Some ramblings on culture

Confused of Calcutta had a great post on cultural differences some weeks back. In it JP references this post: http://www.adinochang.com/archives/chinese-culture-versus-german-culture.html. Follow the blog comments and you’ll find a similar lighthearted comparison of Italy and the EU (by which presumably they mean Northern Europe) http://www.lifeinitaly.com/flash/

Do check these 3 links out – they are fun and can teach you a think or two.

In my case I am half English/half Greek. I was born and grew up in England with the exception of a few years in Greece. Though when I say “half Greek” I should clarify: My mother grew up in Alexandria in Egypt and moved to England in her late teens. So her (and therefore my) view of what it is to be Greek is based on a version of Greece that probably diverged from mainstream Greek culture a century ago. Still – growing up in England in a household that frowned on going to the pub and getting drunk (in some versions of Greece, young people will stay up all night eating ice cream, seriously) made me feel like something of an outsider for a great part of my life.

Which is why I enjoy these cultural comparisons so much, I suppose. Because they help teach me about my own culture(s) as much as about other culture(s). For example I identify with a lot of the “Chinese” cultural elements in Adino’s post, particularly around the significance of the family, but in other respects I am much more “German”. These kinds of jokey stereotypes help crystallise some important cultural points.

So far so rambling, but there is something here about technology and business.

To date, “globalisation” has essentially meant the spread of North American firms and culture. But there is no way that this flow of globalisation can continue one-way. According to the BBC here it is expected that within 2 years there will be more internet users in China than in the USA. So not only does it make sense for westerners to make more efforts to understand cultural differences, but westerners shouldn’t be surprised if what passes for “normal” on the internet in China becomes more dominant globally. Perhaps the next generation of internet sites will look more like TaoBao than eBay.

ERP, BRP and e-sourcing

Brilliant post I picked up from Gaping Void. It discusses a company called Thingamy and how Thingamy’s founder contrasts ERP (which in his book equates to “Easily Repeatable Process”) with what Thingamy call BRP (“Barely Repeatable Process”).

When I think back to my old SAP and Ariba days: those are really all about Easily Repeatable Processes. Posting an invoice, posting a purchase order, issuing a sales order. Etc etc. All pretty standard stuff that happens the same way day in and day out.

But when it comes to sourcing, things are rarely as clear cut as posting a purchase order. Sourcing is much more BRP than ERP which is probably why so many of the traditional ERP companies struggle to produce quality e-sourcing software. And why so many companies who have bought e-auction and e-sourcing licenses end up under-using them and/or considering them a poor tool (e.g. see the comments about e-auctions on Supply Excellence and SpendMatter’s third wish for Santa for some examples). And probably why Email and Excel are still de rigeur in most purchasing departments.

Unless Santa does come up with the MacGyver gadget, a new approach will be needed that better addresses the BRP nature of sourcing. And despite the underwhelming response so far to Enterprise 2.0, I’m sure that most, if not all, of the principles that Jeff Nolan lists here are going to play a major part.

Wikis, User-Generated Content and Procurement Communities

I started experimenting with wikis at TradingPartners a little over a year ago. A wiki could help us, we figured, with sharing  up to date category information across a team that is spread all over the globe. (How to best make sure when Joe in the USA ran a sourcing project for castings that he would know that Jane had recently been working on something similar in China, and would be able to benefit from her experience?)

A wiki seemed like a good fit as:

1. it would be editable by anyone in the business 
2. it would be accessible to everyone in the business over the web
3. it would be fun for people to use
4. the necessary investment would be negligible

So we tried out various wikis and settled on mediawiki. Launched it to the business early 2007 in workshops at which staff excitedly brainstormed ideas of what kinds of information they’d like to see on there…

Then we left it to see how it evolved. Fast forward 9 months and this is what we had:

• Lots of marketing material – case studies, brochures etc.
• Some customised user pages with pictures of people, their backgrounds and interests.
• Standard templates, training materials etc.
• Some category information. But, interestingly, this had not been put on by auction managers themselves, but by self-appointed editors who were collecting the information and uploading it.

In reality, despite the initial enthusiasm for a site that “anyone could edit” was replaced with the more realistic understanding that in order for it to be of any value, “someone” would have to do the actual editing!

It brings home the fact that in wiki- or forum- style communities, the number of people who contribute information is a fraction of those who consume information. The templates and marketing information all went on because they only relied on a small number of interested editors to make the wiki site definitive. Some people – either those who find this sort of thing interesting, or those whose managers find this stuff interesting, were prepared to update their own user pages. But changing the process of running a sourcing event so that all the relevant information is entered into the wiki repository after the event for the benefit of others in the business? Now that’s a whole different proposition. And it begs a number of questions like: how do you make sure all the relevant information is loaded onto the wiki (and you don’t miss out a crucial piece of information which is blindingly obvious to you but which might not be obvious for other people)? How do you ensure that people who are consuming the information are looking at the right page (paper bought for resale might not be the same as paper bought as an indirect, for example)? Etc, etc.

