Take Some Strategy Out of I.T.

on Monday, August 31, 2009

According to a Harvard Business Review (subscription required) article “IT Doesn’t Matter”, the information technology industry has matured, and executives need to change the way they view IT purchase and management. In the article Nicholas Carr argues that information technology has become standardized and commoditized to the point that managers need to focus more on the risks associated with IT than they do on strategic advantages developments in information technologies can provide.

Simply put, the article urges managers to “make IT management and purchase boring”. Carr compares the life cycle of information technology to the lifecycles of other infrastructural technologies such as railroads and the telegraph. He points out that, in these industries, the window for opportunity to use emerging technologies to develop a competitive advantage is very brief. Carr argues that once the initial development or “build out phase” occurs, infrastructural technologies become more of a tactical commodity than a strategic opportunity.

For instance, many companies who blazed the trail during the build out phase of information technologies were able to benefit from their early adoption and foresight. They may have taken some risks, but their risks had the potential to deliver substantial rewards. Carr cites the following five points as indicators that the IT build out phase is over.

  1. The power of IT has surpassed the needs of businesses
  2. Prices have dropped to levels where virtually anyone can afford
  3. Capacity for distribution (the internet) has caught up with demand
  4. IT vendors are repositioning themselves to be commodity suppliers. (Microsoft’s shift toward yearly subscriptions and updates and Dell’s shift toward sever management are good examples.)
  5. The investment “bubble” has already burst.


At this point in the lifecycle of IT, Carr argues that there is no need to take risks when managing IT. He states, “The key to success, for the majority of companies, is no longer to seek advantage aggressively but to manage costs and risks meticulously.” Carr even cites overpayment as one of the biggest risks associated with IT expenditures. In order to effectively manage IT purchases in the future, Carr makes three suggestions.

The first is to Spend Less. The higher the capital outlay on a given piece of technology, the lower the chance of recouping your ROI will be.

The second is to Follow, Not Lead. While this advice may seem counter-intuitive, being on the cutting edge becomes less beneficial as information technologies become more commoditized. When it comes to mature infrastructural technologies, blazing the trail increases your chances of purchasing flawed technology or technology that is “doomed to rapid obsolescence” while creating little strategic upside.

The third and final suggestion Carr makes is to Focus on vulnerabilities, not opportunities. He uses electricity as an example. While there is little strategic opportunity when it comes to the use and application of electricity, a company would crumble if they lost electrical power. Carr states that IT managers and purchasers should shift their focus away from capturing emerging technologies and toward safeguarding their systems against “technical glitches obsolescence, service outages, unreliable vendors or partners, security breaches, and even terrorism.”
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You get what you pay for?

on Friday, August 28, 2009

Of course it was all Chicken McNuggets back then . . . .

I still clearly see that day when my co-worker caught an unconscious cliché spiller in the act. “You get what you pay for”; that’s what the seasoned-pro said to us. It may be the most commonly used line to defend a price position, in the history of time.

So my wise co-worker responded with this little quiz for the seasoned pro;

Q: Have you ever had chicken McNuggets?

A: Yes (Everyone had, of course.)

Q: How much did you pay?

A: $2.49 (Back then I think they were $2.49 for a six pack.)

Q: But they go on sale for 99 cents every so often right?

A: Yes

Q: Do you get 2.4 nuggets instead of 6 or 60% smaller nuggets for your .99 cents?

A: No . . . . .

So you don’t actually “get what you pay for”, you pay for what you get; he said. And the embarrassed, seasoned-pro porky pigged his way through the discussion . . . .

I thought of that yesterday when my quest for laminated pouches took a surreal turn. New to the exciting field of laminated report samples and such, on Tuesday I took to the local nationally recognized Office Supply store to purchase laminated pouches. The respected National Brand sold for $22.99 for a pack of 25, glossy, 9 x 11.5 pouches, about 92 cents a pouch. The Office Supply Store private label sold for 27.99 per pack of 50 glossy 9 x 11.5 pouches, about .56 cents per pouch. Naturally, being a seasoned-pro, I chose the store label brand for a huge 39% savings.

