If procurement has learned anything from our evolution up to this point, it is that scale is often the enemy of strategy. When we give in to the pressure or the desire to take a transactional approach for the sake of covering more ground in less time, we sacrifice the ability to make optimal decisions that draw maximum value from our effort. It is simply impossible to be sprawling and agile at the same time.
In our efforts to become more strategic, we have learned to choose our projects wisely, to follow an approach tailored to the situation at hand, and to think through every step before we take it. When procurement presents our results to the leadership team, it is no longer enough to talk about straight numbers: savings, spend, transactions, and suppliers. Visionary executives want to be informed about relevant nuances: building knowledge transfer bridges internally and creating competitive advantage externally.
Under the old transactional procurement model, the person with the most spend under management or the highest savings percentage was considered the ‘big dog’ in the room. Being known as a tough negotiator used to be a badge of honor. Today, however, with value as a priority and relationships as a key success factor, it is not unusual for those people (and their results for that matter) to be eyed with skepticism. What did you have to say to the supplier to get that rate? How hard did you have to push your stakeholders to get them to standardize their specifications? And what will be the cost of these actions down the road? Will anyone end up happy?
Whether we’ve articulated it or not, most people instinctively know that you can’t max out on savings and spend under management and also form collaborative relationships that generate sustainable returns and innovation in the long term.
In order to accommodate this shift in perspective, procurement has altered the nature of our relationships. We have worked to ensure that standardized processes do not serve as a barrier to opportunity. Although consistency is critical, and frameworks are put in place to help procurement scale our impact, it must always be in-scope to consider an alternative or out-of-the-box approach when the circumstances are right.
If we are going to continue to advance the evolution already underway, the other thing procurement must ensure that is that we have a ‘proper fit’ relationship with our technology providers. When we evaluate suppliers for strategic partnerships, we compare the size of the fish to the depth of the pond. Do we want to be a big fish in a small pond (influential and dominant) or a small fish in a big pond (safe and overlooked)? The time has come for us to replace the relative size paradigm with one that more closely aligns with the objectives we are trying to achieve. Something other than size or volume should be allowed to set the expectations for procurement’s closest relationships – including our technology providers.
When you need assistance, time is of the essence. How fast can you expect a response and what level of familiarity do you expect the company to have with your situation? If the issue is not resolved immediately, will the same person remain with you throughout the process and ensure that you are satisfied in the end? Is the customer service you receive at this key time based on scale – anonymous and highly automated – or strategy – personalised and with a high level of ownership?
How would you describe the company culture where you work? Do you know what kind of a culture is in place at your technology provider? If they were to form a customer panel to collect and review requests for new functionality, what inputs would determine which companies were invited? Would the invitation process be based on scale – where only the largest companies are given voice – or strategy – where deep pockets are balanced with creativity and innovative applications of the technology?
Let’s say you don’t have a technical issue, but just want to get a better understanding of the technology roadmap and maybe ask a question or two. Would you have any idea who to call? Do you know the name of anyone who works at your technology provider or do you have to work your way in through a massive switchboard? Are regular interactions based on scale – where only contracted support terms enable you to get access to someone who knows something – or strategy – where the long-term benefits of being accessible and forming relationships with customers are understood.
Part of the most striking evidence that outcome-based procurement has led to the need for a redesign of what it means to be BIG comes from the choices traditionally big companies are making vis-à-vis their technology partners. While big fish used to be forced to swim in big ponds, large, innovative companies are recognizing the advantages of partnering with strategic, agile firms. As they move away from a scale-driven approach to procurement, they recognize that the only way to stay true to a strategic mission is by working with a technology provider that operates hands-on and with the same drive to achieve their objectives as procurement has.
How can Market Dojo help?
Market Dojo offer the best of both worlds, being leading procurement technology providers while also remaining immersed in the day to day application of their technology by working closely with their clients. For years, we’ve been told ‘it’s not personal, it’s business’. In today’s collaborative environment we might say ‘it’s personal because it is important business’. Let them help by defining and delivering on your idea of BIG.
Interested in reading more? Read our case studies:
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!The Trials and Tribulations of a Software-as-a-Service Company
Market Dojo provides an eSourcing solution based entirely in the cloud. And whilst we boast all the benefits of being a Saas company, such as pay per use pricing and delivery, instant access, and the ability to try the software before committing to a purchase, it would be beneficial to explain what exactly SaaS really means.
To do this, we involved the help of our knowledgeable partner Kelly Barner at Buyers Meeting Point. Myself (Anya) and Nick had a chat with Kelly to discuss what makes SaaS different to cloud computing, how we benefit from working with our SaaS suppliers and how users can benefit from working with us.
Check out the Blog Talk Radio above and get in touch if you have any questions. How do you best utilise SaaS providers? Or maybe you’re part of a SaaS company, what pros and cons have you discovered?
Don’t forget you can always sign up (free) and check out the benefits of a SaaS eSourcing tool. Feel free to get in touch for more info:
Thanks to Kelly Barner for her recent post on Category Dojo (2/4/2014)
Opportunity assessments have long been tied to service agreements or consulting engagements. They are expensive to conduct, have a limited shelf life, and are often cloaked in mystery. Once the effort required to collect and analyze data has been completed, consultants may use the opportunity to sell additional services, making the case that they should stay involved in order to meet the category requirements or timeline associated with the sourcing waves.
Not all procurement organizations have the budget to bring in an outside firm to conduct an opportunity assessment. Those that do may prefer to be in control of the process and results themselves rather than being reliant on an outside group for collecting and interpreting information on their behalf.
