8824
Office : Jl. Pahlawan 377, Citeureup, Bogor, 16810
Email : marketingarrowtraining@gmail.com

By Scott Walls

Today’s best in class organizations are reducing operational expenses by up to 30% and generating multi-million dollar revenue streams by combining traditional SRM applications “+” best of breed, niche, third-party solutions…and they’re just getting started.

Organizations large and small, public and private are extending the value of their traditional SRM application (SAP, Oracle, PeopleSoft)  by integrating it with third-party tools, applications, and services (referred to collectively as supply integration solutions).  Two effective supply integration solutions are content management and settlement management.  Content management solutions allow procuring organizations to eliminate item management and item-contract management, provide mature content review/approval tools, and create significant contract revenue streams.  Settlement management solutions allow procuring organizations to reduce invoice, payment, and match management tasks, while creating significant settlement revenue streams (light years beyond “P-Card”).  This model, integrating traditional SRM applications with third-party solutions, is referred to as the Total Supply Integration Paradigm.

Very large, multi-level organizations (holding companies and state/national governments) are taking the Total Supply Integration Paradigm a step further by creating Trans-Organizational Sourcing Functions(TOSFs).  These entities aggregate spend across all sub-organizations, negotiate favorable contracts with preferred suppliers, and broadcasting contracted items via a shared marketplace (centralized item repositories, accessible regardless of ERP/SRM applications).  The efficiency gained by spend aggregation is nothing short of dramatic; $5+ million dollar revenue streams (1 million for every 200 million in spend approx), 30% reductions in operational expenses, improved tools sets, and decreases in Cost Of Goods Purchased (COGP).  One large, multi-level organization in particular has deployed the TOSF in an effort to become “self-funded”; new revenue sources exceed reduced operational expenses (employees, hardware, software, office space, supplies, and more).  Early results indicate it is well on its way to accomplishing this.

Most encouraging is that The Total Supply Integration Paradigm and the Trans-Organizational Sourcing Function model are just getting started.  These implementations nearly scratch the surface of what is possible.  The dramatic reduction of operational expense and net COGP, creation of revenue, and improved operational tools will allow forward thinking organizations to turn cost centers into cash centers for some time to come.

About SRM Plus

SRM+ is a boutique procurement business consulting firm.  We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP).  Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers.  Visit us at www.srm-plus.com.

By Scott Walls

Chris Rock once said “you can drive a car with your feet if you want to…that don’t make it a good idea.”  Well, any company can deploy eProcurement , that doesn’t make it successful.  Successful eprocurement efforts achieve specific organizational goals (overall philosophy) and business objectives (reduce costs by X%, decrease net Costs Of Goods Purchased by Y%).  This BLOG explains the goal of eprocurement, the business objectives used by best in class organizations, and 5 proven optimization tactics your firm can use to optimize its eProcurement efforts. 

The Goal of B2B eProcurement Efforts

While eProcurement is only one small piece in the overall Total Supply Integration Paradigm, it is perhaps the most important piece.  The eProcurement application is the connection between the providers of content (sourcing agents) and the consumers of content (requesters).  The goal of every eprocurement application is to provide ever-increasing, higher quality amounts of purchasable content throughout the organization, while simultaneously decreasing procurement’s support costs (administrative & transactional) related to acquiring that content. 

Best in Class Business Objectives

If the goal of eProcurement is to provide ever-increasing, higher quality content while decreasing the costs of acquiring that content, then all business objectives should measure progress against that goal.  The amount of content (number of items in all catalogs) is easy to measure, but not a tremendously valuable number.  Because an organization goes from 10,000 to 300,000 items, they are not necessarily reducing costs and/or decreasing COGP?  By examining volume numbers in combination with a price measurement such as the Average Selling Price (using a well defined market basket), procuring can more easily measure decreases in net Cost Of Goods Purchased (COGP) as it increases the number of items available.  Measurements such as breadth of content (how many commodities are being offered via eProcurement) and depth of content (how many business units are really utilizing the content) can be better at understanding the rate of adoption internally and externally.  Monitoring resource requirements for technical and functional tasks internally will show the relative cost control related to the eProcurement efforts; successful eprocurement efforts eliminate item mgt and contract item association efforts, while reducing order, receipt, invoice, and payment support efforts.  eProcurement is a race without a finish line, an exercise in continual improvement.  Business Objectives are the benchmark to understand how well that race is being run. 

NOTE: the past 2 years have shown dramatic adjustments in costs (up to 31%) and decreases in COGP (up to 20% within some categories). 

5 Proven Optimization Tactics

After 10+ years of global eprocurement implementations across 7 different industries, 4 major applications and 15+ corporations, here are 5 major tactics that ensure big returns for my clients: 

1. Simplify the Message – every eprocurement application/organizational marketplace must have a clear and simple message clearly explaining to both the providers of content (sourcing agents) and the consumers of content (requesters) what is in the marketplace and what is not in the marketplace.  Ambiguity leads to confusion, rogue-spend, and can actually create more work for procurement instead of less.  Does your marketplace offer items for non-requisitionables, off-contract purchases, under $2,500 purchases, travel, staffing?

NOTE: Read Marketplace Content Strategy to understand how to create marketplaces where all the participants know the contents of the marketplace. 

2. Simplify the Search Process – this is the second most important rule, but the least well executed rule of almost every eprocurement application/marketplace I have ever worked with; the search must be “Amazonian” simple.  If your process requires the requester to understand the cataloging method (hosted, punch-out, free-form text, etc.) in order to know what page or process to use when purchasing any item, then your process and application/marketplace strategy has failed.  This cannot be stressed enough, start with the one thing every requester knows when he or she wants to make a request…the description and keep it simple.  Requesters should not only be able to locate the item(s) they need, but intuitively understand how to acquire those item(s) once located. 

