Friday, 27 May 2011

Things to consider when creating an e-Cademy

For each purchasing department there are many benefits in creating a centre for best practice which centralises all the company methodology for procurement. As Market Dojo works in the e-procurement space, we thought it wise to offer some pointers on creating an e-procurement academy – hence e-Cademy! OK, not the most thrilling play on words but it will do for now.

Should you have an e-Cademy?

I think the answer is always yes but to what extent is the question. There are many ideas below you might want to consider. An e-Cademy would lend itself to a larger organisation but even if you are a one man band, centralising and organising your documentation will always be beneficial.

So what would you include in the e-Cademy?

We can see two principal areas: support and communication.

1. Support:

Support will be at the heart of any e-Cademy and could encompass several layers.

a) Training – Any e-Cademy would need to provide some sort of training. This falls into two sub-categories – processes and systems. There is always the question over whether you bespoke the systems to your processes or bespoke your processes to the systems. The latter enables you to use off the shelf systems but might require a change in the way you do things. Hopefully, if the system has been designed by professionals then this should not be a major process change, and as with the case with our software, we would also think can be quite beneficial. Our software guides you through the best practice process for RFQs and online negotiation thus allowing for one training course which easily combines the processes with the system to guide you through the best methodology.

Obviously you will end up with the same result if you bespoke the software but the downfall with this approach is maintenance of a system which deviates from the norm. It also assumes that the processes you bespoke the system to are indeed best practice.

b) Documentation and Reports – Any good e-Cademy should have templates, guides and reports. Templates will enable an easy uptake for the commonalised procurement activities and will ensure continuity and compliance. Guides should be available to be used for reference in case the new graduates (Graduate – our name for those who have passed through the e-Cademy) get stuck along the way. Finally a good reporting system needs to be put in place. This is not just referring to a summary report from the activity which can be sent to stakeholders but one that also leaves an auditable trail as well as covering areas such as implementation. These can also be used in the e-Cademies communication on the results achieved by the graduates and the central procurement team activities.

c) Mentoring or shadowing – e-Procurement can be quite a daunting task for those new to it. We can easily relate to the fear of running your first auction; will the suppliers bid? Will my incumbent engage with the process? Have I put everything in my documentation? The fear is justified. However this fear can be allayed by good training and continued support. We find this is best given in the form of mentoring or shadowing for each graduates first foray into these activities. For example it is worth checking their documentation, liquidity and how they have set up the auction activity to keep the education moving in the right direction. This will also help with confidence and knowledge transfer.

d) Support line – Any graduate from the e-Cademy has the capability to add substantial benefit to the organisation. The ROI from activities such as auctions can be within months, if not weeks, and part of the e-Cademies remit should be acting as a support line to all the graduates from the scheme, who are out in far flung parts of the organisation.

2. Communication

Communication from the e-Cademy will be invaluable. How else will people know about it? How will the board of directors know what benefits it brings? No-one else will be blowing your own trumpet so you need to self-proclaim. This communication can also help with encouraging involvement from all parts of the organisation and to avoid surprise when you mention an auction on the more strategic items. There are many ways to carry out this activity so we will start with the easiest:

a) Newsletters – This or a simple e-mail to the procurement staff and key people in the organisation can be a great benefit. Our two top tips here are 1) keep it simple and 2) not too often, once a month would be more than enough and if it is a newsletter, once a quarter. It is also wise to send out a summary e-mail after each e-auction activity to the relevant stakeholders.

b) Web Page - This is a much more involved activity and requires a close link to the IT department with maybe a bribe of a bacon sarnie or two. Basically create an internal webpage for people to go to and see what’s going on. You could also use this page to centralise resources and documentation, although this may be better placed somewhere on the intranet. This creates an easy place to update everyone on your activities without the need to continually send out e-mails, especially if you are able to update the content yourself.

c) Internal conferences / seminars – Many people will be interested in these new e-Procurement activities. The majority may not work in procurement but may easily be affected by your activities; in other words your internal stakeholders. Internal events provide a platform for communication and knowledge transfer that will not only help promote the status of the e-Procurement activities but also encourage involvement and awareness. You could also use these events to encourage innovation in the process to ensure it fits within the organisation and continually improves.

d) Awards – For graduates of the e-Cademy, certificates should be awarded and communicated. This will help give the e-Cademy a certain professionalism and status and will also encourage pride in the graduates. This can also be rolled into professional development plans.