Yesterday, out purchasing items at BJ’s wholesale, I was knocked for a loop, I tell ya. As I strode blissfully past the office supplies I saw a display for laminating pouches, 9 x 11.5 from the acknowledged premium manufacturer for $6.99. Surely, it must have been a pack of 5 or maybe 10 pouches; it was BJ’s after all. But no! To my stunned amazement, it was a pack of 50! That’s right, 50 pouches, same size, same gloss, from the leading manufacturer, for .14 cents per pouch. That’s an 84% savings.

So these pouches had to be defective, right? Or maybe the finish was crummy, or maybe . . . . .

Nope; every bit as good, probably better when I tested them out.

Kinda makes one wonder, just how much even seasoned-pros like ourselves we can negotiate, or save even by accident if we keep our eyes, ears and minds open.

Maybe we don’t get what we pay for . . . .maybe we just pay for what we get.

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Dishwashers Aren’t as Fun to Ride In

on Wednesday, August 26, 2009

But they too are partaking in the “cash for clunkers” type of rebate. Starting this fall, a $300 million federal program will approve $50 to $200 rebates for high-efficiency household appliances according to Monday’s BusinessWeek article. You won’t have to trade in your old appliances though. This will hopefully help the home appliance industry which took an unprecedented sales dive beginning with the down turned housing market in 2006 and continuing since.

Buying a new dishwasher rather than fixing it for the umpteenth time can now help out employees of appliance makers keep their jobs and stimulate the economy. Of course as with most of my previous blog themes, it will also help you be greener with energy efficiency!

Aside from the rebate program details that will vary by state you can take advantage of the lower prices most home retailers like Home Depot and Lowe’s are offering too. If you don’t want to wait until the fall to see what the program details in your state, check in to other rebate programs for energy efficient items (i.e. windows) in your state today that may already exist.
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Its Not All Bad News

on Tuesday, August 25, 2009

UBS is getting ready to give up account details on up to 4,450 Swiss bank accounts held by Americans. Who will benefit. The taxpayer for one as the unpaid taxes on past income is collected. Who else - ex wives!

Since there is no statute of limitations on divorce cases, many lawyers and ex wives will be looking for a windfall.

Just think about it - you have all this stress from the tax man and then you have to deal with the fuming ex. There may be other legal implications as well. Some people have all the fun and all the luck.

If you are not one of the 4,450 lucky ones, sit back and enjoy what's left of summer.
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Plan to fail or fail to plan?

on Monday, August 24, 2009

To borrow from the old maxim, businesses don’t plan to fail, they fail to plan. That’s why, when I hear that a team or team mate is “so busy they have no time to plan”, I get this twisting sensation in my medulla oblongata. It renders me temporarily apoplectic until someone interrupts with common sense and I fall back into normal brain function.

Still, however nonsensical the “too busy to plan” argument may be, the weight of a workload can often send a worker, a team or an entire organization scrambling to throw labor at that workload. It’s happened before, and this piece won’t ensure against it happening again.

But a wise advisor once told me, when you’re busy, that’s the time to take on more work. When you’re selling, that’s the time to sell harder, and when you’re planning that’s the time to plan better. It seemed overly simplistic way back when, but in retrospect, he communicated a great deal more than a maxim. It was mindset.

In the simplest terms, whatever steps lead to success do not become less necessary because one’s workload increases. In fact, the components necessary for success become even more critical. They must be more fully implemented and further refined to ensure against disaster.

To take the “I’m too busy to plan” argument to its illogical extension; imagine a homebuilder telling a developer that because the complex is now 100 homes large instead of a single home, that they can’t deliver floor plans, project plans, etc for the development. Instead, they’re just going to start working based on what they know. But the great news is, they have lots of experience so it’ll be ok. They promise. How far do you think that discussion would carry?