NOTE: Read Marketplace Content Structures, and Marketplace Content Structure Rules to see different methods/tools for representing content.  NOTE: these BLOGs assume the deployment of  content management services, number 4 below; I am a strong proponent of content management services.  They take eprocurement value to another level.

3. Simplify the Requisition Process – the number one variable determining success on every eprocurement project I have been involved with has been the requesters ability to intuitively understand how to locate items, requester those items, and then follow those requests as they work towards completion (order, receipt, invoice, payment, etc.)…yet every client I have ever known has minimized this and created training documentation.  For those that believe you need to train users for the roll-out of ANY eprocurement application/effort, that simply isn’t true.  In fact, the fact that requesters require training indicates that the eprocurement benefits received are likely to be minimal.  With the tools available today and a good consultant, all of the ability to locate, purchase, and follow a procurement transaction through its lifecycle should be “Amazonian” simple.

4. Outsource Content Mgt – this is a no-brainer regardless of the size of the organization.  The newer breed of third-party content managers can manage content better and at a much cheaper rate than internal procurement functional and technical staff.  In addition, the catalog management tools offered are more mature than the traditional SRM (SAP, Oracle, PeopleSoft) counterparts. Besides, best in class organizations are creating transaction settlement revenue streams per supplier that far exceed the cost of outsourcing the content mgt.

5. Increase Content Available – increased content mgt help and better tools allow procuring orgs to easily move much larger amounts of content “in the store” so-to-speak.  In fact, I use a Whole Foods example when I am lecturing.  My wife loves to shop at whole foods, but not me despite loving the quality of the goods.  Why?  I can’t get all of my items in one place.  Many of the items I need on a weekly basis are not there, so I am forced to go to at least one other store.  Eventually, I feel that if I have to go to the regular store anyway, I will buy lower quality goods because I just don’t have time.  In short, shoppers like to take the path of least resistance.  The more limited the selection within your marketplace, the more likely your requesters will shop outside of it.  Successful eprocurement efforts move WELL beyond the usual product aggregators (Dell, HP, Office Depot, Staples, VWR, etc.).  Aberdeen Group notes that 78% of all spend can be on contract (I.e. run through eprocurement).  My last client managed almost 100% of its spend via their shared organizational marketplace.

About SRM Plus

SRM+ is a boutique procurement business consulting firm.  We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP).  Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers.  Visit us at www.srm-plus.com.

By Scott Walls

Trans-Organizational Sourcing Functions or TOSFs are procurement super-structures.  These entities exist to aggregate spend across multiple sub-organizations.  For example, if a holding company wanted to aggregate spend across its sub-companies, it would do so using a TOSF (think Sears holdings over K-mart, Sears, etc.).  The TOSF would aggregate spend from all sub-entities and group it according to the commodity being purchased.  It would then publicly auction this aggregated spend amongst like suppliers and place the contracted results in a centrally located marketplace (see also Shared Marketplaces & Marketplace Content Strategy).

TOSFs are to holding companies and governments (state, national), what procurement departments are to large organizations.  Procurement aggregates inter-organizational demand, where as the TOSF aggregates intra-organizational demand.  These new super-structures represent some of the newer thinking in procurement operational improvement today.

About SRM Plus

SRM+ is a boutique procurement business consulting firm.  We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP).  Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers.  Visit us at www.srm-plus.com.

By Scott Walls

This is a quick BLOG to introduce the concept of the Strategic Procurement Paradigm.  The SPP has been around for years.  It was created on the principles of reducing the net Cost Of Goods Purchased (COGP) by electronically integrating buyer/supplier process touch-points.  While the SPP decreased the direct Cost Of Goods Purchased (COGP) through electronic connections and spend negotiation, it had a less impactful effect on the net COGP due to the increases in administrative costs required.

The mid 1990s saw the emergence of spend management software vendors such as Ariba and Commerce One.  Many soon followed and the drive to leverage spend eventually worked its way into the traditional ERP in the form of what is know known as the Supplier Relationship Management(SRM) application suite.  The functionality of the larger suites and their integration with the “back-end” ERP applications (ledgers, projects, AR, assets, inventory, etc.) makes them the product of choice, however the administrative costs required to make this happen mute any real enthusiasm and have prevented this model from reaching its real potential (see The Total Supply Integration Paradigm for potential solutions).

The Strategic Procurement Paradigm has four high level steps:

1. Identify pools of repeatable spend not currently on contract.  This is typically done via BI tools by a business analyst.

2. Competitively auction pools of repeatable spend amongst like suppliers. This function is performed using the Strategic Sourcing application (often in concert with a supplier portal).  This same application can also be used to sell existing assets.

3. Automate buyer/supplier source to settle processes with key, contracted suppliers.  This is most often done via an eprocurement application connecting with some level of external catalogs and leveraging a newer, more simplified requisitioning user interface.

4. Continually drive increasing amounts of spend on contract via this process.  This is part of an overall business strategy to locate spend pools whose contract and integration benefits exceed the costs of integration and catalog maintenance.

SPP Benefits – This model provides a better requisition user interface, lowers the overall COGP, and allows buyers to remove the burden of constant sourcing (source once, place in central location for request/purchase, and move on to sourcing other items).

SPP Disadvantages – This model favors larger companies.  The cost of integrating and managing item catalogs, forms and/or connections adds up; particularly for the smaller company with a lighter IT and administrative support cast.  In addition, the simplified requisition UI does not mean it is simple.  Requesters still struggle with these pages.  MOST IMPORTANT – these applications require the requester to understand the cataloging method (internal item, punch-out, form, etc.) in order to know where to go and how to make the purchase.  These type of complexities limit adoption similar to if Amazon required book-buyers to understand architectural nuances prior to being able to order books.

