Ottawa, Canada 2010

Democratizing Analytics: From Practical Access to Real-World, Enterprise-Wide Relevance White Paper

A Knowledge Leadership Publication By Procurement Insights Author Jon Hansen

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Table of Contents Executive Summary: Where Timely Insight and Practical Utilization Converge .............. 3 “High Stakes” ...................................................................................................................... 5 The Urgency of Timely Insight and Practical Utilization ................................................... 6 The Non-Consultancy Approach ........................................................................................ 7 SAP – The Dark Side of the Moon ..................................................................................... 8 The Unspoken Problem of Creating Perpetual Need .......................................................... 9 A "Model" Client .............................................................................................................. 11 The Non-Consultant Approach to Rapid Deployment ...................................................... 12 About Rosslyn Analytics .................................................................................................. 15 About the Author .............................................................................................................. 16 APPENDIX A ................................................................................................................... 18

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Executive Summary: Where Timely Insight and Practical Utilization Converge It has always been my belief that purchasing professionals are more than the positions they hold in a company. Like CIOs and CFOs, the artificially established historical boundaries associated with functional silos are becoming blurred. This means that the traditional, and in retrospect narrow, definitions of one’s duties are ceding to a more holistic or enterprise-wide understanding of the many operational areas that intersect and ultimately converge in a unified corporate objective or goal. An essential element in achieving this collaborative outcome both at the department and broader organization level, is the need to effectively communicate with what for many is a diverse group of internal, as well as external stakeholders. At the heart of this "communicative insight" process is an ability to easily access and practically analyze intelligence to drive integrated performance. What I am talking about is the democratization of analytics. This paper will examine what is meant by democratizing analytics as it relates to the timely access and intelligent utilization of information to establish and then quantify real-world results in critical areas such as financial outcomes, increased personnel performance and strategy compliance and maintenance. For many however, this may very well require a shift in how one views the traditional, static definition of spend management, in which the ability to access the information to effect positive front line decision-making was an onerous "mining" process that required both time and expertise. In today's Web 2.0 world (and beyond), an exercise such as the one described above, which does not reflect the real-time, real-world visibility that is necessary to ensure sustainable best-value results, must cede to the provision of intelligence (spend intelligence) that is readily and reliably accessible at the actual point of decision-making or purchase.

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In short, with the increasing cross-pollination of relevant data that transcends individual departmental objectives and for that matter external stakeholder interest, time consuming access of singularly static reservoirs of information will significantly hinder both mid to long-term profitability. This of course is not just a question of technology, although breakthroughs in the utilization of advanced algorithms that both automates and validates the seamless flow of competing intelligence through a cohesive guidance mechanism such as a dashboard is a key component, but is instead more reflective of a collaborative mindset. Herein lays the longstanding paradox that has plagued the majority of organizations relative to their procurement and supply chain operations. Specifically, the views that procurement is merely an adjunct function of finance or IT. This has resulted in the absence of the necessary collaborative participation involving purchasing professionals whose insights and experiences have generally been overlooked. The end result has been a consistently high rate of initiative failures in which the anticipated savings have rarely if ever materialized. Given the present-day acknowledgement that procurement is more than the buying of goods and services to fulfill a larger and unrelated purpose, but is in reality a strategic tool that directly impacts an enterprises profitability and competitiveness, bridging the two realities of functional adjunct and essential asset is what the emerging Software-as-a-Service or SaaS vendor solutions are all about. The responsibility of the SaaS client is to ensure that a collaborative "human" platform has been established. Otherwise, even the most advanced technological breakthroughs will have a limited or reduced effect.

