December 20, 2012

Confessions of an Analyst – 90% of supplier management technology is below the surface (Part 3)

In addition to Organizational modeling is the need to better understand how analyst firms can demonstrate capabilities for Master data and Workflows in supplier management technology.  Let’s next address Master data…

Master Data

One of the most foundational elements to bring about intelligence for an organization unit’s suppliers is the master data model. Master data models support the development of information systems by providing the definition and formatting of data.  But from what we see out there, most enterprise systems and interfaces cost more than they should, to build, operate, and maintain.  Why?

Most supplier management platforms from ERP to source-to-settle providers continue to use database structures that limit how relationships and behaviors can be rendered.  Adding customizations (adding fields and behaviors) in database structures also requires a lot of up-keep for IT on the back-end for tracking database changes and performance.  This may not be an issue if you are working in an on-premise environment, but customizations in the database can become problematic particularly when looking at multi-tenant SaaS deployments of supplier management, where several different organizations are sharing the same code base.

This demonstrates the need for an alternative approach for master data modeling by moving away from a concept of “customizing” database structures to leveraging an ability to “dynamically” represent relationships between objects through configuration. Using this approach establishes the ability to easily render relationships in the data model without altering the underlying database. Consider three areas the HICX  uses where the data model can be “dynamically configured” –

  • Dynamic Object Relationships – new types of relationships that can be easily modeled between master data structures like suppliers and transactional data structures like purchase orders or invoices.
  • Field Permissions – the need for permission-based requirements based on the number of roles or departments touching supplier-based data that will need to read, update or even delete supplier based information.
  • Field Validations  – the need for validating something like payment terms related to a specific supplier address and account for an organizational business unit.

So in evaluating a supplier management solution by looking at an analyst report, ask yourself, based on this report, do you know enough about the solution that you can understand  –

  • How easily dynamic relationships can be created?
  • What are the potential challenges or limitations in customizing the data model?
  • How easily can calculated fields be dynamically created?
  • What data customization constraints exist if multi-tenant SaaS is the only option?

 

Workflow

A last  yet critical aspect  is the ability to easily understand how easy it is to customize workflow based on organizational unit requirements.  Workflow in supplier management must demonstrate that the widely-accepted philosophy of  “one process fits all” cannot not always hold true for global organizations because processes cannot be fully harmonized due to varying business needs and local requirements that create added complexity.

A perfect example of this is compliance. Accommodating local process requirements can be an expensive after thought given the expansion of compliance requirements occurring on a global scale.  Strict process workflows for regionally focused compliance requirements such as for the Bribery Act in the UK or FCPA in the US. Both laws also have global consequences for those doing business in those countries and penalties in the millions of dollars for non-compliance.

The ramifications of not being able to handle a local requirement such as those described not only can become a costly and or a criminal affair (should violations be found), but in the interim can cause great inefficiencies and frustration for those trying to manage them. Hence from a technology perspective, HICX understands that supplier management solutions must provide the flexibility of global (macro) processes that can easily be automated and supported, while the managing subtle differences reflected by alterations for specific steps (micro) at local business unit or divisional levels.

But again the challenge here is that analysts often can only assume capability based on what’s demonstrated.  For instance, here are some direct quote from an analyst firm discussing the ease of workflow for FCPA compliance –

  • “it looked relatively simple to work with to create complex workflows”.
  • “needed improvement because of its limited document management and workflow capabilities”
  • “continues to possess solid workflow capabilities, and it offers a mature, full-scope audit management solution”

What do terms like “solid” or “relatively simple” really mean? If you are evaluating a supplier management solution by looking at an analyst report, ask yourself, based on this report do you know enough about the solution that you can answer –

  • How easy is it to manage both internal and external workflows by users groups or individuals?
  • How easy is it to model the global and regional workflow requirements like the UK Bribery Act or FCPA compliance?
  • If a merger or divestiture event occurs, do you have to roll back all the specific workflow changes or can these simply be added to the existing system?

In conclusion of this three part blog piece, there is no question that analysts add insight to the a marketplace for understanding a space, the players and the relative dynamics of a particular platform. Having experienced it first hand, aside from confidentiality agreements that prevent and analyst from sharing deeper insights into a solutions provider, an analyst report may only be able to go so far to show you the underbelly of technology.  As a result, analyst reports are left providing a highlight or a starting point, but won’t  provide you that extra insight below the surface in evaluating technical fundamentals like the three described.

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As you ponder this further let’s also consider the spirit of the season and what we all should be thankful for.
Wishing you a Happy Holiday !

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by Grant Watling

Chief Customer Officer

Grant has 11 years management consulting experience specialising in supplier data and analytics advisory services. Grant holds a Master’s Degree (MSc) in International Business, is a Prince2 practitioner and holds certificates from the Institute of Financial Services and the Chartered Insurance Institute.
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