About SRM Plus

SRM+ is a boutique procurement business consulting firm.  We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP).  Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers.  Visit us at www.srm-plus.com.

By Scott Walls

This is a quick BLOG to introduce the concept of the Total Supply Integration Paradigm (TSIP).  The TSIP was introduced to solve the issues created by its predecessor, the Strategic Procurement Paradigm (SPP).  The goal of the SPP was to reduce the net Cost Of Goods Purchased (COGP), by driving procurement spend onto contract.  The main issue with the Strategic Procurement Paradigm was, that as more spend was driven onto contract, the costs of supporting the related items and transactions increased dramatically.  The limited the adoption of the SPP.

The TSIP is the next generation of the SPP.  It focuses heavily in two major areas – content management and settlement management.  The content management solutions outsource the creation and management of content (eliminating the item mgt function and providing better mgt tools) and the settlement management solutions outsource the settlement of transactions (reducing the invoice and payment mgt functions).  Furthermore, these new supply integration solutions often provide more mature content/settlement mgt tools and allow for deep integration with existing SRM applications, business processes, reporting, and employee evaluation metrics. 

TSIP Benefits – The TSIP is allowing organizations to become self-funded, at a minimum.  The content management applications are outsourcing the catalog management, with the exception of approval, and providing better catalog management tools.  The settlement management is not only reducing the labor expense related to invoice and payment management, but providing revenue generation (settlement rebates, contract rebates, etc.).  A good rule of thumb for revenue expectations is 4 million annually for every 1 billion in procurement spend.

TSIP Disadvantages – some of the integration points will need time to mature.  For example, SciQuest’s Spend Director does not allow for change orders, meaning orders are essentially fill or kill.  They allow procuring orgs a work around (manually updating orders in both the marketplace and the SRM application), but this is not realistic.  Over time this dynamic will disappear.

TSIP Conclusion – with the ability to reduce OpEx by greater than 30% and create minimum of 4 million in annual revenue for every 1 billion in spend, the results are too dramatic to ignore.  Every organization, particularly those of size, should be investigating supply integration solutions and the TSIP.  Also, they should not be approached as one-off solutions per se, but more as a group of related applications needing to be fully integrated into the procurement application, process, and reporting landscape.

About SRM Plus

SRM+ is a boutique procurement business consulting firm.  We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP).  Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers.  Visit us at www.srm-plus.com.

By Scott Walls

Marketplace Content Strategies align the creation, management, and usage of marketplace purchasable content with the overall procurement business strategy.  Having a well defined marketplace content strategy allows both the providers of content (sourcing function) and consumers of content (requesters) to understand the value of the marketplace and use it appropriately.

Here are the three steps required to create an Marketplace Content Strategy:

Step 1 – Understanding Marketplace Data Elements or “Content Structures”

First, the group designing the marketplace must understand the content structures available to them.  Content Structures are the marketplace term for the data elements being used within an organizational marketplace to represent purchasable content (items, forms, catalogs, contracts, suppliers, procuring orgs, content consumers, and content providers).  Content structures vary based on the organization’s business requirements.  Each organization needs to ensure the content structures required to represent their business are available (on-contract/off-contract, requisitionable/non-requisitionable, sub-org security, sorting classes, product priorities, etc.).  In addition, the Shared Marketplace Model allows for multiple versions of the same content structure (i.e. Microsoft being vendor 123 in one ERP/SRM application and vendor 123 in a second ERP/SRM application).  Hence, the organization needs to understand how those values in multiple worlds are linked correctly within the marketplace.  For a more detailed explanation of marketplace content structures, click here.

Step 2 – Define Marketplace Content Structure Rules

Second, the design group will need to create the content structure rules.  Content structure rules transform a collection of data elements into an intuitive, functioning marketplace.  They define what type of content will be in the marketplace (contracted content, requisitionable content, etc.), how that content will be organized (under contracts, organized by supplier), how it will be presented to the requester upon search (recycled appears first in a search, all items in one results box), and how ALL requesters (even the most inexperienced) will understand what to do with the content when located.  When designing the marketplace, it is not enough to simply say contracts and suppliers will exist in the marketplace.  There should be well defined rules telling market participants what content, contracts suppliers, etc.  These are content structure rules.  For a more detailed explanation of marketplace content structure rules, click here.

Step 3 – Create Measurable Content Objectives

Lastly, the design group will need to create measurable content objectives.  Measurable content objectives indicate the extent to which marketplace content is supporting the overall business procurement strategy.  Content objectives can be organized around 5 basic criteria (this can differ by engagement); scope, adoption, breadth, depth, and payback.  Each criteria must have a definition (i.e. the scope of the market is all spend on contract regardless of whether or not it is initiated using a requisition) and an evaluation criteria (total number of contract-related order lines purchased / number of contract-related order lines originating from the marketplace).

Additionally, content objectives can exist at the macro level (marketplace as a whole) or the micro level (for a given sub-org or by sourcing group).  For example, if a firm wants to evaluate the payback numbers (revenue generation) for its content, it may want them market-wide, but also at a level similar to how their employees are organized.  The latter would be helpful in evaluating one group of sourcing agents against another group.

To obtain understand more about or discuss what an appropriate Marketplace Content Strategies might look like in your organization, email Scott Walls at scottwalls@srm-plus.com.

About SRM Plus

SRM+ is a boutique procurement business consulting firm.  We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP).  Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers.  Visit us at www.srm-plus.com.