At Market Dojo we have sometimes drawn the parallel to cars. Auctions are just vehicles to get from A to B. Obviously there can be drawbacks as with any vehicle but the benefits outweigh the disadvantages. The way that cars get around the disadvantages is to make sure all drivers have a licence. Could you have an e-Auction licence? You could even give ‘drivers’ points for bad practice!

Also if you are lucky enough to be part of a large organisation with many teams, maybe you could create inter-team competitions to encourage success and give you another reason to hand out some trophies at the end of the year!

This just about sums up our thoughts here. Please feel free to add more via the comments and highlight any experiences (good and bad) that you have had with ventures such as these. One other thing I missed off the list is don’t forget to celebrate success with a trip to the local.

Footnote: Interestingly the name Academy traces back to Plato's school of philosophy, founded 385 BC at Akademia, a sanctuary of Athena, the goddess of wisdom and skill. Over the course of history it has been used to describe all types of institution from renaissance academies to independent state schools. It is about time we brought it into the world of e-procurement.

Tuesday, 17 May 2011

Market Dojo Interview with Buyers Meeting Point, November 2010

To get us started, give us a little background on Market Dojo and the team.
Two of the founding Directors, Alun Rafique and I, worked as cost reduction consultants for a nearly a decade combined. We helped companies like BP, Asda, Tarmac, Meggitt, Rolls-Royce and others to reduce cost and risk in their supply chains through strategic sourcing, tactical negotiations, supplier workshops and managed e-auctions.  During this time we noticed a gradual shift whereby companies wanted to carry out the activities in-house.  This gave us the seedling that became Market Dojo, the business-to-business e-auction software provider.
Our third Director, who used to work as an IT database specialist, but now currently designs complex data analysis software, has created solutions for companies like Tesco, Argos and Best Buy.  Therefore between us we feel we have all the necessary skills to create and manage an e-auction software company.  Our goal is to enable small and medium-sized businesses to run their own e-auctions successfully.

There are already so many players in the market – why enter the scene now?
We think that the timing is ideal.  We’ve noticed procurement organisations are facing new challenges as many of their clients who have enjoyed their services now wish to self-manage e-auctions to reduce costs.  Businesses have also learnt from the consultancies and there are an ever-increasing number of educational e-auction courses available.  Thus we have focused our company to supply the procurement professional with a commoditised solution.  We are not aware of any other e-auction providers that offer a product which is openly and reasonably priced (with no hidden prices or price escalations), yet easy to use and adopts professional processes to ensure success for third party use.  Furthermore the “cloud”, which is big news at the moment, allows us to provide the software-as-a-service solution to a very broad market with no set-up costs.
Our offering, which aims to provide businesses between $5m and $500m annual turnover with the tools required to run their own e-auctions, is very neatly spaced in its own market niche.  A number of our competitors would struggle to keep their skilled consultant workforce if they approached this market with our philosophy.  We believe this is exemplified by Ariba divesting their consultancy arm of the business to Accenture.  Both experienced professionals as well as complete novices are able to use our software.  We embed best practice into the software, which means our support costs will be greatly reduced.

One of the distinct things about Market Dojo is your credit based pricing system. Why did you choose to take this approach rather than just charging straight GBP for a license?
The credits model is to give us and our clients flexibility.  What we offer is a solution that caters for 90% of the e-auction market as standard, but with modular functionality to satisfy the remaining 10% of users, for example having bespoke categorised participant databases or using advanced reporting.  Our clients can expend credits to add such functionality to their account, if they so choose, and can make this choice once their experience and requirements develop, i.e. once they feel comfortable.
Credits also allow clients to consolidate their purchasing and invoicing transactions and allow them to continue to use their account uninterrupted. This works in the same way as something like ICIS LOR, the plastics and chemicals market price database.  Credits can be purchased in bulk by our clients to be used how they want, when they want.
For us the credit system is an advantage because the consolidated invoicing also aids our cash flow.  Furthermore the credits allow us to carry out some great marketing initiatives.  For example, exclusively for Buyers Meeting Point, sign up with Market Dojo before the end of 2010 and drop us a line quoting “Buyers Meeting Point” and we shall give you 25 free credits towards your first event, plus a further 25 credits in return for a case study.