Extrapolating from this experience has taught me something important about any attempts to build a procurement community online: The procurement world is sufficiently small that you can’t expect a critical mass of people simply to contribute useful information to any one central repository. Iasta’s e-sourcing wiki is an example: 7,500 odd hits so far but check the recent changes page and only a small number of names appear as contributors. Perhaps there’s a generational element, with newer buyers more open and older buyers more reticent. That would be the thrust of articles like this one at Tech Crunch, but I suspect the generational piece will turn out to be just a small element in the overall equation, especially when applied to business information. Seems to me that the best way to share useful information in the procurement space is by inferring it from what people are actually doing, rather than treating it as an activity in its own right. Of course, exactly how to infer auction best practice (for example) from successful auctions people have run rather than via a self-contained documentation exercise is another question in its own right which, I guess, nods towards the Semantic Web – if that ever gets off the ground. More questions than answers, in other words.

A coda: what did we do with our wiki in the end?

Well, we kept it for two things:

1. Community building by people building their own pages and telling a bit about where they come from and what their experiences are. This is becoming part of the process for all new starters and is quite a neat way to quickly get a feel for who you should be talking to about what.
2. An intranet-style piece holding standard templates and marketing materials.

Regarding category information: We could have gone down the traditional Enterprise Software Change Management route. This would have gone something like “come on, the eAuction managers aren’t updating their category information. We need to mandate it as part of the process and keep beating them over the head until they accept it”.  Or we could have gone down the Enterprise Software Budget Busting route. This would have been something like “the central repository won’t work without an editor. So let’s hire someone to maintain the wiki and have that person interview, or otherwise, extract information from the eAuction managers as they go about their daily jobs”.

We took a different approach, which I call the Going Back To The Objective approach. We asked “what are we trying to achieve here?”. The answer was: “help eAuction managers keep up to speed with what their colleagues are doing”. Next question: “Is there an easier way to do this that doesn’t make them do extra typing?”. Answer: “How about just letting everyone have query access over our history of sourcing events with some pre-defined reports so people can easily look up who has the most experience in category X and which eAuction managers have auctioned category Y most recently. That way they can just pick up the phone and easily get hold of all the relevant information, plus all that intangible, invaluable stuff you only get through talking to people”. The tool then becomes something to encourage, and facilitate, people to talk to each other. Not an end in itself. Boom. Sometimes the simplest solutions are the best.

Vista not all that bad

At TradingPartners UK we recently did a mass upgrade of laptops from XP/Office 2003 to Vista/Office 2007.

And you know what? Vista has been ok. Most of my colleagues have turned off most of the “cool” Aero features and set their PCs to work at maximum performance. I’ve found the startup is not superfast and Outlook 2007 can take a while to start, but overall it’s faster than my old PC, and it costs less than my old PC did.

The gripes I’ve heard people at TradingPartners coming up with tend to be around getting used to the way Office 2007 has completely changed the way all the menu items and buttons appear for no apparent reason.

As far as performance goes obviously Vista needs a lot more resources than XP. So on an identical spec of PC, XP will run faster than Vista. But … When you factor in thc falling costs of IT hardware, I am now getting more performance per $ with a 2007 PC running Vista than I was with a 2004 PC running XP.

And I believe that by having Vista now, we’ll have an operating system that won’t look dated in 2 years time.

Reverse Auctions: Whose definition will win?

My last post looked at how interest seems to be starting to re-awaken in reverse auctions.

So I did a google on Reverse Auction to see what came up. The results are very instructive:

1. Wikipedia’s definition of a reverse auction. Good.
2. BidJam – One of those “lowest unique bid wins” operations. Ouch.
3. Autoebid – a site for consumers to run reverse auctions on new cars. Good.
4. Charlotte’s auction – one of those “lowest unique bid wins” operations. Ouch.
5. BidLowest2Win – one of those “lowest unique bid wins” operations. Ouch.

If you’ve been fortunate enough not to come across these “lowest unique bid wins” operations then this is how they work. Someone puts up a TV for sale, for example. People who want the TV place bids and pay a fee per bid. The person who placed the lowest unique bid then pays that price to buy the item. Yes, gambling, essentially.