So the moral to this short story is that some old maxims hold true. Businesses never plan to fail, but the failure to plan is every bit as effective as planning to fail.
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Have you hugged your sniper today?

on Friday, August 21, 2009

“On top of all that, we hired a new director of purchasing, a real heavy hitter and we’re sewn together at the hip . . . . he’d need to be involved in anything we do.”

Yes; people actually still use tired cliché after tired cliché in business discussion. That alone is gut-wrenching enough. But when you mix it into the prototypical operations’ guy “stay away” speech; it’s downright viral. Not internet viral, intestinal viral.

I feel like putting it on a poster with the caption “How many times has this happened to you?”

Sadly, if you work in procurement consulting, the answer is “too many times to count”. As digestively painful as this juncture may be, it’s a rare time of opportunity in the sales/consulting process. One has the choice in that instant to simply nod approvingly and stroke the ego of the chest beater, or to see the moment as a critical event and appropriately introduce critical mass.

Here’s what stroking the ego gets you. The chance to stroke more ego. It won’t get you work, and even if it does get you work, the work will never come to fruition. Because a chest beater, left to beat his or her chest is only interested in using you to validate their work.

Those of us who want to produce results take the “road less traveled”. (Yes, I use tired clichés too, but never in tandem.) Because if you want to break through with the guy who “has it all under control”, you have to set the table to challenge that notion immediately. Statements like “real heavy hitter” are “stay-away” language, just like the speech about all they’ve done and all they’re doing already to reduce costs.

So when I heard the standard Ops guy rap this time, I took a shot. I said, “Hold-on, much of what you’re saying sounds like “stay-away” talk. Are you feeling that you don’t need us? Because if this is just a polite and detailed dismissal, why not just be direct about it?”

It was a risk. I have to admit I was a little nervous about introducing breakthrough language in the first ten minutes of a sit-down. But 99% of the time, a hero is just a regular guy who’s too cold, too tired, too hungry, or in my case too fed up with the standard BS to give a damn about the risk. Too often, we’re so afraid of losing that we play not to lose, rather than to win. Here’s what we know about playing not to lose. One usually loses.

So play to win. Engage the stay-away guy. Listen to his rap until your stomach starts to twist and then put up the stop sign, and end the madness. It’s the first step in turning a BS event into a critical event. It’s the first step in having a meaningful, profitable engagement instead of being some chucklehead’s patsy.

Yeah, it’s a bold step. But no one ever falls out of bed and makes a million dollars. Now there’s a cliché for you.

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What Happens When The Stimulus Ends?

on Thursday, August 20, 2009

Over the last year, the government has thrown trillions at the economy, most recently helping people get rid of their clunkers.

Some economists see hope in the recent Philadelphia Federal Reserve business activity index when it rose to 4.2 in August versus minus 7.5 in July. The rise exceeded even the most optimistic forecasts breaking a 10-month contraction. Helping the index was a jump in new orders.

I look at this and think "is this all we get for spending trillions of taxpayer dollars?" I tend to agree with Alan Ruskin, chief international strategist at RBS Securities in Greenwich, Connecticut who in a recent CNBC article stated "The combination of the inventory cycle, and the impact of special factors like the cash for clunkers (program), will probably see manufacturing sector data overstate the general improvement in the economy."

Even with all this government spending, we are still losing jobs as evidenced by the 576,000 initial claims for state unemployment insurance benefits reported today. Housing continues to be in a slump and according to the Mortgage Bankers association, late payments on U.S. mortgages increased to a record in the second quarter, with almost one in eight homeowners delinquent or in the foreclosure process.

Given that demographics are against us (aging baby boomers) and the government printing presses are running full out, I can't see future growth engine that will give the economy the boost that it needs.