One of the challenges of running a successful auction is being absolutely prepared. How you plan to be sure that users of the Market Dojo solution have positive results – not just because the software is useable but because they have the knowledge in house to follow a good process in advance?
We completely agree that the so called "plug and play" e-auctions can require just as much work as the consultancy-led managed auction process to be successful.  We have worked hard to inform our clients of the work and thorough process required, which is encapsulated in our free guides, yet by streamlining the process within the software we have managed to reduce the workload.
Whilst working as a consultant I recall assisting a client who wished to run their own e-auction.  After initially agreeing to proof-read their RFP, I ended up re-writing it for them, as well as adjusting the spend data and Lot structure.  However, despite our warnings, we just could not convince them to bolster the number of participants.  In the end they received a mere 3 qualification bids and during the e-auction itself just one further bid was placed.  It just demonstrated that the traditional "three bids and a buy" embedded itself in their process so firmly that even the e-auction became a part of it.  However, there is also an element that because the company sought to run an e-auction themselves via software from a consultancy, there was a blur in the roles and responsibilities, which ultimately caused it to fail.  At Market Dojo we counter this by clearly outlining the process in our guides and by taking on the clear role of a software provider.
Our past experience gave us a great learning platform to incorporate into Market Dojo. We have developed a number of features to make our clients, in their own capacity, run successful e-auctions. Firstly, we offer only self-managed e-auctions, therefore the clients know what to expect. To assist them we have created nearly 20 guides packed full of our consultancy knowledge and experience, which are free for all our users.  We have established our own community site, called Community Dojo, which encourages the free exchange of knowledge and learnings from running e-auctions and using Market Dojo. We have created professional, step-by-step software that has information help icons for every title, button and action that not just state information but provide advice and tips as well.  We also have professional support on stand-by in the form of e-mail, phone and Live Chat.  
All of these features combined mean that we have used our past learnings to fuel the future success of our clients.  Nevertheless, although we do focus on the software, we are a new company and we would be happy to go the extra mile in return for a testimonial or referral to make sure that our clients exceed their targets.

Monday, 9 May 2011

Why are we doing what we're doing?

Billions of pounds are tendered every year on goods and services. Procurement as a profession is becoming an ever more important focus. Companies realise that in these times, coming out of a recession with increased global competition, an efficient procurement strategy can mean the difference between profitability and receivership.

E-procurement entered the scene in the nineties with the dotcom boom and e-markets. It took time for the real value to come to light after the initial surge and consolidation. One technology which emerged in assisting companies realistically and effectively at reducing cost was the reverse auction.

However, due to procurement professional’s level of understanding of this new technology, the primary method of delivering benefits from auctions was via consultancy. Companies emerged offering the possibility of outsourcing this activity and their benefits came from their skilled resource, cutting edge methodologies, systems and comprehensive supplier databases.

With the general understanding of reverse auctions vastly improved within the procurement community and with universities teaching about e-procurement as part of their curriculums, more and more procurement professionals want to run their own tenders via reverse auctions.

Some of the companies have realised this and are starting to sell their software stand alone or as an add-on to a larger Enterprise Resource Planning (ERP) system. This software is still expensive, cumbersome and requires assistance in best practice and training.

Thus there is now a gap in the market for a commoditised product. The basic concept is simple as there is a paradigm shift from ‘luxury’ based software, which requires a third party, to a commodity product which any professional buyer can use.

Large companies such as Ariba are starting to notice this but also smaller, nimbler companies such as ourselves, Market Dojo, are realising the potential.

This new breed of online hosted software is not radical in overall concept but in how it is designed and positioned in the market.

The new SaaS offerings are:

• Functional and user friendly
• Embedded with professional processes
• Offering a clear pricing structure

By offering a combination of the above features, reverse auctions are being taken to the next stage in their evolution. Not only are they building on the understanding already in the marketplace, but these tools can easily be opened up to any buyer by providing a very low barrier to entry with respect to cost, usability and best practice.

As with most services that start out being used only by experts, reverse auctions now find themselves being commoditised. One only needs to looks at complex software such as engineering simulation, which is moving from the hands of engineers to the CAD Jockeys, or web design and search engine optimization tools which started out with a plethora of specialized agencies but are now in the hands of consumers. Accountancy and CRM solutions have moved to the online model such as Clearbooks and Zoho opening up complex applications to the SME market. This is the natural progression of software in our technological age.

This new breed of companies such as ourselves and the new offerings from Ariba demonstrate the new wave which is surely just a springboard for even greater innovation.