So of the Top 5 sites found by Google in natural searches to do with Reverse Auctions: 1 is about reverse auctions in general, 1 is about consumer reverse auctions, 3 are gambling sites.

Even Wikipedia’s definition is under assault by the gamblers. The introduction to reverse auctions ends with the following:

(In the past few years mobile reverse auctions have evolved. Unlike B2B reverse auctions, mobile reverse auction is B2C and allow consumers to bid on products for pennies. The lowest unique bid wins.)

The parentheses are Wikipedia’s.

This tells me a few things:

1. A Consumer vs Business point. If ever anyone needed more proof that business software isn’t sexy then here you go – the relatively recent consumer view of reverse auctions as a form of gambling seems to be swamping the business view. (The business view takes its cues from the academic literature on the subject. So you could even extend the argument to say that consumer technology is sexy, business technology is less so and academic technology is really dull)
2. A linguistic point. Whatever we believe about what a “reverse auction” truly is, no-one owns language, so if “reverse auction” comes to mean “gambling” then there’s not much B2B auction providers can do about it.

So which way will things go? Will the “lowest unique bid wins”-type of gambling sites retreat in the face of an increasing accceptance of the business/academic consensus on what a reverse auction truly is? Or will these “lowest unique bid wins” types of event become so dominant in the public mind that subliminally people file “reverse auction” in the same general area as “poker”?

Will the supply chain definition of reverse auctions become the parenthesis, with the B2C version becoming the main definition?

The return of the reverse auction?

Is Buxton’s theory of cost reduction about to kick in for 2008?  Recap: reverse auctions are most fashionable when people feel that there is an economic/house price slowdown on the cards.

I’ve been banging on about reverse auctions for some time now – and to be honest the response I’ve had has often been along the lines of “Fair enough, but we’ve seen it all before. Now, where did I put my sustainable sourcing strategy?”

And yet recently the stars have been (re-)aligning around e-auctions. Are reverse auctions about to become flavour of the month again?

Supply Management, having been silent on reverse auctions for a long time, runs a piece of research about their take-up. This has stimulated some debate – their letters page in this issue (13th December) carries both for and against views.

Michael Lamoureux laid into some reverse auction myths

David Bush talks about a “recent trend of running into a great deal of new content about reverse auctions” here:

Even Tim Minahan – whose only mention of e-auctions that I can recall in recent history was a case study of Sun (a Procuri client) – has come out with 3 (yes, 3) posts here, here and here about e-auctions in the past week or so.

If this is the beginning of a pro reverse e-auction groundswell then I hope:

1. We see an increasing professionalism in the use of e-auctions
2. We see an increasing take up, in the private sector, of e-auctions that consider non-price factors
3. We stop talking about dutch auctions, because they are still rubbish

Consumerisation of businesses technology: careful which sites you emulate

I’ve been blogging for a long time about how enterprise software has a lot to learn from consumer web sites.

This is not to say that consumer sites are inherently clear, intuitive and a joy to use. Many are far from it:

Take this disclaimer from lindam, who sells baby stair gates: Lindam would from time to time also like to send you promotional information regarding our products and promotions. If you would prefer not to receive such information please do not tick the above box.

Or the fact that I couldn’t order flowers from Next Flowers at 11pm on Monday because their online shop was closed until 6am the next morning (and this fact was hidden at the bottom of the page – I only stumbled upon it after much scrolling and dragging around trying to figure out where to click). 

Or SNH, a site which doesn’t let you add more items to an existing order, and whose “contact us” email form seems to send messages into a black hole (*)

But worse than all these is the grand daddy of consumer web sites: Amazon. How these guys came to embody good website design is beyond me (**). Their screen is full of clutter and the processes don’t follow as logically as they could. Take wish lists for example.

When you choose something from someone’s wish list you land on the “people who bought X also bought Y” page. But this is irrelevant information if you are buying a specific present for someone else. You should, if anything, be sent back to the person’s wish list so you can buy more stuff for them! I recall a Christmas a few years ago: my parents wanted to buy 2 books for my wife from her wish list. They ended up ordering one off the wish list and one similar item, accidentally, from “people who bought X also bought Y”. It took some time to disentangle the order mishap.

They haven’t used Amazon since.
The consumer web sites that enterprise software should be emulating are sites like Zopa – which successfully personalises an otherwise very de-personalised space (lending and borrowing money). Or, GLTC has a neat feature for zooming into images, which would be a cool way of showing suppliers images of parts that you are buying (for example).

(*) Yes, you can see the sort of stuff I’ve been buying over the last few days.

(**) Ironically Ariba ditched the bright, fun golds of their early user interface for a pastel Amazon look in version 7 of Ariba Buyer. Add a few autocomplete text boxes to the old look and feel, and you’d have something a lot more up to date than what they have now.