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“High Stakes” “UK public sector spending amounts to some 1.5 percent of global GDP. In 2009-10 it will amount to nearly 50 percent of UK GDP, approximately £11,000 per man, woman and child in the UK. This is equivalent to a lifetime investment of £850,000for a person with average life expectancy.” The public therefore has a right to expect that this money is spent efficiently and wisely. However, despite some excellent recent initiatives, the efficiency of the public sector remains too much a legacy of its past and a prisoner of its structures." From Towards Tesco - improving public sector procurement by Colin Cram

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The Urgency of Timely Insight and Practical Utilization In the opening paragraphs of his March 19th, 2010 report "Towards Tesco - improving public sector procurement" Colin Cram presents compelling data for improving the way in which the government in the UK currently purchases goods and services. While the majority of organizations overall spend may not fall within the same range of the UK government's "approximately £11,000 per man, woman and child," level, the importance of the actual numbers undoubtedly warrants equal consideration. Unfortunately, and similar to the government, efficiencies and needed breakthroughs in terms of improved process and best-value decision-making remains subject to the very same legacies of past mindsets and rigid functional silos. In essence, the very accessibility to the critical spend data or intelligence that is so necessary to drive sustainable improvement and savings has been impeded by what Rosslyn Analytics has referred to as "organizations who are being held hostage by vendors heavily reliant on consultants and solutions that have been slow to implement, costly and inflexible in today’s 2.0 world." These challenges have been further exacerbated by the unwillingness of longstanding mainstream industry pundits to readily embrace the emerging Web 2.0 methodologies and solutions, oftentimes dismissing concepts such as spend intelligence as being "nothing more than an attempt to shoot some Botox into a segment of the Spend Management market." Others have even gone so far as to suggest that the phrase “spend intelligence” is "misleading," expressing the opinion that it "sounds like a new take or sub-segment of business intelligence software applications which offer analytics and dashboard capabilities and sit on top of existing systems of record."

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The "problem" as they explain it is that "spend visibility and analytics is much more complex, requiring data cleansing, rationalization, classification and other efforts which go far beyond what is needed to gain insight into basic HR, financials, IT and other internal information, which fall cleanly in to the BI camp.” While attitudes such as the ones expressed above tend to slow to a certain extent the rate of market adoption of the aforementioned Web 2.0 service-oriented platforms, the fact that 85 percent of all e-procurement and supply chain initiatives have and continue to fail to achieve the expected savings results has created a reality of pressure. In short, it is one thing for industry pundits to opine about the greater relevancy of process efficiency and technological-centric savings in a theoretical world of knowledgeable pontification. It is quite a different matter to have to deliver tangible value and measurable results in a world in which expenditures carry the weight of "£11,000 per man, woman and child," and the equivalent to a "lifetime investment of £850,000 for a person with average life expectancy." Something had to give, and based on the changing economy and increasingly globalized nature and importance of modern supply chains, both private and public sector organizations can no longer "survive" the inefficiencies of the overarching, monolithic undertakings associated with traditional ERP-centric implementation programs. This is especially true when said programs and their related technologies continue to alienate rather than engage all critical stakeholders both within and external to the enterprise.

The Non-Consultancy Approach While the term "non-consultancy approach" appears to be indigenous to Rosslyn Analytics, it is clear that it is to a certain extent an indictment of the ineffectiveness of the traditional ERP-centric "licensed" models in which the implementation process usually spanned years instead of the days or for that

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matter hours associated with the new SaaS models. However, before we discuss the emergence of a new and perhaps more productive consultancy model, I would like to take a few moments to review a sample of the results that have led to this monumental shift in solution identification and implementation approach. In the following excerpt from a section of a white paper I had originally written in 2007 titled SAP Procurement for the Public Sector, I highlighted the many challenges associated with traditional ERP-centric initiatives in which a elongated implementation period coupled with significant consultant involvement led to many failed programs including those within the high tech world.

