Category Archives: Functionality
Last week, Seth Balsam, Director of Global IT Sourcing at Ciena, contributed to Iasta’s Webcast, Using Spend Analysis to Smooth the M&A Path: 4 Steps to Consolidate Your Purchasing Power. When Ciena acquired Nortel’s Metro Ethernet Networks, Ciena literally doubled its size overnight: twice the revenue, twice the customers, and twice the employees. All those doubles don’t come for free. Even though spend data doesn’t get a lot of headlines in M&A news, the merger also resulted in twice the … More
During the first half of 2011, more than 4,100 merger and acquisition (M&A) transactions took place, according to a recent article on Open Forum. These transactions were valued at more than $620 billion. In the second quarter of the year alone, more than 2,000 M&As were successfully completed, with a transaction value exceeding $260 billion. You don’t see only big companies participating in M&As, either. According to the article, “People are attracted to larger numbers and that’s why those deals … More
Did you know post M&A spend analysis efforts typically yield a savings of 7-10 times the project investment? Spend visibility is critical in helping your organization consolidate its purchasing power. Without spend visibility, you could be missing out on significant cost-savings opportunities. You never know where your organization’s true and best opportunities are until the majority of spend data has been analyzed. Join Iasta, Ciena and Andrew Bartels from Forrester Research for a free Webcast titled Using Spend Analysis to … More
It seems that there are still some misunderstandings in the marketplace about the place of reverse auctions in eSourcing. I’ve noticed that several procurement professionals are facing resistance from their internal stakeholders to using eSourcing platforms. This puzzled me, so I decided to put on my detective’s hat. In my investigation, I determined that many procurement professionals: • Use a rigorous sourcing process or “playbook” • Have a common platform that provides a centralized place for everyone to collaborate and gain visibility … More
Everyone in procurement knows that spend analysis is important. The problem is they also know that it’s hard. It means getting a lot of data that may come from multiple sources, determining a hierarchical classification system, and classifying each piece of data (usually each financial transaction). You’re also going to need software tools to compile the data in meaningful ways so that you can see spending patterns and identify opportunities for savings. It’s not about getting the data one time; … More
In the second of the 4 part series, we will dive more deeply into the first possible approach to finding savings in indirect goods and services: Spend Visibility. Although most companies realize how important spend visibility is, many companies struggle with three common issues: 1. How do I build a business case to prove we need visibility? 2. I have an ERP system, can’t I use that? 3. I have a spend visibility provider, but I am not sure if it is giving … More
Iasta has been long at work researching trends and best practices in contract authoring because we’ve received a lot of requests to provide authoring to go along with SmartContracts®, our contract management software. The first obstacle we uncovered seemed to be an almost universal challenge: standardizing contract language. Many companies, regardless of size or industry, struggle to implement standard, approved language in all their contracts. The inclusion of non-standard language is a primary reason for contract rejection during the contract … More
Love it or hate it, but there is no denying that eSourcing has revolutionized the purchasing arena. Negotiations will never be the same. Strategic eSourcing initiatives, processes and technology bring clear benefits to companies by: • Speeding up the negotiation time. Time savings is one of the most significant benefits of using eSourcing. • Increasing transparency. Both companies and suppliers get real-time visibility into what should be considered fair market prices. • Levelling the playing field for all parties. Everyone receives the information … More
Which came first: the chicken or the egg? From Wikipedia, “To ancient philosophers, the question about the first chicken or egg also evoked the questions of how life and the universe in general began. Cultural references to the chicken and egg intend to point out the futility of identifying the first case of a circular cause and consequence.” For me, this question is so procurement. You might think the last thing I would consider when I am talking to my … More
by Dr. David Howie, Director, TPI Winning bidders in auctions often experience buyer’s remorse, a gnawing sense that they have paid too much for something that they don’t need and perhaps no longer want. Something similar can happen in reverse when a client selects the cheapest service provider in a competitive tender for outsourced services. For example, in today’s tough conditions, many clients are anxious to strike deals that shift fixed components of their cost base onto the provider. But … More
As a sourcing professional, my most difficult negotiations aren’t with suppliers but rather with internal customers. Based on conversations with my colleagues, that experience is not unusual. One measure of this challenge is “savings leakage” (savings negotiated but not realized). Aberdeen Group reports average leakage rates of 21% as Purchasing strives to implement its sourcing decisions. Best In Class companies experience about 14% leakage whereas All Others see 24% leakage (1). Small companies experience up to 40% savings leakage (2). … More
In a recent Friday Rant entitled “Reverse Auctions Have Become the Aero-Bars of Sourcing”, SpendMatters’ Jason Busch describes the all too frequent abuse of Reverse Auctions. He quotes David Clevenger, formerly of FreeMarkets, who notes that “the problem with reverse auctions may be the same as with any powerful weapon in the wrong hands”. A knife can be used for murder or for life-saving surgery. I believe there are at least two factors that contribute to abuse. I recall Stephen … More
We have been known to promote the usage of reverse auction in these parts. However, rarely have I had the opportunity to discuss the process from the first person. Recently, Iasta had the opportunity to manage and execute an e-auction from cradle to grave. Needless to say, we did not need much support, but it was pretty easy to get. The auction was managed directly by one of our IT Managers, who despite having never used SmartSource as a practitioner, … More
Time and time again I hear people say that you can only really auction a commodity; something that is standard, simple – like a widget that doesn’t have too many service components. Well, if that’s the case then what have we been doing the past 10 years?? The European Leaders in Procurement magazine (Spring 2007 issue) had an article written by Bill Simpson (director of financial services managed accounts – Fujitsu Services) in which he addresses the topic of auctioning … More
There are many components to e-Auction success, including good strategies, best practices, and inscrutable ethics. However, this post is going to overview another set of good process that you can follow to make sure the auction runs smoothly, efficiently, and delivers on it’s expected benefits. Define Requirements and Goals As with every other step of the sourcing process, good requirements, along with clear goals, are key. Be sure to understand what the strategy is for lowering or controlling costs, for … More