Reverse e-auction myths

The doctor kicked off a post taking a swipe at some common e-auction myths here: http://blog.sourcinginnovation.com/2007/12/03/the-doctor-goes-mental-on-auctions.aspx

Obviously, I have a view as well (!), so here are a few more to add to the list

Reverse e-auctions damage supplier relationships. In a comment on a recent post, David Stone put it best: It is the decision to go to market that threatens relationships, the method by which you go to market is not relevant, you handle the threat by efficient communication and supplier management. If a change of provider is required, an auction actually gives suppliers greater visibility of our sourcing reasons and handled properly can strengthen relationships.

Reverse e-auctions are only about price. In the EU public sector, at least, they are not. Since January 2006, any public sector body using an e-auction must award the contract to the winner of the auction. This means that buyers must factor their evaluation of non-price factors into the e-auction itself – so a bidder who is ranked first in the e-auction is in first place overall. I’ve seen a whole range of this kind of auction in the intervening 20 months: from Consultancy Services at 35% price, 65% non-price through to Electricity at 90% price, 10% non-price.

Reverse e-auctions are only appropriate for commodity items, not for services. If you can specify it, you may be able to auction it. For example, you can auction architect day rates, though you probably can’t auction the design of a building.

I have written two white papers on the subject of reverse e-auctions:

1. A giant step forward for eActions (about the impact of the 2006 public sector regulations on e-auctions)
2. Does procurement e-auction design matter? (about how different auction designs affect the auction result)

If you’d like a copy then feel free to drop me a line.

Software Patents are a tax on innovation

It’s no secret that the patenting system, for software at least, is a mess.

I have talked to a number of entrepreneurs, CEOs, CTOs, and even Intellectual Property lawyers and have yet to  come across any credible examples of where software patents have had a positive effect. Here are the reasons for taking out software patents that I have so far come across:

Marketing: Having a patent granted gives you something to talk about in your promotional material.

Sales FUD: Having a patent application in (not necessarily even granted) lets you talk bigger in front of prospects.

Because the VCs told me to: Investors may feel an exit will be more valuable if there are some patents amongst the firm’s assets.

For defence: If one of your competitors tries to screw up your IPO by threatening a patent infringement suit then you’ll probably find some way that they are infringing one of your patents and can beat them off that way.

IBM makes a lot of $$$$ by licensing their IP: By extension, so could you. If you wanted to operate that kinds of businesses.

Nowhere (or just incredibly rarely) does “to protect and reward the inventor” figure. Much innovative software is developed for free under “open source” (*).

Now look at the commentary on the Ariba/Emptoris pissing contest patent wars and tell me that someone other than lawyers benefits from this broken patent system.

http://www.combinenotes.com/site/comments/ariba_sues_for_patent_infringement/
http://www.spendmatters.com/index.cfm/2007/11/26/Patent-Suites-Continue-Should-Customers-be-Concerned

P.S. This tirade is just directed at patents. I suspect the solution to the IP mess might be addressable through copyright.

P.P.S. At TradingPartners we have taken the view not to apply for any patents. I’d prefer to spend the $$$ on building better e-auction software. If someone wants to rip us off then I’ll take it as a compliment, and it will just spur us to innovate harder.

(*) Setting aside for a moment the thorny issue of whether some open source code infringes on others’ intellectual property.

Amazon Kindle doesn’t sound like a winner

Amazon’s new Kindle device has ignited a large amount of opinion, much of it negative. A good summary is: http://seekingalpha.com/article/54711-amazon-hopes-to-fire-up-e-book-business-with-kindle

As ever, Fake Steve has an entertaining take that is a bit close to the bone: http://fakesteve.blogspot.com/2007/11/first-spy-shots-of-amazons-new-portable.html
Yet has still managed respectable sales, according to the BBC: http://news.bbc.co.uk/1/hi/technology/7107118.stm.

The Economist, disappointingly, are hedging their bets. They recall the naysayers at the time of the iPod’s launch in 2001, whose criticisms are eerily similar to comments on the Kindle. http://www.economist.com/business/displaystory.cfm?story_id=10181125

But back in 2001 people already had mp3 players and had been through portable tape players, portable CD players, even portably minidisc players. People could easily understand the point of a better-looking mp3 player. Amazon is targeting a market in a much more incipient state than the market for portable music was back in 2001.

So, despite not even having seen the damn thing for real, I will remain on the Grinch side of the fence. Bezos’ investment in MFG.com seems to me to be a better bet than his punt on the Kindle.
(* disclosure: I don’t even own an iPod).