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What I have learned about looking beyond the hype and identifying the partner for the long run.
As the technology expert in charge of designing Resilinc’s next generation capabilities, I am regularly on the receiving end of product demonstrations from vendors who I plan to use in our solution. I have seen demos that throw at you trending buzzwords, awe inspiring graphics and analytics that resemble a scene from a mission impossible flick. Reality seldom matches the hype. In my view, technical due diligence demands rating the solution on many different dimensions against your needs, and it is important to remember that in enterprise solution procurement, you’re not just purchasing the software but the services and support around it as well. More importantly, with Saas solutions, the track record of innovation by the vendor is very important in evaluating their ability to evolve with a dynamically changing market.
Here is what I have learned from many years of technology partner selection and procurement. Hopefully, these takeaways will be invaluable to supply chain experts in the process of evaluating solution partners for their supply chain resiliency journey.
Looking beyond the hype…
Content Sources, Scale and Breadth (30%)
Value:
Rich pre-existing repository, fast time to value, depth of, breadth of and verifiable sources of data leveraged efficiently via a secure network of trusted partners.
Ding/Ignore:
Unverifiable, outdated, software that runs solely on customer provided data, or where data is collected in a brute force way between one customer – one supplier.
Treat this as the least common denominator. Supply chain risk management in recent times has evolved to a paradigm where you can manage your risks very effectively given sufficient types and quantities of supplier intelligence. Content is much broader than pure data. It is not just an export from your heavily used PLM/ERP systems and your suppliers, but includes relevant consolidation of research data on your locations, commodities and suppliers, commentary and white papers, recent events etc. Each of these enhances the value your organization can leverage from a solution.
Measure a vendor on the breadth, depth and verifiability of their content.
- Breadth of the content refers to the categories of data that the vendor is able to support – supplier location and operations information, business continuity, capacity, quality, inventory etc.
- Depth refers to the amount of data that they can provide in each of the category – Can they do N-tier mapping? If so can they do it at a part / commodity level? Can they map flow of the material at a sub-tier level?
- Verifiability is an important consideration for content driven applications, without which, the fancy charts and analytics are not actionable. Third party or publicly mined information is merely a start… the best option is to always source data directly from the owners – your suppliers.
- Auditability is necessary for some cases such as supplier business continuity, where self-reported data provided by supplier may incorrectly provide a rosier picture of reality.
Secure Network Effects
Gone are the days when companies could leverage data by connecting 1 to 1 with each supplier. Today’s cloud and enterprise networking technologies enables creation of secure enterprise data platforms that can exchange information securely between trusted partners (suppliers and customers) based on a system of approval. This creates tremendous network effects and increases value exponentially over time for all network participants. Therefore, vendors who have innovated in this area have a unique edge, because they can provide you immediate network effects from adopting their platform. They help you accelerate your time to value by letting you leverage common data securely, and allow you to build, grow and refresh content seamlessly, growing the depth and breadth continuously over time. While a supplier exaggerating their claims may be able to get away with it in a 1-1 setting, in a shared network, many participants help check integrity of the data, benefiting everyone in the ecosystem.
Selecting a Vendor
A good test for ranking a vendor’s content is to provide the vendor with a subset of your supplier names and see what kind of data (breadth and depth) they have on their platform. Prefer vendors who already have good percent of suppliers on their platform and can offer the network effects necessary to reduce the effort needed for the initial efforts, but more importantly, streamline the future efforts needed to keep the data updated and refreshed over time.
Analytics (30%)
Value:
Insightful, accessible and actionable to practitioners presented based on users’ roles.
Ding/Ignore:
Eye candy demos with flashy charts without consideration for user needs or roles
CAUTION: This is where most hype gets generated. Analytics in a product is of good value to you if triggers a measurable process within your organization. Especially in a supply chain organization where teams strive to implement a gold standard in business processes, it is important that the software you choose becomes a means to implement, measure and fine tune your process.
Measure a vendor on the breadth of the capabilities
- How is the content delivered to different types of users in the company – is it in the form of actionable insights to them in their roles?
- Having a risk or performance score for your suppliers is of limited use unless you are able to pinpoint the specific type of risk, or drill down further to part number levels. A supplier level risk score is useless in material risk management, because there are nuances that make one part have a completely different risk profile from another part from the same supplier.