What do you see and think?
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Master Negotiator - New Look, New Deals

on

MasterNegotiator.com, the site for buyers to find pre-negotiated discounts and contracts with leading national suppliers, has just launched a new version of its popular website. The new site offers improved navigation to help buyers find deals in the categories that their company needs help the most in and has simplified the checkout process.

Additionally, Master Negotiator has added three new deals to the site:
  • The first deal is with the leading national supplier of pest control services. With this deal, companies can receive 5 to 15% off preferred pest control pricing with Terminix®. see the deal
  • Next up is a deal with a leading technology services provider that offers 10% discounts on Cabling Installation and Network Design Services. The supplier in this category will provide 10% off qualified competitor quotes, and has the added benefit of being a minority supplier, to help fulfill minority spend obligations. see the deal
  • Third, Master Negotiator has just released a deal for up to 20% off new and 80% off remanufactured Digital Copiers and Office Equipment from a leading national supplier of Xerox and Toshiba equipment. see the deal

Master Negotiator provides a free, quick and easy way for your business to gain immediate access to preferred pricing for commonly purchased items and services. Simply go to http://www.masternegotiator.com/ and start browsing for your deals to help your business start saving money fast. Master Negotiator does not charge any fees for its service to buyers.

On a related note, Source One Management Services, LLC and ServicePower just formally announced the launch of the ServicePower ServiceStore. This spend management system, similar to Master Negotiator, was developed exclusively to help service-industry professionals increase their profitability by obtaining lower pricing and reducing the administrative time required to source common items and services. If your trade group would like assistance in developing its own industry specific deals for its affiliates, contact Source One.

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Supplier Account Management – When Cross-Functional Becomes Dysfunctional

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A good portion of my day is spent qualifying alternate suppliers, and while price is always a factor, ensuring a supplier can provide the right combination of service, product quality, and price, is the best way to make sure the new relationship is a successful one.

One aspect of a service offering I always look in a new supplier is a cross-functional account management team. A single sales contact allows customers to utilize the sales channels to act as an advocate for the customer within their organization, but that advocacy only goes so far.

Dr. Robert Handfield of North Carolina State Univerisity has done extensive research in this area, and a colleague of mine had the opportunity to hear him speak. Dr. Handfield illustrates the differences between a standard customer/supplier relationship and a cross-functional relationship this way:

Standard Customer/Supplier Relationship Model

Cross-Functional Customer/Supplier Relationship Model

Particularly in direct materials and services, it’s important to know that you have a point of contact exclusive of the sales channel, as sometimes questions come up that make more sense to direct to operations, marketing, or finance within the supplier organization.

And, as a general rule, it’s always best to let the engineers talk amongst themselves.

That being said, I recently had an experience where the introduction of a cross-functional team during the sales cycle actually helped a supplier lose business. Without going into too much detail, at the end of an RFP process one supplier was the clear winner on service and another was the clear winner on price. The last factor to check, quality, would require a month long testing process with each supplier. Before we committed to that process, we asked the service leader to try to close the gap on price. If they could come close enough, multi-supplier testing would likely not be required.

The sales team we were working with was very motivated by the aspect of being the sole testing candidate, and went back to the account management team to discuss pricing options. What should have taken a day or two at most ended up taking nearly two weeks. In the end, sales, finance, and operations could not come to an agreement on the provisions behind additional cost concessions, and essentially passed at offering any additional cost reduction.

In this case, the supplier went from a 90% chance of getting awarded the business (pending final testing), to a 50% chance at best – and also extended the timeframe for placement of a first order by no less than 1.5 months. In addition, one of the aspects of the supplier’s service offering that gave them a clear service level advantage – the cross-functional account management team – now became a disadvantage to the customer and lowered their total score on the RFP evaluation.

So what really went on here? My father-in-law likes to use the saying “too many cooks in the kitchen”, and it goes without saying that was the issue we encountered. Many times I have seen cross-functional account management teams produce tremendous results, but only when they have a clear decision maker. What’s missing in the model for this particular supplier is leadership and coordination.