In November of 2013, Market Dojo, a pioneering software-as-a-service (SaaS) company based in the UK, released Category Dojo. Category Dojo can be used alongside Market Dojo, their sourcing and auction platform, or Innovation Dojo, their buyer/supplier collaboration platform, or as a standalone solution. It enables companies to conduct their own opportunity assessments by putting them in the driver’s seat to enter category-level information about spend and then adjust the criteria weightings to prioritize sourcing opportunities, estimating savings and recommending the best sourcing strategy or route to market.
The algorithm that serves as the backbone of the assessment is logical, organized, and consistent. It allows each organization to establish and analyze criteria such as complexity, auctionability, time to implement and risk tolerance. The reports that are created by Category Dojo address a number of perspectives on the categories of spend in question, including Sourcing Strategy, Spend vs. Complexity, Time vs. Return, Savings Potential, and Power Balance. The Power Balance report applies the Kraljic matrix to help procurement see themselves in relation to their suppliers, as well as how their suppliers see them. It reflects the growing trend of placing an emphasis on collaboration with suppliers in strategic categories.
As with their other solutions, Market Dojo designed Category Dojo to be intelligent and easy-to-use with commoditised pricing. In fact, procurement organizations can create a portfolio and enter category information, run the algorithm, and access four of the seven reports for free.
Although Category Dojo is new, it has been received warmly by procurement practitioners. Companies in a range of industries are already putting it to use in-house. Housing 21, the UK’s largest non-profit care provider and a national leader in providing innovative, affordable housing for older people, were one of the first to use Category Dojo. They analysed over 45 categories side by side.
“Market Dojo has played a key part in driving our planning process in ensuring we ask questions on a consistent basis across all our spend categories,” said Paul McGinnes, Housing 21’s Head of Procurement. “This analysis has enabled us to obtain a comprehensive three dimensional result by comparing vastly different categories in a single unified format.”
In an environment where the trend is to move everything to a services model, Market Dojo saw an opportunity to combine the advantages of SaaS solution with the independent capabilities of procurement organizations to allow them to conduct their own opportunity assessments. In addition to enabling companies to manage the process themselves, having hands directly on the solution means that adjustments to criteria can be done on the fly to better understand their impact on project prioritization and to facilitate conversations with executives and internal stakeholders.
As we’ve noted in the past, Market Dojo never releases functionality without having their sights set on the next goal. The Category Dojo mobile app for ipad and iphone has just been released. They are also looking at building additional capabilities around savings tracking at the category level. Stay tuned for more, and file under ‘Savings Dojo’.A fantastic article about Market Dojo on Buyers Meeting Point
Buyers Meeting Point has written a great article about our new Samurai release. We were so pleased, here it is in full:
In October 2010, Buyers Meeting Point received an email from Nick Drewe, the co-founder of a then new-to-market eAuction solution provider based in the U.K. He asked to have Market Dojo listed in our vendor directory, introducing their offering as “very easy to use, has all the professionalism that you would expect, and is offered at a transparent price level.” We have since gotten to know Nick and Market Dojo’s other co-founder Alun Rafique quite well. Their belief in the value proposition of their solution has caused them to invest in development that makes that value apparent to us as well.In the two years since they launched, much has changed – both for Market Dojo and in the spend management solution landscape. Market Dojo has steadily increased their presence through successful application of their technology and industry recognition of their thought leadership. They have been recognized by the U.K. public sector, receiving two Technology Strategy Board (TSB) grants to develop additional functionality. They recently announced the release of Samurai, an upgrade of their solution nine months in coming. This new release brings a revamped user interface and new functionality that increases the breadth and depth of the solution.
While they made their initial entry to the market with a focus on auctions, including less commonly found event types like Japanese auctions, Samurai adds best-of-breed RFx capabilities to the solution. With an eye to the strategic need for collaboration with suppliers, Market Dojo has also added an innovation portal for soliciting and accepting well-defined ideas for improvement from the market and a ‘sandpit’ where buyers can validate the presentation and setup of events by test-driving them before release to suppliers.
Of the changes included in Samurai, the one most likely to make an impact in procurement organizations is the addition of scoring capabilities that can be applied when weighting the information and prices collected in RFx’s and eAuctions. While scoring itself is hardly a new idea in eSourcing, Market Dojo’s approach is closely tied to their philosophy on procurement decision-making and the relationship between procurement and the rest of the organization. Much has been made of procurement’s (sometimes precarious) relationship with Finance. Beyond questioning savings calculations and realization, many Finance groups have trouble accepting the ‘transformational math’ used in scoring scenarios that allow too much subjectivity into what should be an objective evaluation process.
Market Dojo supports two approaches for scoring, both linear in nature:
In the first case, non-leading prices are scored purely against how they rank in the market, as represented by the participants. In a pro rata (or proportionate) scoring scenario, both the market and the buying organization’s expectations are reflected in the pricing score.
While the RFX or eAuction is under way buyers can clearly see the breakdown of the price and non-price scores in real time, adding transparency into the negotiation and decision-making process. This breakdown can be clearly communicated to the participants as well, mitigating the risk of participants challenging the award decision. Furthering the need for transparency, price and non-price scores are independent of one another, which is fair and consistent for the participants. If a participant earns a score of zero in the qualitative (questionnaire) portion of an event, they can stay in the process (if allowed to by the host) by offering a competitive price.
The additional capabilities added to Market Dojo with the release of Samurai allow them to compete for business with a broader base of prospective clients. They have expanded their reach in the sourcing process while their established place in the negotiation phase.And yet, with all the growth and change, Nick’s introductory statement holds true. Market Dojo is still easy to use, professional, and transparent. Two years after launch, Market Dojo saw £120 million auctioned through their solution in a single month. Buyers Meeting Point looks forward to seeing and hearing more from the Market Dojo team as more companies harness their solution to manage spend and innovate with their suppliers.
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.