By Scott Walls

Marketplace content structure rules are a set of rules governing the content within organizational marketplaces.  They are created by the providers of marketplace content in an effort to clearly indicate to all marketplace participants what content is in the marketplace, how content is located, and how that content is to be used.  Directly, or indirectly, the underlying principle in most, if not all content structure rules, is to make the presentation and utilization of purchasable content by the most novice of consumers as intuitive as possible.    The goal of marketplace content structuring is to increase the organizational adoption of the marketplace while simultaneously decreasing the organizational support required for the marketplace’s transactions. 

The organizational value of a marketplace increases along with the amount of purchasable content in that marketplace (higher spend on contract, larger rebates, one-stop shopping, etc.).  Unfortunately, so does the acquisition diversity (acquisition diversity = content complexity).  The diversity of items being acquired (on contract vs. off-contract, req vs. no req, fixed vs. variable pricing, lease vs. purchase, static item vs. dynamic item pricing or configuration) increases the need for clear and well communicated set of content rules allowing the consumer of content to intuitively locate and purchase the right goods and services for the right price. 

While each marketplace’s content differs according to the culture, needs, and size of the organization, all marketplace content structure rules fall into one of four categories.  Those categories are as follows:

1. Scope – scope-related rules articulate the business definition of the content within the marketplace.  Is the marketplace’s scope limited to a functional area (i.e. the scope is technology goods and services); limited to pre-sourced or org-wide contracted content (i.e. the scope is goods and services pre-negotiated as part of statewide contracts for all state-agencies); or simply wide-open (i.e. if the organization can link to a good or service electronically, it is in the marketplace).  Some scopes are easier for the most novice of requesters to intuitively understand.  The goal of the scope, as with all structure rules, is to make locating and using marketplace items as intuitive as possible for the most novice of requesters. 
2. Organization – organization-related rules define the data elements used within the marketplace as well as how those data elements related with one another.  In a technical sense, this could specify the data elements being used to represent marketplace content; supplier, contract, catalogs (marketplace, remote, proxy, instructional), item or form.  Or, in a functional sense, this could specify the relationship between those data elements; all goods and services must belong to a contract and a supplier, but a supplier can have multiple contracts.  Organization rules help the provider of content understand how they are going to represent content within the marketplace (which has also been conceived in a way that supports the most novice of requester).
3. Presentation – presentation-related rules define how the marketplace’s content will be presented to the party inquiring regardless of the method (window shopper or via a third party application such as PeopleSoft, Oracle, SAP).  Most requesters of marketplace content are familiar with Amazon-like purchases (type in text, search for item, select item, check-out), hence many successful marketplaces strive to present content in this fashion (starting with the known).  When this is not a possibility (i.e. non-requisitionable items such as a rental cars or temporary staffing), both the presentation rules and the utilization rules (see below) take on added importance.  Organization rules are solely based on the consumer experience and making complex goods and services as intuitive as possible.
4. Utilization – utilization-related rules define how a consumer will use the content being presented.  More specifically, if a consumer/requester searches for an item and receives a link to a punch-out, do they understand how to use this link, what a punch-out is?  Do they know they now need to access the supplier’s site, potentially re-search, load a cart on the supplier’s site, check-out back to the marketplace (and possibly back to the SRM application)?  As the scope of marketplace content is increased, the number of acquisition instructions increases, are these instructions being stored at the right place in the transaction…at all?  Utilization rules govern the methods in which consumers of content will quickly and easily understand or learn how to acquire all items that are not intuitive.  An example of a good utilization rule would is adding a “How to Purchase” link at the item level that is returned along with the item search.  Hence, when a requester searches for a rental car (something not usually purchased via a requisition or using a marketplace…but could be considered in-scope if it is on a statewide contract), they would also receive detailed purchase instructions for this non-standard type if purchase.  Utilization rules, like presentation rules, are solely focused on the consumer experience.

 In short, a marketplace could have the best content in the world, but if the providers of content cannot design, deploy, and articulate clear, intuitive marketplace content structure rules, then all participants will struggle with the content in the marketplace and how to correctly use it.  This marketplace is likely to underwhelm the organization, either because it offers too little content or because the content it offers is too complex for the infrequent or novice consumer; both issues limit the overall adoption of the marketplace.  Well designed marketplace structures maximize comfortable, successful adoption well beyond the purchasing savvy and/or F&A consumers, this achieving the marketplace content structure goal.

* To understand how to use content structures and content structure rules within an overall marketplace strategy, see Marketplace Content Strategy

About SRM Plus

SRM+ is a boutique procurement business consulting firm.  We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP).  Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers.  Visit us at www.srm-plus.com.

By Scott Walls

Marketplace content structures are the data elements used represent purchasable content within an organizational marketplace.  This BLOG highlights the common content structures found in most marketplaces.  Where relevant, examples of how marketplace content structures can be governed by marketplace content structure rules is provided (marketplace content structure rules transform marketplace content structures into an intuitive, functioning marketplace).  For more information on marketplace content structure rules, read the BLOG entitled Marketplace Content Structure Rules.

The most common marketplace content structures are as follows:

Items – this content structure represents the goods and services being presented within the marketplace.  The item description is one of the few data points that all participants know and most good searches are based on this variable.  Content structure rules related to scope help consumers understand what items can be found within a marketplace, rules related to presentation help consumers understand how to search through those items and rules related to utilization help consumers understand how to purchase those items once they have been found.

Forms – this content structure allows requesters to request items that can’t be represented within a marketplace by entering free form text into a predetermined set of fields (description, qty, rate, etc.).  When an item’s basic element(s) prevent it from being represented within the marketplace (variable pricing component – lease pricing depending on term, RFQ pricing, or highly configurable product not supported by a supplier’s site/remote catalog), forms are the vehicle for creating requisitions.  Content structure rules related to scope help consumers understand what forms can be found within a marketplace, rules related to presentation help consumers understand how to access the right form and rules related to utilization help consumers understand how to purchase items using a form.