SAP – The Dark Side of the Moon Often times it is the unknown that can create the greatest challenges. Regardless of the vendor, the less than stellar results associated with the majority of all e-procurement initiatives should give one pause for thought. That said it is not the intention of this study to either recommend or dissuade the reader from actively pursuing an SAP-based strategy. The primary objective is to provide decision-makers with an "objective lens" through which they will be able to view all relevant data. For this reason, our research was extended to include case histories in which the results of an SAP program did not meet client expectations. In a September 16th, 2004 article titled Extending the Enterprise – SAP: Are its customers happy? (Appendix B), Dale Vile referenced a story in which one of SAP’s major customers (MFI) “cited problems with an SAP supply chain implementation as a reason for poorer than expected

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financial results.” Other similar stories including Hewlett-Packard’s “lost $400 million in revenue from a failed SAP rollout”(Appendix C) and the £12 million hit that Cadbury Scwheppes took in 2006 as a result of a "bad SAP supply chain" project (Appendix D) is also worth noting in that the issues extend well beyond the size and resources of the companies in question. Although the HP case study should be somewhat disconcerting given that the organization's level of sophistication and supposed expertise with SAP purportedly distinguished it as an integrator.

As RedMonk analyst James Governor put it, “HP is trying to build an application management business to rival IBM’s. What better case study in proving your R/3 and Netweaver capability” . . . by showing “everyone how to merge two SAP systems.” The analyst concluded by saying “Who would want to go to HP now for large scale SAP integration? The CEO just publicly said HP can't effectively manage such a project.” This being the case, if a high technology company who has extensive experience with the product can’t succeed, what does this say in terms of any organization’s chances for success?

The Unspoken Problem of Creating Perpetual Need The above excerpt is telling in that it speaks to a much larger flaw in the traditional consultancy approach to implementing a strategy and corresponding application. The fact that the investment in automating one's

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procurement process usually leads to an increasing revenue track instead of a declining one is telling. In fact, it shares surprising similarity to what Jeffrey H. Boyd wrote about the American health care system in a December 2006 Journal of Religion and Health article titled Are Americans Getting Sicker or Healthier, in which he concluded that "the more money a society like the USA spends on medical care, the more expensive medical care becomes. This is the dark side of medicine, which counterbalances the well-known breakthroughs of medical science," the consultancy-centric implementation process that has been in place for far too long produces the same outcome.

Example A

Technology-Centric Approach

As illustrated in the graph above, an escalating cost track or trend actually kicks in at the point of implementation, giving rise to what some have referred to as a "post implementation consulting cottage industry." The added sting of the above model is that very few initiatives actually come close to achieving the expected savings and, as proven time and again, many cause irreparable harm in key areas such as supplier relations and a phenomenon known as supply base erosion. An example of this is the City of Ottawa.

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A "Model" Client It is somewhat ironic that in the above mentioned SAP white paper, the vendor had cited as an example of a successful implementation the City of Ottawa. In their reference material, SAP encouraged us to "read how

Ottawa, reformed from 12 municipalities, uses the integrated

mySAP Business Suite family of business solutions to improve

processes such as centralized payroll and consolidated

inventory, and to run faster reports and responses --

anticipating 100% ROI in five years.

Nearly 2 years later in a December 2009 article I wrote titled "The Paucity of supplier bidding on City of Ottawa contracts is a symptom of a much larger problem," I reported that "the City of Ottawa receives on average only five bids per tender—and they want more companies to bid on their tenders." What is interesting is that in the case of Ottawa, like the City of Houston as well as many of SAP's other clients, these initiatives are expensive, long-term propositions that ultimately confine procurement-related requirements to a low-prioritized rank on a to-do list of what inevitably becomes a consultant managed cash intensive program. Even in those instances where procurement is given a priority status, the need to allocate valuable resources to maintain basic system functionality can be onerous. Or as one senior purchasing official from South Dakota lamented, “are we in the software business or the procurement business” after having to dedicate 2 full time resources to making their PeopleSoft application work. These as well as other examples perhaps provide ample support for Rosslyn's "non-consultancy approach."