Without a decision maker setting the agenda and keeping consensus, conflicting opinions can create timing delays and lead to little or no real response from the supplier in terms of additional incentives. By essentially having too many hands in the pot, a clear asset for the supplier has now become a liability. An account that was almost a sealed deal could potentially walk away from the table.
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House Says Yea to the FDA

on Wednesday, August 19, 2009

About a month and a half ago, I provided some food for thought in which I discussed the U.S. House of Representatives Energy and Commerce Committee’s legislation for implementing a more regulated food safety system. At the end of July, the House passed The Food Safety Enhancement Act of 2009 with a vote of 283 to 142. The bill was declined its first time around, in which a two-thirds majority was needed for its passage. A day later, a second vote took place and the bill was accepted by a required simple majority.

The individuals who opposed the bill were concerned with some of the burdens it would place on small farmers and food production facilities. Before the second vote was taken, changes were made to the bill that would not require farmers to pay the $500 annual registration fee. The FDA will also have limited access to farm records. Another modification of the bill was made so that the FDA will only set production standards for those foods that are at a high risk of being contaminated, such as vegetables. (For more details, check out The New York Times)

The legislation would also require imported foods to meet the same standards as domestic foods. The FDA’s greatest responsibility established through this legislation is to prevent the outbreak of food-borne illnesses. It is very difficult to determine the source of contamination and trace a contaminated food’s path through the supply chain. The Washington Post says that the responsibility of establishing a method or technology tool that the FDA can use to trace food will be handed to the secretary of Health and Human Services.

An issue that may arise further down the road is related to the financing of this bill. About forty percent of the costs associated with the FDA’s new responsibilities will be covered by the annual registration fees paid by food production facilities. In five years, the annual fees will produce about $1.4 billion. This is not nearly enough to cover all the FDA's necessary functions.

It is now the Senate’s turn to develop a piece of legislation, which is expected to happen sometime in the fall. In the meantime, the FDA should look into how they will cover the other sixty percent of the costs it will incur with its new potential responsibilities. Facilities should also begin to implement a risk management process if they have not already done so. Identifying potential risks is the first step, and then controls should be established, monitored, and continuously tested to ensure their effectiveness.
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California's got a new IT sourcing process

on Thursday, August 13, 2009

According to CivSource, the Governator recently signed a new budget that included several reforms for California's Information Technology procurement process. I will not rewrite the entire article here, because it is definitely worth the read, but in summary they point out that the existing procurement process is so cumbersome that it is not uncommon for a RFP process to last over 400 days. The reform hopes that "RFP boot camps" will help the sourcing process be reduced to a 10-24 month period, which is still terrible, but at least a start.

The article explains that the "sprawling and extremely detailed RFPs made it hard on both sides of the procurement process". As most of you know, this is not uncommon in government procurement. Even "simple" contracts for non-IT contracts can go on for months (or years) on end. I recently reviewed (and declined to respond) to a 72 page federal RFP for sourcing services. Aside from the actual human resource costs (on both buyer and supplier side of the table), these overly complicated RFPs present a lost opportunity in savings and efficiency gains in the sheer amount of time that is wasted in the selection and qualification process that could have been used in the implementation and sustainment process.

It would be nice if California circles back around again in a couple of years after this legislation is approved and provides some statistics showing that it actually had a positive impact. Maybe the federal government can learn something from the proposed "RFP boot camps".

Though doubtful, I hope that this means Coupa's recent announcement of a 6-month trial for governments might have gained the tiniest chance now of gaining some interest from the sector.
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Price Chopper Makes a Nice Move

on Tuesday, August 11, 2009

In a recent article from Forbes, the author offers options trading advice for a few companies in the grocery store industry. As she points out, demand for basic goods has risen approximately 0.6% to 2.6% this April from a year ago, while total food sales have declined by 3.1%. This means that many recession conscious households have shifted disposable income from eating out to more practical food choices that can be found in grocery stores.