Catalogs – this content structure represents supplier-specific (sometimes even contract-specific) groupings of items.  The scope of catalogs is wholly dependent on the scope of the items within the marketplace.  There are 4 different types of catalogs, each type is examined below: 

• Marketplace Catalogs – these catalogs reside within the marketplace and contain product details and pricing information.  These catalogs cannot be updated without the permission of the procuring organization.
• Supplier Catalogs – these catalogs reside in the supplier’s marketplace and contain product details and pricing information.  However, due to their dynamic nature (either price volatility or configuration required to obtain pricing) price cannot be stored in the organization’s marketplace.  The marketplace holds the link to the supplier’s version of the organization’s catalog.  These catalogs can be updated by the supplier at any time and require some level of pricing auditing in order to ensure compliance.  These items DO NOT show up automatically in a marketplace search, they require a “proxy catalog” to be loaded and maintained within the marketplace. 
• Proxy Catalogs – these are not complete catalogs, they serve more as product “pointers”.  Proxy catalogs contain only product details, no pricing information.  Instead of pricing information, they point to a supplier catalog (they can be set up to make a call to the supplier’s site, but that has not been done at the time of this writing).  When linking to a supplier’s site, they can access the supplier’s content at various levels (store level, item type level, or at the various item…again, anything other than store level had not been set up at the time of this writing).  These catalogs require manual updating from the marketplace providers of content.  The more detailed they are (PC 8126…) the more often they come up in product searches, but the more often they require review and updating from the providers of content.
• Instructional Catalogs – these are not “real” catalogs, they too serve as “pointers”.  However, these pointers point to purchase instructions for items not available within the marketplace.  Most often these would be for items whose purchase does not require a requisition, but they must be represented within the marketplace.  For example, a sourcing specialist negotiates a contract with a rental car provider and the marketplace content structure rules dictate that the marketplace is supposed to provide product, pricing, and purchase instructions for all items negotiated as part of organizational contracts.  An instructional item would created (a fake item linking to detailed purchase instructions for the rental car, including the reservation web site) and loaded into a catalog for the rental car vendor even though a requisition is not used.  Instructional catalogs/items allow marketplaces to expand their scope rules beyond requisitionable content when necessary.

Contracts – this content structure represents a sub-grouping of items/catalogs for a given supplier.  Contracts are supplier-specific.  This can be helpful when attempting to isolate market-baskets (market-baskets allow procuring orgs to continually evaluate the value of content to itself).  Contracts are also very helpful when rolling up spend across sub-procuring-organizations.  Most marketplaces allow contracts can be negotiated at the parent organization or sub-procuring-organization level.  As with catalogs, the scope of catalogs is wholly dependent on the scope of the items within the marketplace.

Suppliers – this content structure represents the highest level in the item hierarchy.  All other content structures (items, catalogs, and contracts) are subordinate to suppliers.  Suppliers represent the actual supplier of the goods and services.  Marketplaces need to have at least one supplier for every item within the marketplace.  The level of data stored for each supplier depends on the extent of use for the marketplace vs other related applications (i.e. is the order transmission information stored within the marketplace or within an SRM/ERP application).

Procuring Organizations – this content structure represents the organization or sub-procuring-organization doing the purchasing.  This could be one, high-level organization or multiple sub-procuring-organizations depending on the business.  In a shared marketplace model, the high level organization negotiates contracts, leveraging spend across sub-organizations, and shares the items negotiated with multiple sub-orgs by deploying a shared marketplace model (multiple procuring organizations linking to the same marketplace). For example, the State of Georgia contracts with many suppliers on behalf of its 123 sub-agencies (corrections, transportation, juvenile justice, education, etc.).  It then uses its shared Team Georgia Marketplace to broadcast all items to its 123 sub-procuring-organizations.

Providers of Content – this content structure represents the marketplace participants responsible for creating the content within the marketplace; most typically the sourcing function (see also, trans-organizational sourcing functions).

Consumers of Content – this content structure represents the marketplace participants responsible for utilizing the content to order goods and services.  They are typically referred to as “requesters”.

* To understand how to use content structures and content structure rules within an overall marketplace strategy, see Marketplace Content Strategy

You’ve certainly read about it in the press: Siemens cancelled SAP maintenance a few months ago. And now, it seems, SAP has been able to fix the situation. Did anything change? Who won?

Let’s look at the few details that are in the public domain:

• SAP now has Global Enterprise Agreement with Siemens
• The term of this agreement is 3 years
• Instead of paying a little over 35 million Euro per year for SAP maintenance, Siemens now pays 18 million (SAP denies that number – but it must be in that ballpark)
• SAP included MaxAttention – a value of at least another .5 million
• SAP agrees to extend maintenance to at least some of the Siemens customizations

I also hear that Siemens was able to get shelfware off maintenance – extremely important these days as many organizations reduce users and find that they have functions and components on the bill that are not used. Typical for such agreements, engine-based pricing is likely to be excluded or fixed at a nominal level for the term of the agreement.

In short, this looks very much like SAP adopting RiminiStreet’s pricing and conditions.  Siemens gets the customer support representatives (hence MaxAttention) and support for customizing (RiminiStreet does that too). The clear winner here is Siemens – congratulations, a wonderful contribution to their bottom line! My old (and first) employer is setting a new standard for successful CIOs – makes me feel proud.

The three year term shows that Siemens is pursuing a new application strategy with shorter review cycles. This reflects the strong desire of Siemens not to be fettered by an application vendor when transiting to new business models. Siemens must up its readiness for change and that requires eliminating obstacles such as lock-in policies of application vendors.

