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Achieving Practical Outcomes to Complex Purchases at the Heart of the Emptoris Acquisition of Click Commerce
Written by: Jon HansenArticle Overview: “I would not give a fig for the simplicity this side of complexity, but I would give my life for the simplicity on the other side of complexity.” Oliver Wendell Holmes, Physician, Poet, Writer, Humorist and Professor at Harvard (1809-1894)
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Free Download - Is supplier incumbency a major problem with government contracting? By Jon Hansen |
Achieving Practical Outcomes to Complex Purchases at the Heart of the Emptoris Acquisition of Click Commerce
“I would not give a fig for the simplicity this side of
complexity, but I would give my life for the simplicity on the other side of
complexity.”
Oliver Wendell Holmes, Physician, Poet, Writer, Humorist and
Professor at Harvard (1809-1894)
To
begin, and as many of you already know, I have a great passion for all things
procurement. It is an area of business
that to me is the equivalent of 10 cups of dark roast coffee and is reminiscent
of my first ride on the python rollercoaster at Busch Gardens. And while my interests in business are
varied, nothing seems to run parallel to the sheer joy I take in the simple
complexity of the modern supply chain practice.
This
is why the reviews of last week’s Emptoris acquisition of Click Commerce has
been at times frustrating as they generally fall back on the analyst speak that
often resonates only within the limited confines of a select group of
followers. In the brave new world of Web
2.0 and beyond, where social networks and mediums such as Twitter exponentially
increase the reach of one’s message, this antiquated practice seems out of
step. Especially given the fact that 85
percent of all supply chain/e-procurement initiatives continues to fail
worldwide. If anything, this result
should emphasize the importance of the need for the assessment or explanation
of industry events to appeal to a much broader audience, an audience whose
influence on both adoption and outcomes can no longer be overlooked. In short, while decisions are made in the
boardroom, success is ultimately achieved on the frontlines.
In
this forum of real-world understanding and insight, questions regarding service
partner cultivation and tangential marketing strategies while valid, fall
largely on deaf ears as it has no practical value from an execution standpoint.
Never is this statement truer than it
is in the areas of services procurement where subjective elements are
intertwined with tangible metrics such as pricing.
As
indicated in the past, a great deal of my research into the utilization of
advanced algorithms within the framework of an agent-based model centered on
the objective of achieving a “best result” purchasing outcome on a consistent
basis. Funded by the Government of
Canada’s Scientific Research and Experimental Development (SR&ED) program,
this task was considerably easier when the purchases involved either a Direct
or Indirect Material acquisition. While
there were certainly real-world, real-time factors that changed daily if not
hourly - for example our trending showed that with the majority MRO spare
parts, the cost would steadily increase throughout the day hitting a peak on
orders placed between 3:30 and 5:30 PM – the ultimate scorecard was still based
on a somewhat static analytical model.
With
the procurement of services, the model was considerably more complex through
the introduction of subjective elements into the assessment or decision-making
metrics. Of course the obvious question
is simply, what are subjective elements?
And in this regard, I am more than happy to share an excerpt from a case
analysis I had written as a means of illustrating my point.
A
large government agency was looking to contract with a service provider to
handle the support of their vast IT infrastructure. In an effort to establish a performance
capability measurement that could be used to create a definable standard and
therefore uniformly applied to all RFP respondents, it was suggested that a
minimum certification requirement be introduced. Specifically, if a bidder’s service
technicians had obtained a certain level of industry certification, then that
company would receive positive points toward the total bid. If not, no points. Without getting into the complexity of bid
parameters and weighted values, this one factor had a high degree of influence
on the bid outcome. This raised concerns
with several organizations bidding on the contract as the certification being
sought was relatively new and therefore the majority of technicians who had
more than 10 years experience did not have the stipulated designation. In short, the company whose technicians had
the designation had on average less than 3 years of practical experience, while
the technicians who lacked the required designation had on average more than 10
years of practical, real-world experience.
This raised the obvious question . . . which technician would be able to
provide the greatest level of service?
Without
giving away the results of my research, these are the very real and very practical
questions that Emptoris is seeking to answer through their acquisition of the
Click Commerce Contract and Service Management solutions.
In
line with my observations in last week’s commentary, what Emptoris has accomplished
with the Click Commerce transaction is “successfully maintain the balance of
its indigenous innovative insights (or DNA) with an increased breadth of
service offering to expand its ability to better serve a growing, mainstream
market.” This indigenous innovative
capacity, to which I am referring, is reflected in the ability to effectively
identify quantify and incorporate the subjective elements of a services
acquisition into the procurement process.
A capability that is clearly demonstrated by the insights provided
through the first two of a three-part guest post series by Emptoris’ Lead Scientism, Dr. Olga
Raskina. (Note: these articles are available through this author on Evan Carmichael.)
And in the end, being able
to demonstrate the ability to respond to real-world frontline questions and
challenges is of far greater interest (and importance) than the contemplation
of the overall impact on market share or competitive strategies often heralded
in traditional reviews. Or to put it as
simply and as succinctly as possible, the majority of professionals are more
interested in how are you going to fix their problems and in the process make their
life easier.
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