By Jim Baehr
Many data management tools exist across the procurement supply chain. Deciding to migrate to one of these Master Data Management environments can present a number of challenges. In our “Ask the Expert” column, we engaged Mary Ellen Mitchell, the President of SpendCheQ, to learn more about how these new tools impact global procurement, supply chain and spend management at both the strategic and operational levels.
Q: What is the problem users are looking to solve?
A: Whether a user is looking at spend analysis, inventory or catalog data, they’re beleaguered with inaccurate data that resides on multiple data bases. Even if they have the tools to integrate the data, the data is problematic due to variances across the same data points. They find multiple descriptions, and they lack the ability to cleanse, enhance or enrich it. Placing non-cleansed data into any tool, provides poor results. Often bad data is integrated into software solutions hoping to solve the problem. Users need to determine: What information do I need to make strategic decisions? Where is this data, and is it available? What software provides the reporting and analytics needed? Does that software integrate the data automatically with minimal resources and cost? Does that software integrate with the rest of the supply chain platform? Are the information updates processed interactively? Finally, what are the short and long-term goals for managing the supply chain data?
Q: What kinds of solutions do the users require?
A: Users want to locate all the data needed from all their data bases, integrate that data into a single platform, standardize it, take any redundancies out, and enrich it if needed. They also want a user-friendly interface for statistical reporting, analytics, and data management. Users are looking for an integrated way to manage their data that’s affordable, easy to use and requires little IT support. Many large enterprises are endorsing a cloud technology strategy.
Q: Why are some organizations hesitant to embrace these tools?
A: Major systems in the MDM market have their foundation in embedded mainframe financial and material systems. The integration of the MDM software is a major expense and requires a long timeline to implement. Users are reluctant to make an investment when they are unsure of the results and value. Smaller boutique providers are introducing cloud based integrated systems, but typically they’re bolt on applications and often not effective across the enterprise. Very few enterprises have implemented a strategy and documented their savings and benefits. Without this savings/benefits baseline, users are reluctant to make a commitment.
Q: What makes a system good?
A: The system should be easy to implement and maintain, and should address the unique needs of the entire enterprise. Implementation should take months not years. An initial data cleansing and enrichment of the data is critical to avoid the “garbage in, garbage out” problem. Once a data item is changed in one application, it should automatically update all the other supported applications. The system should deliver reporting and analytical analysis in an interactive fashion, with both historical and predictive data. There should be a minimal need for resources and collaboration tools, dashboards and workflows should be provided. Once the data is cleansed, refreshes are needed to ensure data doesn’t become corrupt. As data is entered, it should automatically update the spend, inventory, catalog, contract management and supplier data. This capability is only available in a single platform solution that’s built from the ground up.
Q: What can I expect as a Return on Investment?
A: This is a difficult metric to guarantee. It depends upon the volume of data being processed and the number of supply chain applications being maintained. One can measure cost saving by the reduction of resources managing and entering data on all the disparate data bases and the cost of labor to onboard suppliers, inventory data, develop spreadsheets, vendor catalogs and storing contracts. Moving from heavy multimillion dollar mainframe maintenance costs to a cloud technology typically provides meaningful savings. Cloud solutions are implemented quickly and can yield savings within months not years. It’s not unusual to see cost savings ranging from 25-50%. What gets tricky is having the baseline data available to calculate the ROI. Since the technology is relatively new, there are few studies available and few active implementations. Some large enterprises have opted to go with the major providers and are accepting the long timeframe approach in order to minimize risk.
Q: What does it take to manage and maintain?
A: Implementing a cloud based total MDM solution can take a matter of months. If the MDM cloud based solution is truly integrated, the refreshes will be automatic and on-demand. The system will pull the data from the diverse data bases, map them to a standard template, and update all the applications on the platform. The provider should maintain the application, upgrades and furnish customer support. The users can manage the data from their dashboard, and, as needed, modify reports or customize dashboards per their needs. The provider should deliver statistical reports on any changes to the system, problems or issues to be resolved. The provider working with the users can standardize the templates, customize the reports required and train the users. Other than providing an interface to the data bases, there is virtually no assistance needed from IT. Typically, a system administrator and a key contact in the supply chain or procurement group is needed to support the implementation and refreshes.
Q: Tell me about the “bad part’ of doing this
A: All too often we see bad implementations due to buying one application at a time and expecting to see great results. For example, there are many spend analysis solutions in the marketplace that are very good at spend analysis; but, they’re not truly integrated to other applications using the same data sets such as inventory data, supplier information, the products descriptions or pricing. This breeds data isolation. Once those silos are created, it’s difficult to produce an integrated solution.
Q: Why did you consider entering an already crowded market?
A: As a consultant and software executive, I’ve been working with companies that struggle to access accurate data to make good strategic decisions. Having responded to hundreds of RFPs over the years, I’ve had the opportunity to amass a comprehensive library of functional “must haves” and “like to haves”. The market has delivered software solutions that meet specific requirements, but few address the need of integrating all those data points from multiple and disparate data bases into one platform making it easy to aggregate supplier, materials, spend, catalog and inventory data. Providing true Master Data Management (MDM) technology to the market in an inexpensive cloud application suite couldn’t be achieved by buying other provider’s products and “hooking them on” to fill gaps in a product line. We envisioned a solution for the entire supply chain, and the only way to deliver this MDM solution was to build it from scratch.
Jim Baehr is the Lead for the Sourcing Strategies Group LLC (SSG) supporting the supply management needs of clients in both the public and private sectors. Prior to forming SSG, he was an independent advisor for several years.
His most recent corporate roles were as Vice President of Global Information Technology Procurement for Reed Elsevier, and Director of Technical and Services Procurement for Bayer Corporation. Baehr has extensive experience in senior management positions and an accomplished career in sales.
Currently, Baehr is the President of the ISM – Pittsburgh Affiliate, a member of the Board of Governors of the Joint Chemical Group of Pittsburgh and a member of the Visionary Council of Coupa Software Incorporated based in San Mateo, Calif.
He is a blogger, a frequent presenter at meetings and conferences and a contributing author to the book Next Level Supply Management Excellence: Your Straight to the Bottom Line® Roadmap.
George E. Krauter
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