Is Siemens an exception? Not at all – there are plenty of customers having very similar issues. Siemens is just a pioneer, a hero who is now a full year ahead of the pack. I am sure that many large customers are carefully studying the case that may easily have kicked off a change in the software industry as a whole.

Where does that leave RiminiStreet? First, it appears, RiminiStreet will get some business from Siemens allowing for the build up of more SAP expertise. Siemens tested RiminiStreet’s ability for months in parallel to SAP support and in cooperation with Siemens IT-Services (they have a long track record of very good SAP expertise servicing both Siemens and many other SAP-customers) and was satisfied with the results. Siemens knows that competition is essential and, in order to keep the attained advantage, must be sustainable. Three years down the road RiminStreet may get a bigger slice. Who knows.

There have been doubts about RiminiStreet’s ability to serve such large organisations. True, they do not have an SAP track record with large accounts yet. That can change very quickly:

• SAP is laying off staff and has plans to lay off another 6000 in Q1/2010
• Large SAP customers have to downsize on all fronts
• The lack of new implementation projects makes SAP experts available from many SAP partners

These effects should help RiminiStreet sufficiently to get the ressources required – experienced SAP veterans that compare favourably with the young and less experienced technicians in SAP’s Indian and Chinese labs.

Meanwhile, SAP is doing its best to impress the world saying that it services all SAP solutions Siemens uses and that it has, indeed, broadened the relationship with its key customer. Well, that leaves room for interpretation. Siemens has swapped some of its unused licenses for SRM, part of a deployment plan that was developed two years ago – nothing unusual. The SAP press statement does not say whether all users in all installations that belong to Siemens are now under SAP maintenance nor does it cover Siemens entities that do not carry a Siemens name. Careful wording to make sure that Siemens does not appear as a  reference for RiminiStreet – for now.

A noteworthy compliance story has surfaced this past week involving NCAA All-American and potential NFL Lottery Pick wide receiver Dez Bryant.  Oklahoma State declared Bryant ineligible last week for their game against Texas A&M.  He is expected to go through a follow-up interview with the NCAA sometime this week.

Bryant claims he “panicked” and lied to the NCAA about a meeting with former NFL player Deion Sanders at a Texas athletics center.

In his written apology to the NCAA, obtained Tuesday by The Associated Press following an open records request, Bryant said that he is “very, very sorry” and “made a terrible mistake” when he lied to Marcus M. Wilson, the NCAA’s assistant director of agent, gambling and amateurism activities, in July.

“I was scared because I was thinking, why would the NCAA talk to me unless they thought I had done something wrong, even though I did not think I had,” Bryant writes in his letter. “I worried about the interview and was really nervous during the interview.

“I kept thinking about how football has been my dream for years and how football was going to allow the chance to make a living and help my family. My mom, my son, brother and sister all depend on me and I felt that somehow I had let them down.”

Oklahoma State athletic director for compliance Scott Williams formally requested that the NCAA reinstate Bryant and impose a lighter punishment for “unique circumstance.”  The standard punishment for a violation such as Bryant’s is a 50 percent withholding from, which would force Bryant to miss half of the Cowboys games this season.

In his apology, Bryant writes that he denied meeting Sanders at the Texas field house facility.  Bryant stated that he and Sanders, “jogged up and down the field, but did not go through any drills, and he did not work me out.”

Williams is suggesting for the NCAA to classify the meeting as preferential treatment, or “unique circumstances,” which would be catalogued as a secondary violation.  This would allow Bryant to re-join the team immediately.

“I really love OSU and would like to have an opportunity to finish the season with OSU. … I know I should be punished, I deserve it, but I hope that my punishment is not so bad that I do not get to play football again at OSU.”

This event is something many prospective student-athletes should pay attention to.  Compliance issues and amateurism status is something that should not be taken lightly.  The NCAA offers a 2009-10 Guide for the College-Bound Student-Athlete.  This 24-page document is available in PDF form for free download by clicking here.  JumpForward also offers a “PlayBook” that addresses various compliance issues and discusses the “gray areas” of amateurism.  For high school athletes, securing your amateur certification is an extremely important part of the recruitment process.

–Brian Linklater

Managing supplier relationships used to be a zero sum game. Most companies focused on short terms goals where price was the main focus. Bullying suppliers were commonplace in some organizations. Employees took great pride in “facing down suppliers” and relationships were viewed on “how much money we will make”. However, with the increase in outsourcing and volatility in commodities, supplier relationship management (SRM) has moved to the forefront of organizational strategy. Companies are spending increased time on their selection criteria and determining clear best practices to manage partner relationships. However, few companies have mastered supplier management and SRM is in its infancy.

The question of quality

With the increase in outsourcing and the growth in world trade, product quality is increasingly an important factor. Many companies in the pet food, toy and dairy industry are still reeling from recent quality scandals in China and other parts of Asia. These scandals have put increased pressure on companies, as consumers are progressively more concerned about product quality. These quality scandals of late, as well of those in the apparel industry over the past decade, have highlighted the importance of managing relationships and the importance of supplier tracking and auditing. The days where companies could plead “we don’t have control over our suppliers” are gone. Environmental concerns and an increased scrutiny of labour practices also are demanding improved supplier relationships.

Outsourcing to the “unknown”

With outsourcing to Asian countries on the increase, companies need to understand culture issues. Many companies have been burned when outsourcing manufacturing to countries such as India and China. Management practices that worked in one country are not necessarily going to work in another country and companies need to change the way they think and work in other markets. Country values are also different. For example, cutting legal corners is seen as a survival technique and is much more tolerated in some countries. It is important to understand the value system of each country and it is important to assume nothing.

