“That said and in line with the above referenced October 30th, 2008 Procurement Insights post, Evans stressed the importance for government buyers to “put out has much information as possible to remove any barriers or perceived barriers for suppliers.”
While Evans stressed the importance of reaching out and engaging as many suppliers as possible, especially with large IT acquisitions, as it is virtually impossible for a buyer to “know what all the technologies are in terms of what is out there (in the market), the need for greater clarity in terms of articulating what service the government wants to provide and how it is different from what is currently in place or is known is crucial.
This according to the former US Federal Government CIO, provides vendors with the ability to clearly state and demonstrate how their solution is going to get the job done.
The clarity to which Evans referred also extends to providing a meticulous outline as to how vendor solutions and capabilities are going to be evaluated by the government, as it can reduce the potential for challenges or protests of contract awards down the road.”
The above excerpt is from a May 2010 post from the Procurement Insights Blog in which the former CIO for the U.S. Federal Government Karen Evans, stressed the importance of clarity in a successful RFP acquisition process.
Now one might think that this isn’t exactly breaking news or that we are sharing what had until this point in time been an unknown secret of successful contracting. In reality, this is such an obvious observation that it would seem to be somewhat redundant to even mention it at all.
However, if it is such an obvious statement, then why are organizations in both the private and public sectors struggling with declining RFP response and eroding supply bases?
In the December 4th, 2009 post from the same Procurement Insights Blog titled “The Paucity of suppliers bidding on City of Ottawa contracts is a symptom of a much larger problem” city officials were lamenting the fact that on average they only receive a handful of responses to their bid requests despite a significant investment in SAP as well as posting RFPs through the ubiquitous government-wide MERX site.
So in the spirit of the old Johnny Rivers hit, where have all the suppliers gone and, why did they leave? Of even greater importance, how do you bring them back?
In a recent roundtable discussion in which I was joined by industry experts to talk about transparency in the public sector procurement process, there were many reasons presented for the decline in supplier bid response.
From one-sided belt with suspenders contract terms and conditions that unduly place the lions share of risk on the shoulders of the supplier, to policies that can turn a simple acquisition into a Magna Carta event, the tendering process can in and of itself present a daunting obstacle to transacting business.
In other words buying organizations, for the most part unintentionally, make it difficult if not outright impossible for a supplier to do business with them. What is ironic however is that the very thing that is supposedly designed to attract suppliers, is usually at the heart of the exodus problem. I am talking about technology. And this is a problem that is not confined to the supplier side of the equation, but also extends to include the buyers themselves.
According to a November 2009 article by Leon Smith titled “Chances and Challenges for Buyers” despite the huge investments made in procurement technologies during the past decade, “usage of these systems remains markedly poor.”
Based on his research, Smith found that only “14% of the companies surveyed expressed confidence that 60% of spend was being channeled through eProcurement,” which is the typical benchmark for applications of this nature. What is even more telling is that “more than 60% of those who responded to the survey placed eProcurement usage at less than 20%.” Less than 20%!
This is one of the reasons why I have always viewed the McDonald’s-type “billions and billions served” tag line that has been adopted by some vendors who trumpet that they process more than x number of dollars in spend, as being the quintessential red herring.
In fact, and coupled with the disclosure 0f these negligible adoption rates, it may not be all that unreasonable to surmise that commensurate with the introduction (and forced compliance) of an automated system, there is an accelerated rate of decline in terms of supplier participation.
So if technology is more a part of the problem than it is the solution, then what is the answer?
Evans, who oversaw more than $70 billion U.S. in IT acquisitions by the Federal Government during her tenure as CIO, expressed the firm belief that “products” (re technology), does “not replace skill sets.”
A sentiment that is obviously shared by the CPOs who responded to the Smith survey when they indicated that “raised expectations on procurement to deliver sustainable bottom-line savings,” emphasizes the fact that there is an “acute” need to “nurture top talent.”
Some 65% of these respondents rated “capability development and talent management as a key objective area for the coming year,” which includes “the right blend of category, supplier and market expertise with the usual contracts and pricing knowledge.”
Could it be that the industry’s enamored view of procurement automation has caused both vendors and their customers to overlook an immutable truth . . . people buy from people whom they know, like and trust?
Is it a possibility that in the misguided attempt at maximizing throughput through the introduction of automated eProcurement systems organizations have somehow ignored the importance of practical expertise and industry knowledge?
At the end of the day, and this is where I believe that both Evans’ and Smith’s CPOs references to skill set requirements should also include software vendor personnel – especially those whose origins are in the ERP world – people transact business through relationships of understanding versus automated bid notifications. Specifically, organizations that have become enamored with what the technology is purportedly capable of doing re the famous features/functions/benefits list, ultimately lose sight of what really counts which is the ability to share expertise and experience.
It is these latter two “people-centric” skill sets that cannot be replicated or scaled as a turnkey system. Perhaps this is the key contributing factor to the low adoption rates about which Smith wrote?
If this is in deed the case, which I am inclined to think it is, then a change in the way that vendors and their clients view technology is in order.
