Business & Technology Nexus

Dave Stephens on technology and business trends

Content Management & Indirect Procurement

with 6 comments

Back in the late 90’s, Ariba popularized the eProcurement space. With the typical hype of a surging start-up, they motivated the Fortune 500 to begin to address the inefficiencies so present in their indirect Procurement systems. And although nowadays it’s hard to imagine a system for automating the purchase of Office Supplies selling for $4MM or more, some did! Boy how times have changed.

Bringing mostly paper processes online meant the paper catalogs from vendors often available at admin’s desks in offices the world over would need to be digitized. But how?

Initially (and even today) intermediaries helped suppliers produce electronic content suitable to corporate buyers. The target format was defined by vendors who sometimes (and often surreptitiously) used standards bodies to legitimize their preferred XML ontology.

An interesting question the ecosystem of software vendors, corporate buyers, and suppliers faced was how much to classify and normalize content. By classification, I mean the deconstruction of lengthy and often marketing-oriented item descriptions into structured name-value pairs. For example this:

“Only .27 inches thin and 1.5 ounces, iPod nano packs a lot into its diminutive design. Up to 14 hours of battery life. 1GB of storage. A bright color display. The Apple Click Wheel. A Dock connector that fits an entire ecosystem of iPod accessories. With so many features like these, iPod nano can change the way you listen to music — and more.”

Becomes this:

Storage 1Gb
Max Battery Life 14 hours
Depth 0.27”
Weight 1.5 ounces

The question, of course, is whether the classified content is more useful than the long description. Was it worth the extra hassle of deconstruction? And for most indirect spend categories, I argue no.

But some vendors go much further than category-specific attribution. They believe it’s not enough to deconstruct an item into its name value pairs. The attribute list itself must be rationalized against all other available items in that category. This is where the direct materials engineering design problem clashes with the far more basic needs of ordinary indirect purchasing. In my view a single system targeting both problems risks doing neither well.

So keep it simple. When implementing local catalogs in your eProcurement solution, don’t go overboard on the classification problem. Consider going with marketing-rich long descriptions and calling it a day.

Now of course completely avoiding the content management problem (via supplier punch-out perhaps) is a pretty good solution too. But that’s a story for another time.

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Written by Dave Stephens

02/28/06 7:48 PM at 7:48 pm

Posted in Historical, Opinion

6 Responses

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  1. A big exception to my argument against attribution and rationalization of content is in a space called Component and Supplier Management or CSM. Back in .com boom days, Aspect was king in CSM and i2 bought them for $9B (yes, B). Then i2 completely and utterly destroyed the business. Others have spoken about the CSM space & about what happened to Aspect’s business. Many believe the CSM market these days seems underserved. Perhaps I’ll get the urge to throw my 2 cents in and write about CSM in the future.

    Dave Stephens

    02/28/06 10:29 PM at 10:29 pm

  2. These days, with search technology improving, I would say that categorization — at least for end-users — is less important. To me, classification should be driven from procurement group’s requirements for spend analysis.

    Henry

    03/4/06 12:56 PM at 12:56 pm

  3. Yes, that is an interesting notion. The one thing item category seems to continue to drive is the accounting (what cost center pays for the good or service). It also is used for subject-matter-expert approvals. But absent these requirements you could conceivably use Zycus’ AI to categorize after transaction processing has concluded – essentially categorize later simply for the reporting.

    Dave Stephens

    03/5/06 4:47 PM at 4:47 pm

  4. I wouldn’t push classification for spend analytics to the end with Zycus if that is a decision to be made — I still think there’s great value in trying to get the data right up front.

    In any case, I think there’s still a lot of work to be done on the front-end of procurement systems. In addition, from what I’ve seen, people are moving away from hosting content (too much work for little return) and pushing towards punchouts, which makes the user experience even more daunting. Suppliers haven’t implemented transparent punchout in great numbers (yet).

    Henry

    03/6/06 10:24 AM at 10:24 am

  5. The solution to this whole problem is XML. Tag your data points within the long legal or marketing description, and have the ability to pinpoint data AND keep it in context.

    Jason

    03/8/06 7:36 PM at 7:36 pm

  6. Content mgt — my favorite subject :-) Have been working on catalog mgt solution for 6 years now. Totally agree with the “keep it simple”, especailly when a company is just starting to do something about it. Making your taxonomy too complex makes it too expensive to maintain. For most companies, high-level business intelligence is better than no (or wrong) intelligence. A 2 or 3-level UNSPSC, i think, can be more useful than 5-level-1-million-plus-category version. There are a lot of hidden cost too — like trying to map your categories to your suppliers’. And, imagine the $ you need to spend to keep up with all the revisions. Yes, in addition to migrating to the latest eBusiness Suite, you need to migrate to the latest UNSPSC…

    York

    03/30/06 6:40 PM at 6:40 pm


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