Outsourcing to emerging markets provides companies with unique challenges. Companies must develop contingency plans as delivery delays are normally more frequent. As one executive put it, “getting on time deliveries from our Asian suppliers, is one of our key challenges”. Working in the “unknown” also provides companies with unique legal challenges. Foreign companies trading in China and India have complained in the past about unfair legal practices. Companies must avoid disputes and ensure contracts are clear to all parties involved.  Do not assume all parties will read the fine print and try to avoid legal terms. Always aim to simplify matters for suppliers. Consult lawyers that not only understand local laws but also cultural issues. The interpretation of the law can differ from country to country and cultural issues need to be taken into consideration.

Technology

In recent years, companies have seen technological advances in managing supplier relationships. The day of managing suppliers with spreadsheets are gone, and SRM is increasingly complex. Companies are demanding increased visibility. The need for real time information is on the increase. Companies are investing significant resources in managing suppliers and the use of supplier relationship software is becoming more common place. Supply chain managers are increasingly using the web to collaborate and to communicate with supply chain partners.

Find the right partners

Previously, partner selection only focused on price, with value sometimes taking a backseat. Today, companies are spending increased time and resources to develop and implement a comprehensive supplier qualification process. Companies need to establish a strategic road map and clear selection criteria. For example, the selection criteria may include important components such as strategic vision, capability, capacity and environmental issues. Companies need to evaluate if potential suppliers meet their required standards. Furthermore, supplier selection is not just limited to procurement departments, and companies are increasingly making use of cross functional teams. Employing external agencies to monitor and track supplier relationships is also on the increase.

Building relationships

Companies must always act with the relationship in mind. Companies must have a clear relationship development plan for each partner with clear goals. Building trust is key in any relationship, and trust must be built at all levels of the organization, and not just at senior management level. For example, companies can introduce department induction programs and in some cases even embed suppliers in the organization. The more partners understand each others businesses, the better for all parties involved. With clear communication channels, partners will have the confidence to address problems head on.

Advantages of relationships

One of the key advantages of long term relationships is cost reduction. Companies work together to solve supply chain problems and learn from one another. Better collaboration and communication will lead to increased sales. Improved collaboration can also lead to better demand planning and route scheduling. For example, when Kellogg evaluated Tesco’s inventory levels it realized that most out of the stocks occurred in the middle of the week. Kellogg worked with Tesco and changed its delivering schedule to accommodate the retailer. By changing the delivery scheduled, Kellogg reduced stock outs, increased sales and improved both customer and consumer satisfaction. As the Kellogg example demonstrates, working with suppliers can provide mutual benefits to all parties involved.

In today’s world, companies require suppliers that are results orientated and are demanding increased speed from suppliers. Not all suppliers are equal and all suppliers need to be segmented. Segmentation is critical, as it will determine the importance of the partnership and how much time companies need to spend on building supplier relationships.  All members of the supply chain must have clear accountability and each member of the team must be aware of his or her duties. Companies need to monitor compliance and implement and communicate clear Key Performance Indicators (KPIs). In today’s high speed world, SRM is on the forefront of any successful company.  SRM has changed significantly over the last couple of years, and suppliers are now seen as an extension of the business.

This past summer, the NCAA conducted a study of academic-support services for student-athletes at Division I institutions.  The study found encouraging results for potential collegiate student-athletes.

Almost 92 percent of Division I institutions report that spending on academic support for student-athletes remained steady or increased since 2007, even though more than half of those schools cut overall athletics spending in the wake of the national economic downturn.

The study also showed that more institutions reported coaches becoming more supportive of the academic success of their student-athletes, an effect tied directly to the increase in academic standards brought by enhanced progress-toward-degree requirements and other policies established by the Academic Performance Program.

The study found that most schools experienced between a 1 to 20 percent increase in total spending on academic programs over the last two years, with 12 percent reporting even greater increases. At the same time, overall reductions on athletics spending were identified.

Football Bowl Subdivision members reported spending more on academic-support services than their counterparts in the Football Championship Subdivision and Division I programs without football. The median total academic-support budget reported at the FBS level was $655,000, compared with about $150,000 in other subdivisions. Similarly, more FBS institutions reported greater use of academic resources among their student-athletes than those in other subdivisions.

FBS schools also reported that they were more likely to provide a broader array of academic-support services than those in the other subdivisions. Most schools, however, offer assistance with course selection, degree-progress monitoring, class-attendance checks, study-hall facilities, course-specific tutoring and computer labs for student-athletes.

Many institutions reported requiring the use of academic-support services, such as study hall, for incoming freshmen student-athletes. Though recent NCAA data collected through the APP have indicated that many incoming transfer student-athletes are at risk academically, fewer schools are likely to require transfers to take advantage of the academic-support opportunities available to them.

The NCAA research staff plans to more fully analyze the data in the coming months to examine potential links between the level of academic support for student-athletes and changes in the Academic Progress Rate at individual institutions.

This is exciting news for any prospective student-athlete (PSA).   Basically, increased academic spending means either bigger scholarships or more scholarships for PSA’s .  More importantly, the NCAA highlighted how larger “sports oriented” Division I programs are pushing their athletes to take their studies much more seriously.

–Brian Linklater

Well here it is, finally.What we all have been dreaming of, what the competitors have been noodling about…Site Recovery Manager 4.0.

Why so much hype, why so much talk? Two words, NFS support..now certainly there are plenty of other features and functionality that are worth mentioning (below), but if any one item could be targeted it would be this.

Why? Well I cant speak for any other NAS array other than the Celerra, but SRM and Celerra Replicator (via iSCSI) were as painful as being smacked in the face with a bag of rocks. 2.5 times (FS for iSCSI LUN) capacity of your production iSCSI LUNs were essentially needed to accomplish this replication..this alone made people angry…hey it is what it is..but it wasn’t pretty.

So where do we stand…for now NFS support has been alienated to NetApp and EMC NAS arrays..