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The Non-Consultant Approach to Rapid Deployment In the over view of their offering Rosslyn Analytics makes the statement that they are "the only spend analysis company that believes advanced technology correctly applied creates significant business value." They go on to say that this was the impetus behind the company's development of the industry’s "first web-based Automated Spend Analytics Platform (W-ASAP), Rapidintel, a cloud computing strategic Spend Analysis as a Service (SaaS) solution enables organizations to quickly, cost effectively and securely run “on-demand” pre-built and configurable analytical applications." This is an interesting statement, especially given the fact that they list the following panoply of client benefits: • Spend visibility in minutes or days • Payback period in 8 to 12 weeks • Unlimited users, unlimited pre-built applications • Guaranteed ROI in six months • Centralized one trusted view of all spend data • Automated categorization and real-time data enrichment • Advanced analytics including predictive modelling tools • Self service, on the fly report creation • Customized dashboards, scorecards and alerts • Role-based information access • Real-time collaborative platform • Sustainable savings of 10-15% year on, year on • No software, hardware or consultants While Aldous Huxley lamented the fact that "truth would be lost in a sea of irrelevance" or slick marketing material that strategically measures the use of each word to deliver the right message, re "an ROI in excess of 500%," the basis upon which the Rosslyn Analytics solution has been structured lends credence to their lofty claims.

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In fact, based upon the unique methodology and platforms upon which many of the "New Titans of the SaaS World" have structured their solutions, promises of implementations within days with an almost immediate ROI payback is becoming increasingly commonplace. The basis for these results can be found in the core methodology under which these process-aware systems have been developed. Example B

Our Belief Rosslyn Analytics believes that organizations have been held hostage by vendors heavily reliant on consultants and solutions that that have been slow to implement, costly and inflexible in today’s 2.0 world. Rosslyn Analytics is committed to helping finance and procurement leaders to regain control of their spend analysis function by providing them with rapid, easy-to-use and cost-effective web-based applications and tools that have been developed in collaboration with and for customers. Rosslyn Analytics is challenging the status quo, breaking the established “rules” to define and deliver value previously unimagined to organizations. Introduction Rosslyn Analytics is passionate about helping organizations of all sizes make faster, easier and more reliable business decisions based on access to their spend data. What others do in months, we accomplish in days because our end-to-end strategic spend analytics platform, and creative service model, are compellingly customer-centric. Rosslyn Analytics is uniquely positioned in the market as the only spend analysis company that also specializes in data extraction and hosted data warehouse. We are a one-stop shop; from extracting spend data to designing consumer-like “slice & dice” reports and dashboards. We make spend analysis easy for our customers. Rosslyn Analytics is also the only spend analysis company that believes advanced technology including cloud computing correctly applied creates significant business value; which is why we developed the industry’s first web-based Automated Spend Analytics Platform (W-ASAP), Rapidintel, a cloud computing strategic Spend Analysis as a Service (SAaaS) solution that enables organizations to quickly, cost effectively and securely run “on-demand” spend analysis applications. Yet, we are more than a pioneering technology company. Leading organizations such as Aberdeen Asset Management, Clifford Chance, Novartis, Rio Tinto and Serco Group have turned to us because of our non-consultancy approach and commitment to customer service is unmatched. We are proud to say that our end-to-end solution, combined with our approach, delivers the industry’s fastest cost savings, quickest return on investment and lowest total cost of ownership. Industries we serve:

• Energy • Financial Services • Legal • Manufacturing • Oil & Gas • Pharmaceutical • Services • Shipping

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Example B Process-Centric Approach

As illustrated by the above referenced graph, the heavy lifting associated with true process understanding and adaptation is born by the SaaS vendor prior to implementation. Similar to Science integration, which goes beyond the mere generation and reporting of data, but is instead an attempt to synthesize and interpret the world in light of new scientific findings, these new solutions which leverage advanced algorithms also develop an integrated picture using disparate findings. In the procurement world, these disparate findings would be linked to both historic and dynamic factors such as time-of-day order placement, pricing fluctuation associated with commodity characteristics, geographic location and historic delivery and quality performance. This means that at the point when the system is actually turned-on, it is a fully functional "intelligent" solution that requires nominal ongoing interface on the part of the vendor. And this is perhaps the reason why Rosslyn Analytics considers itself to be "more than a technology company," that believes "advanced technology correctly applied creates significant (and perhaps unprecedented) business value. Based on extensive research such as what has been cited above, one would be hard pressed to argue this point.

