Unfortunately, some traditional mainstream pundits continue to miss the mark when it comes to Coupa and similar-type vendor solutions

Posted on March 2, 2010

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I just read Torbjorn Thorsen’s post on his  Purchasing Transformation Blog, and while gently making reference to the fact that Spend Matters’ Jason Busch was “correct in his analysis” regarding a recent post comparing Coupa to Ariba, he went on to say that “there are a few areas where the correct analysis unfortunately gets in the way of pragmatically successful purchasing.”

He is of course right, and not being shy to throw my hat into the proverbial ring of debate, here is my two cents worth by way of a copy of the comment I posted on Torbjorn’s blog:

You make excellent points as unfortunately, Jason (whom I like and respect but as demonstrated with previous opinions including his assessment that spend intelligence was a misleading phrase*), has proven once again to be out of touch with emerging trends in the industry.  Including in this instance the viability of agent-based, Metaprise models.

These models allow operational flexibility on the front lines without sacrificing the adherence to centrally established objectives.  In short, adaptability to real-world market conditions as outlined in many of the 700 plus articles and white papers I have written, and maintaining and achieving centralized or collective objectives are not an either or proposition.

In the following excerpt from a recent article, supply base erosion through the broad application of forcing procurement practice into an artificially narrowed funnel of supplier access, has had dire consequences in both the private and public sectors:

“Public sector organizations are being faced with a serious problem relative to supply base erosion.  Specifically, fewer, quality suppliers are responding to bids resulting in a phenomenon known as creeping margins.  Creeping margins occur when the RFP response pool decreases dramatically to the point where 80 percent of the business is being done by 20 percent of the suppliers. Over the years I have made reference to creeping margins by way of tangible examples such as the Canadian Department of Defense consistently paying a premium of a 157% above market price for Indirect MRO parts to support their IT infrastructure.  Of course the results of an eroding supply base is not limited to the public sector, as US retailer Best Buy through a misaligned vendor rationalization strategy paid a premium of 23% above the going market rate for their MRO parts.” (Note: here is the LINK to the above article in its entirety, as well as others).

Through my government funded research (re the Scientific Research & Experimental Development Program or “SR&EDs”) the data was noteworthy regarding the effective use of agent-based models within a Metaprise platform (the basis upon which the iBuy, iRequest and similar-type dashboard applications have been developed).

This ensures an accessible, dynamic and reliable supply base through which the intelligence that is gathered represents true market conditions that lead to sustained best-value purchasing decisions.

It is the collaborative view and collective outcome and not the enforced compliance practices that ultimately determines sustainable results through increased access.

In short, the technology behind dashboard accessibility to a broader supply base in which advanced and multi-parameter algorithms are automatically incorporated into each front-line decision in real-time, provides the buyer with the necessary autonomy while still ensuring that centrally established objectives are incorporated into each and every decision.

* Note: here is the LINK to the article re Jason’s comments about spend intelligence, which we all now know is not just a simple misleading phrase.

Once again, and as the title of today’s post suggests, Jason is not alone in his thinking as many other bloggers have shared similar sentiments.  But as Colin Powell pointed out in one of his more famous speeches in which he encouraged the need to seek out experts, he did so with the following caveat that “today’s experts may have reached (and passed) their peak.”

Perhaps with Jason, and the other more traditional thinking procurement bloggers, this statement appears to be true at least as it relates to this issue as well as spend intelligence.