• NS‐120, NS‐480, NS‐960, NS350, NS500, NS700, NX4, NS20, NS40, NS80, NSX
• 5.3.36 or later
• NetApp Arrays? Oh who really cares…

Note: you will have to upgrade your SRA to an SRA that supports NFS.

How good does it get? This dramatically decreases the upfront cost to integrate SRM and Celerra Replicator, while allowing full SRM failback, two features that will, together, continue to drive the proverbial stake into the hearts of Mr. Softee and Simon Crosby’s crew..

Ok what else, how about this as noted here..

• Full compatibility with vCenter 4.
• Full support for NFS-based arrays.<—Did I mention NetApp and EMC Only
• Support for shared recovery sites <—very interesting, enter Public Cloud Service Providers
  Enables many-to-one pairings of protected sites with a recovery site. For more information, see the technical note Installing, Configuring, and Using Shared Recovery Site Support, which is available at http://www.vmware.com/support/pubs/srm_pubs.html.
• Resilience in the face of vCenter unavailability during a test recovery.
  Placeholder virtual machines can be quickly repaired after the protected site vCenter becomes available again.
• New repair-mode installation features.
  You can run the SRM installer in repair mode if you need to change configuration parameters such as vCenter credentials, database connection information or credentials, and certificate details.
• Graphical interface to advanced settings.
  Eliminates most requirements to edit the XML configuration file
• Support for DB2 as an SRM database server.
• New licensing options.
• Improved scalability.
  A single protection group can now include up to 1000 virtual machines.
• Full Compatibility With DPM (Distributed Power Management)
  SRM recovery plans can now power-on or power-off a host that is in standby mode.
• New Option to dr-ip-customizer Utility
  The dr-ip-customizer utility now logs less verbose diagnostic output by default. To force dr-ip-customizer to log the same level of diagnostic output that it produced in earlier releases, use the -verbose option.
• Change in Certificate Validation
  When you select certificate authentication, the SRM installation validates the certificate you supply before continuing. Certificates signed with an MD5 key are no longer allowed.
• Support for Protecting Fault-Tolerant Virtual Machines.
  SRM can now protect virtual machines that have been configured for fault-tolerant operation. When recovered, these virtual machines lose their fault tolerance, and must be manually reconfigured after recovery to restore fault tolerance.
• Improved context-sensitive Help.
• PDF documents available on release media
  Current versions of the PDF documents for this release are available in the docs folder at the root of the SRM 4.0 CD. Updated versions of these documents may be available at http://www.vmware.com/support/pubs/srm_pubs.html.

Nice to see the boys @Uptime sparking it up again, it seems they have been busy…read up will yah?

http://blogs.vmware.com/uptime/2009/10/srm-40-get-it-now.html

http://blogs.vmware.com/uptime/2009/10/a-quick-tour-of-srm-40.html

http://blogs.vmware.com/uptime/2009/10/srm-40-is-here-the-wait-for-vsphere-and-nfs-support-is-over.html

Other useful links here…

http://www.vmware.com/download/srm/

http://www.vmware.com/products/srm/resource.html

http://www.vmware.com/support/pubs/srm_pubs.html

Oh, the disbelief at being dissed - and in the first round! The patronizing indignation towards Madrid and Tokyo.

Whether you were rooting for a 2016 Chicago Olympics or not, this is a funny-in-a-sad-way auto-commentary on the state-run media. Unguarded moments tend to reveal character.

Question of the day:  Would conservatives feel what they’re feeling now if it had been Bush, and not Obama, as the President? How much of it is animosity towards Obama and Chicago? How much of it is the gall of the man to travel to Copenhagen to make the pitch?

There has recently been a lot of press heralding VMware’s limited support for vMotion across Data Centers, or “long-distance vMotion” as I have seen it called. The details of the solution can be found on Cisco’s website here. While I think that is just great, I’d like to remind people that Microsoft Hyper-V has this same functionality today and has a lot less requirements and restrictions than VMware’s long-distance vMotion.

Where VMware has VMwareHA, vMotion and Site Recovery Manager (SRM) to take care of virtual machine availability, Microsoft provides the same functionality with Windows Server Failover Clustering and in fact in some cases goes beyond what VMware can provide in terms of virtual machine availability as I described in a previous post.

What I’d like to focus on today is Microsoft’s competitive offering to “long-distance vMotion”. To achieve the same functionality in Hyper-V, you simply deploy a multi-site Hyper-V cluster using Windows Server Failover Clustering and your favorite host or storage based replication solution that is certified to work in a Windows Server 2008 multi-site cluster. By doing this, you can use your existing network infrastructure and your existing storage infrastructure to do Live Migrations across data centers. As far as requirements, they really are the same as any multi-site cluster, except I would recommend that you span your subnets to avoid client reconnection issues that occur when moving a virtual machine to a new subnet, as the clients could cache to old IP address until the TTL expires.

A demonstration video of Live Migration across data centers using Windows Server 2008 R2 Hyper-V and SteelEye DataKeeper Cluster Edition can be seen here.

Recently some very clever people at VMware and EMC showed off some scripts at VMworld that allows you to combine SRM and VMware View. I went to the session at VMworld and it was impressive but light on details. The good news is, the scripts are now posted, and you can grab them from my Sky Drive.

Some shortcomings of the script, however, as I see it, is that it’s really impossible to do a VMware View “test” using these. Because View has to talk to VirtualCenter, AD, DNS, and between connection brokers, doing a “test”  is always missing some components. In the VMworld presentation, they used some EMC plugins to do easy failback after their “test”, but the test itself is very disruptive to anything in production.

Big thanks to Tommy Walker for providing these scripts, as well as to the very clever authors (whose names are in the script source).