While it would seem that all grocery store and wholesale food chains should be experiencing an uptick in performance from this recessional boon, this is not the case. The article compares the technical performance of floundering companies like Kroger and Costco (which, intuitively, should be doing well) with the strong performance of Whole Foods (whose success as a high-end chain during a recession seems counter-intuitive). So, the question becomes, “If it’s not all economics, what other performance drivers are affecting companies in the grocery store industry?”

In some cases, a sour balance sheet or poor financial management could be the cause of poor performance. In others, the lack of a completely integrated marketing and communications program could be costing big in revenues. And for others still, the cause for poor technical performance under favorable economic conditions is the result of short-sighted, reactive management of business functions such as…you guessed it…purchasing.

While the purchase of items for resale is clearly a strategic keystone for grocery stores and wholesale food chains, many managers may forget the impact that the sourcing of non-resale goods and services can have on the bottom line. In a weak economy, good non-resale purchasing managers can attack soft markets to drive enormous cost savings that can mean the difference between red and black ink at the end of the day.

With this in mind, I was interested to see that Price Chopper has recently transitioned/promoted Rick Mausert from Manager of Continuous Improvement to Director of Non-Resale Purchasing. It seems that Price Chopper’s management team has realized the enormous opportunity to reduce spend in the non-resale area, and has made a very wise choice in resource allocation. With a background in continuous improvement, Mausert should have the proactive mindset, strategic focus, and high levels of patience that are necessary to revamp (or even overhaul) a company’s purchasing system.
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WWGD?

on Friday, August 7, 2009

As the vox populi said, in no uncertain terms, last November; it’s time for change. And change we got. The finance and investment industry teetered on the brink of collapse for months. The bloated, antiquated mindset of the American auto industry became affordable no more. Wall street, left unchecked for almost a decade, was returned to (albeit mild) supervision. Those are dramatic changes, for sure. Still there is so much more to do.

American business still stumbles and fumbles, making the same excuses (no time, too much on our plate, system conversion, etc.) for being afraid to make decisions. Still succeeding in spite of itself.

But there’s hope, because for those of us willing to go out on the proverbial limb and distinguish ourselves, the potential is more unlimited than ever (he said with purposeful irony). But the approach required is more heroic than most can stomach. We gotta’ go Commando; no, not that kind of Commando; GI Joe style Commando.

So when the wheels stop turning, and things are drifting away, we need to remember this acronym:

WWGD?

What would GI Joe do?

Now it’s impossible to know exactly what Joe would do when he goes three e-mails and two phone calls without a response, but I’ll bet we all know what he wouldn’t do. He wouldn’t keep sending the same wishy –washy e-mails and making the same calls to the same person. Now would he? No! First of all; it’s unlikely Joe would let two contacts pass without changing the energy and demanding a response. So why are we any different? Why do we keep taking the same wishy-washy actions, expecting different results?

It’s not because we’re bad people. It’s not because we don’t want to do the right thing. But one possibility is that we’ve become worktrons, sleepwalking through our daily tasks simply throwing the prescribed action at the designated task.

So we have to wake up. We have to stop before we e-mail again, and ask ourselves; what would GI Joe do?

So while we may not go storming through plate glass windows (although that’s a dream of mine) or open fire on a computer or two, the metaphor works. Because Joe can’t afford to wait for results, and neither can we.

So all we have to do when we hit a roadblock, is remember these 4 letters. WWGD? Um, no. We have to do something too.

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Supplier Total Cost of Ownership

on Tuesday, August 4, 2009

So you’re a supplier who’s been approached by a PSP or client directly and have won the bidding process. You’ve hooked the client based on your pricing and complete proposal as a supplier all around. Now you need to follow through.

