EDITOR’S NOTE: This is the second installment in a series that will accomplish the following three things:

• If you are a provider, this post will cause you to do some real soul-searching about why you are “really” in business.
• If you are a practitioner, this post will provide you with an infallible screening process to determine if the provider you are considering will “actually” enable you to succeed.
• If you are an active VC or Wall Street “player,” well, you may not like the “hard truths” from 20 years of tracking practitioner initiative success rates.

Here is the link to the previous article that launched this series – 2005 SR&ED Related Report on eProcurement Software Industry Tells A Revealing Story in 2024

ERP Versus AI Initiative Success

“Sadly, beneath the aspirational headlines and the tantalizing potential lies a sobering reality: Most AI projects fail. Some estimates place the failure rate as high as 80%—almost double the rate of corporate IT project failures a decade ago. There are ways, however, to increase the odds of success.” Harvard Business Review (December 2023)

Comment On The First Post

Benjamin Goodwin • Chief Procurement Officer | Construction, Industrial, Manufacturing, Mining | Project Delivery and Sustainment | Digital Transformation | Agile Strategy and Contracts | Negotiation | Kaizen | ESG

Great share, Jon.

I’m looking forward to part two. History has a habit of repeating itself and, at a minimum, informing potential risk. It always pays to keep your lens in rotation mode and not just fixed on the expected future. Surely, further consolidation is on the way, and implementation/support/upgrade risk vs. upfront cost is surely a premium consideration now in all evaluations. I HOPE.

The end game of a lot of the players in Michael’s map is surely ACQUIRE ME PLEASE …..NOW!

My Response

Benjamin Goodwin, spot on!

When I examine a company, I first determine whether it is driven by solving client problems or satisfying VC or share price requirements.

Check out this post from 2016 – which is the basis for part 2 of the present series. For example, two of the reasons I have chosen to work with a provider like Zycus since 2009 are the following excerpts:

• In one discussion, I expressed my surprise regarding how frank they were about the market, the competition, where they are weak, and where they are strong. I could not help but wonder why they were so open.

• Is the fact that Zycus is financially independent of external third-party interests, such as VCs and Wall Street expectations, the reason for their openness?

To your point, “ACQUIRE ME PLEASE …..NOW!” is the focus of too many firms to address VC pressures to generate revenue or meet Wall Street expectations rather than solving a client problem first by building rapport and relationships. In that case, we will continue to see failures of initiatives regardless of the technology and era.

Once again, I screen the providers I chose to work with, monitor their motivations, and continue to qualify their level of commitment to end-user success.

The January 27th, 2016 Article Revisited

How does Wall Street and Venture Capitalist money influence service provider transparency?

Posted on January 27, 2016

I have been getting a lot of interesting feedback regarding my last post about Zycus.

In one discussion, I expressed my surprise regarding how frank they were about the market, the competition, where they are weak, and where they are strong. I could not help but wonder why they were so open.

The response I received was simple and to the point . . . because they don’t have anything to hide and even less to fear.

Already talking about the framework for our next book, I brought this last point up with Kelly Barner.

Is the fact that Zycus is financially independent from external third-party interests such as VCs and Wall Street expectations, the reason for their openness?

In other words, does the need to play to Wall Street and VCs make service providers less open?

Do they make service providers less likely to be forthcoming?

Her answer was a qualified yes.

According to Kelly, they can only get away with being less than forthright “if” procurement decision-makers don’t push for more. In this, Kelly talks about real information beyond perfunctory features, functions, and benefits analysis.

If we in the procurement world continue to be blinded by the shiny paper of traditional analyst assessments – think Magic Quadrant lists – we can (and will) miss the big picture.

So, too, will the service providers.

In an earlier post, I made reference to an article titled The Myth of Ariba. In it, a former executive for the company said the following; “Ariba was a real company with a real product that got swept up in its own hype, with unfortunate consequences.” The executive then added “Ariba was basically a fraud . . . creating [the impression that Ariba was constructing a global marketplace]. . . even though this was seen as being “a rather impossible task.”

In the same article and a subsequent book, the executive then went on to say that the company “went through the motions” of building this marketplace because “the stock was the only thing that mattered. A valuable stock gave Ariba currency it could use to buy other companies.”

Barner then added that with investment dollars being “harder to come by,” service providers need to shift their thinking. From my standpoint, this means that they have to become more transparent about their strengths and weaknesses beyond a specification sheet.

Instead of playing to The Street, which includes using press releases that brag about wins, they need to openly talk to the real market about real areas of interest and concern.

It would appear, at least based on this one call, that Zycus has figured this out.

With a healthy percentage of failed initiatives and increasing churn rates, one can only wonder how long it will take other providers to follow suit.

In the next installment, we will look at several where are they now players? Some of the revelations will likely surprise you.

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