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About Rosslyn Analytics Rosslyn Analytics is a cloud computing leader who offers strategic Spend Analysis as a Service (SaaS), which changes the way world-class organizations access, use, share and monitor their spend. Its award-winning web-based automated spend analytics platform, Rapidintel, aligns and empowers ALL employees that can influence spend by delivering visibility of enterprise-wide spend in under a month. This type of technology has a profound impact on levels of profitability as it enables many customers to slash indirect costs by up to 25% within eight weeks. Initial savings occur so rapidly that Rosslyn Analytics guarantees an ROI in six months. Also, enterprises can start with a free, self-service version of Rapidintel that gives buyers the ability to run base spending reports and identify duplicate payments, for example, within minutes of loading data into the platform. For more information, please visit www.rosslynanalytis.com. Rosslyn's World Headquarters is located in LONDON, UK. Company Website: http://www.rosslynanalytics.com/ © Procurement Insights 2008-2010

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About the Author Jon Hansen has studied and written extensively about e-Procurement and the changing face of procurement around the globe. In addition to being a highly acclaimed international speaker, his Procurement Insights Blog reaches 300,000 syndicated subscribers each month worldwide, and is currently available in several languages. He has written more than 700 articles and papers on subjects ranging from supply chain optimization and the utilization of agent-based modeling in the software development process to the evolution of sustainable purchasing practices and the impact of traditional ERP-centric implementation methodologies on the high rate of supply chain initiative failures. Funded by the Government of Canada’s Scientific Research and Experimental Development (SR&ED) program Mr. Hansen’s work in both identifying the existence of Commodity Characteristics as well as defining and recording their impact on “best value” purchasing practices represented a seminal breakthrough that led to the establishment of new theories surrounding the practical utilization of synchronized platforms in achieving sustainable coordinated savings and overall process efficiencies. Jon is also the host of the highly acclaimed PI Window on Business Show on Blog Talk Radio (BTR). As a BTR Network featured host, Jon has welcomed leaders and bestselling authors from the world of business discussing both timely and thought provoking topics. The PI Window on Business Show airs throughout the week between 12:30 and 1:30 PM EDT. Jon Hansen is also an author of the critically acclaimed book, “Your Show Will Go Live in 5 Seconds (Confessions of a Blog Talk Radio Host)," and the just released "The Unsociable Business of Social Networks And Why The So Act Social Network Will Change The World." His books are available through both Amazon.com and Barnes & Noble Bookstores. To obtain copies of the above referenced book, or to inquire about Jon’s availability to speak at your next conference or seminar contact Jennifer Cameron at thesenses@ymail.com, or 819-986-8953.

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Democratizing Analytics: From Practical Access to Real-World, Enterprise-Wide Relevance White Paper Appendices

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APPENDIX A

Pages 5,6 (High Stakes - Towards Tesco); http://www.blogtalkradio.com/jon-hansen/2010/04/09/towards-tesco-saving-the-government-25-billion-pun, Radio Interview with Colin Cram RE "Towards Tesco - improving public sector procurement" paper, PI Window on Business (April, 2010) Pages 8, 9, 10, 11 (SAP: The Dark Side of the Moon); http://www.slideshare.net/piblogger/sap-procurement-for-public-sector-white-paper, SAP Procurement for Public Sector White Paper, Jon Hansen (December, 2008) Page (Are Americans Getting Sicker or Healthier); http://www.springerlink.com/content/e023223161631w03/, Journal of Religion and Health, Jeffrey H. Boyd (December, 2006) Pages 12 (The Paucity of supplier bidding); http://procureinsights.wordpress.com/2009/12/04/the-paucity-of-suppliers-bidding-on-city-of-ottawa-contracts-is-a-symptom-of-a-much-larger-problem/, The Paucity of suppliers bidding on City of Ottawa contracts is a symptom of a much larger problem, Jon Hansen, Procurement Insights Blog (December, 2009)