Recently I’ve heard some companies say they are currently with one supplier but they are not happy with what seems to be pretty much everything but their price (and some the actual price too!). This may have been after looking around for the best price, what supplier coverage is available in their area, etc. One company I spoke with mentioned poor packaging that was often received damaged, incorrect items shipped and lag-time on receiving credits. Even if you as the supplier had the most reasonable pricing and well-rounded proposal, the proof is in the pudding. You should take a second go at your total cost of ownership.

If the company finds similar pricing and tries out another supplier with a similar proposal without any set backs they may take their business elsewhere. The original supplier needs to evaluate not only how their pricing stacks up but to be on top of customer service, ordering and finance operations among other aspects. This will show the customer it is not just about price and therefore build a stronger, longer term relationship with the company. This way they hopefully don’t decide to test other waters every time something shiny catches their eye.
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Been There, Done That, Got it for Free

on Monday, August 3, 2009

A few weeks ago I was speaking to a salesperson for one of the major eSourcing toolset providers (disclaimer: NOT Ketera), and I asked them if they ever heard of WhyAbe.com.

The response I received was somewhat surprising.

“Everybody has heard of WhyAbe”, the sales person said.

“Every time I go into a new customer, the first question I get is why should I pay for it when I can get it for free.”

The conversation could not have been timelier given the recent posts on Spend Matters regarding Ketera’s future, where the company “has truly gone out on a limb with a new philosophy and strategy”.

So what’s new at Ketera? You can check out Spend Matters for the details (Part I, Part II), but to summarize, Ketera is combining on-demand sourcing tools with a supplier directory network and online storefronts.

The question I have is what’s new about this?

Or I guess, the more adept question is what drove Ketera to make these changes – was it truly innovation and a broad understanding of the future needs/wants of the buyer and supplier community, or was it more of a reaction to shifts that happened a long time ago?

Which takes me back to my original point. The only thing I can see Ketera doing differently is charging (buyers and suppliers) for this on-demand resource. The rest already exists.

ThomasNet.com has had ThomasNet RFP Manager available to buyers for over a year now. The toolset doesn’t have all the P2P bells and whistles that the major players offer, but it does offer one of the most extensive supplier directories ever created, as well as sourcing tools and contract management. The site also has a ton of other resources that buyers can use, and the Thomas name has sell-ability to most the supplier community. The reason Thomas gets so much traffic (as well as name recognition) is that the information and tools it provides are on-demand and free to the end user.

ThomasNet RFP Manager is powered by WhyAbe. WhyAbe on its own doesn’t have half the name recognition of Thomas, and therefore its supplier directory is not nearly as extensive, but it’s growing every day. Besides the basic sourcing toolset, WhyAbe also offers contract management for buyers, and storefront capabilities for suppliers, all for free.

Admittedly, when Jason Busch was getting his first Tradex briefing back in 1998, I was in college learning how the Internet would change the way business was done, making B2B commerce faster, more efficient, and cheaper. It was also supposed to give us better information. What we’ve learned since then is that web-based models that provide information only work when they are free (unless that information is not readily available elsewhere). The sites and portals that got the Internet right (Google, Facebook, etc) understand that end users don’t want to pay for content.

What Ketera doesn’t understand is that buyers see supplier directories and pricing data as information, not to be paid for but to be used as an aid when deciding how much to pay. Storefront technology and all the other P2P enhancements may make the transaction process more efficient, but in a sense its apples and oranges. Very few companies are going to build their entire business process on top of an on-demand tool from a company that has a tendency to shift strategies as the wind blows.

The new pay as you go model Ketera “developed” also has a supplier-side revenue stream which means yes, Ketera is now getting paid from both sides. How long will suppliers continue to pay when they find out buyers are using their information to benchmark pricing and negotiate down costs? Probably not too long. And how long will buyers pay for a system where the only suppliers in the directory are the ones that pay to be there? It’s tough to justify buying biased data when there are so many unbiased sources available.

Sure the new Ketera platform will be less expensive than the old model, but it’s still not free, and that’s where the concept will have difficulty succeeding.
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