- Value is delivered when something is done about the content and insights – the right solution needs the follow on workflow necessary to redesign the supply chain, reduce the risk, assign actions to individual team members and track it over time.
- Can it provide gaps to executives that they can target and fix?
- Can they deliver these analytics even on everyone’s favorite handheld device?
Bottom line – Rank product features based on the value to you and not just based on their coolness factor.
Services (20%)
Value:
Comprehensive service offering with proven SLAs, project milestones, successful supplier engagement.
Ding/Ignore:
Inexpensive, easy to use, so called self-serve solutions.
This is the most common hidden cost of a solution. “Our product is so easy to use you don’t need any help from us” – that is a trap; a road that leads to certain failure. Services are an integral part of the technical solution since they ensure that you are able to implement and realize what you paid for.
Getting information from several sources requires coordination, project management and a lot of patience. Your suppliers will constantly need to know why a certain piece of information is being requested. They require legal and IT clearance in some cases. Data provided may not always be very clean or complete. If you have to follow up and administer this with your supplier, then you are indirectly paying the vendor in terms of the investment in your resources in managing supplier engagement, data quality issues and finally, there is your opportunity cost of doing something more valuable.
Prefer vendors who can provide you with a full suite of services, as they are able to leverage their resources across multiple customers and drive tremendous economies of scale. Not only that, they develop the core competence because they can standardize and automate and thereby elevate the general quality of the process and database as a whole and stabilize the customer and supplier experience. Having an account manager also provides you benefit to learning best practices across companies they serve. Such vendors would have tried, tested and perfected processes and SOPs for reaching out to suppliers, training, data ingestion, cleansing etc. Risk management is a journey that never stops – it is important to have a vendor who will be part of your extended team and walk with you every step of the way.
Evidence (20%)
Value:
Strong referenceable customer base that renews its partnership with the vendor over time, industry focus, supplier footprint expansion.
Ding/Ignore:
Pilot customers, third party partners for services.
This is where boys are separated from men. Great product but we have only pilot customers with no significant customer base to show. This speaks about their solution’s capability to function. Some vendors might not own the supplier onboarding capability and may choose to partner with a third party for this. Beware, because in this case, there is a lot of uncertainty about who owns the problems, and who is ultimately responsible for the supplier experience.
In order to be effective, risk management products require the solution to be solid not just in functionality but the end to end solution of content acquisition, analytics, refresh, supplier onboarding. Ask to speak to customer references who are in the same boat as you. Check the breadth of their solution usage by seeing how the vendor has grown its footprint in a customer account. Have the customer expanded and added modules from this vendor. Ask for their largest deployment? How many suppliers have they mapped and to what extent? Ask for a typical timeline on how the software was implemented. Ask for customer churn and why?
Test their breadth and depth of data with this customer. Question their analytics that are used by customers? Demand a project timeline for implementation. The more you can see their claims in reality the more chances that you will succeed with this vendor.
Quick Note on Cost
There is an invoice price and then there is the total cost of ownership (TCO) of the solution. If you rank your vendors based on above criteria, every ding should be quantified as an added cost to you. The ding should not only include the cost to your company to implement/circumvent the gap but also any opportunity cost of what your team could have spent their valuable time on. For example, a company with a robust data verification and quality program will save you tremendous amount of time checking the data yourself. More importantly, the value is multi-fold because the data can be immediately usable and leverageable. If you are unable to use the solution because of continuous data quality issues, then the value proposition cannot be realized and the ROI promise remains unfulfilled. The additional cost of checking and verifying data will need to be borne by you. A vendor who costs more, but offers this as an included service, should be far more preferable when taking the TCO into account.
As any procurement expert knows, choosing a vendor is an involved process and usually takes time and effort. In my experience, technical feasibility is one where hype drives decisions. Decisions which are based on well thought through requirements, and driven by proven claims (reference checks) and use cases, as opposed to purely driven by cost considerations, are likely to have a far greater likelihood for long term success.
Feel free to reach us at [email protected] , if you are considering a risk management solution or have more questions on what it means to implement one in your organization.
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