Included in this renewed state of perceptive reasoning is the need for vendors to alter their approach in terms of their sales and marketing efforts, placing a greater emphasis on leveraging important indigenous skill sets versus what I call automation abdication. In short, execution and ultimately the scalability of any procurement strategy is driven by a particular vendor’s unique understanding of the real-world operational challenges faced by their prospective clients outside of their technology’s functional capabilities.
This means that the viability of a software solution should not be predominantly based on an analysis of technical functionality, but instead on the vendor’s industry expertise associated with properly assessing risks, structuring contracts and managing supplier relationships.
I am certainly not alone in this thinking, as Evans also talked about vendors having to “change their business models” and begin focusing on the critical areas of “quality of service and reliability of data.”
Unfortunately, you very rarely if ever read about the operational skill sets of the people behind a software company, and how they can address areas such as effective policy development and calculating shared risk.
Front and center on Ariba’s main landing page for example is the tag line “Better Commerce for Everyone – Introducing the Ariba Commerce Cloud,” as well as other technologically oriented links. If, as Smith’s article claims, only 14% of all companies process 60% of their spend through their eProcurement system, how important is technology or computing in the clouds?
After all virtualized or “cloud computing” architecture Evans reasoned, is really just “optimizing the use of infrastructure” and is therefore a commodity versus being an actual service. Therefore vendor expertise must shift from their technology to the very processes and operational realities of the procurement world they are seeking to serve.
Given that eProcurement technology has done little to reverse the decline in supplier bid participation, instead of asking for technological specifications, end-user clients are going to start examining and comparing the purchasing skill sets of individual software vendors. This will include areas like category, supplier and market expertise, as well as contracts and pricing knowledge.
To sum it all up, don’t tell me what your technology can do for me, tell me what you can do in terms of providing the expertise to create contracts that are balanced and effective at delivering a best result outcome for all stakeholders. This alone, is the all important first step to improving supplier engagement and participation.
How you get there technologically is largely irrelevant.
NOTE: The above post was provided courtesy of the new Contracting Intelligence Blog.
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Conrad Black’s “sunset” lament: “I am big. It’s the pictures that got small!”
As I looked at the picture of Conrad Black arriving in a limo at a rented ocean side mansion in Palm Beach, Florida following his release from prison, I was immediately reminded of a line from the 1950 classic movie Sunset Blvd. when the iconic Norma Desmond reflecting on her career in silent pictures dismissed talkies with the line “We didn’t need dialogue. We had faces!”
photo from CBC News (Hans Deryk/Reuters)
If you look closely at Black’s profile one cannot help but notice the slight smile and underlying smug arrogance of a man who undoubtedly views himself as a brave knight unjustly banished from his fiefdom by a cruel and largely uninformed legal system.
After all the only thing that Conrad did wrong was quite simply . . . be Conrad.
Think about it for a moment. The actions that landed him in court, and ultimately in jail while different were nonetheless executed with the same condescending aplomb that in 1978 enabled him to “acquire” from the widows of Ravelston Directors Bud McDougald and Eric Phillips controlling interest in the company.
Despite the outrage that he had somehow taken advantage of these ladies in mourning, Black’s reward was Ravelston.
Let’s move ahead to 1981, where after one of his companies (Norcen Energy) failed to disclose that it’s board planned to seek majority control of Ohio-based Hanna Mining Co., the SEC charged Black with “filing misleading public statements.” The charges were subsequently withdrawn by “consent decree” after Black and Norcen “agreed not to break securities laws in the future.” Naughty, naughty Conrad.
In 1984, Black deemed that the pension plan surplus of Dominion Stores Ltd. was the rightful property of the company, and then proceeded – without consulting plan members mind you – to withdraw over $56 million. Must have had big plans for the weekend?
The supreme Court of Ontario ruled against the company expressing the opinion that while the most recent language in the plan suggested that the company may in fact own the money, the “original intention was to keep the surplus in the plan to increase members’ benefits.”
The decision was then appealed all the way up to the Supreme Court of Canada which eventually upheld the lower court’s decision.
As much as possession is nine-tenths of the law, perhaps to Conrad ownership is also a state of mind with the mere morality of the masses being nothing more than an inconvenient reality.
The fact is that the charges and ultimate conviction of Conrad Black has more to do with shifting societal mores in which his overabundant avarice and feeling of entitlement offend those of us who he considers to be mere mortals. In essence it is we who have changed and not Black, and as a result the manner in which the law was applied to punish him was more in line with our outrage than was it with true legal principles.
The court proceedings reminded me of the Bill Cosby snowball in July story. The one where he had returned to the family freezer in July to retrieve a snowball that he had stored there in January for the sole purpose of exacting revenge on a friend when he least expected it – re a snowball to the head in the middle of summer – only to discover that his mother had thrown it out. What is a kid to do? In Cosby’s case, he went up to his friend and spit on him.
In Conrad’s case, the people tried to hurl at him the equivalent of a legal loogie, which was as it turns out an inappropriate application of the law.
So now Conrad is free. No doubt feeling somewhat vindicated, and being the picture of consistency throughout the entire ordeal, he can now state in Norma Desmond-type fashion that “he is still big . . . it is the rest of us who have gotten smaller.”
With the American legal system lying face down in the proverbial pool, it would be hard to argue with him. Of course, it has always been hard to argue anything with Black.
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