Slaying and Saving with Verticalization at #ISM2017
When you think of going to Disney World, you don’t necessarily think of a business conference, but for over 2,000 procurement professionals, industry specialists, and accomplished public leaders, that’s exactly what the iconic destination was last week for the annual ISM conference.
Over the four-day event, the JAGGAER team at ISM introduced our new corporate brand persona, the Spend Slayer. Personifying our message of “targeted solutions for multiple industries,” our archer Spend Slayer made the rounds on the exhibit floor encouraging attendees to participate in our Spend Slayer challenge to win a JAGGAER Jelly Speaker. One of the steps in the challenge gave participants the opportunity to view a quick demo for our Source-to-Contract suite.
During the conference we also announced the launch of a suite of solutions tailored to meet the needs of multiple major industry verticals including:
- life sciences
These next generation solutions have been integrated into JAGGAER’s 2017 roadmap driven by a monthly release schedule. Listen to the podcast interview from ISM with Manufacturing Talk Radio and JAGGAER’s GVP of Commercial Enterprise Sales, Mike Brak, for more information.
Welcome to Manufacturing Talk Radio (MTR).
Your source for breaking new, business trends and economic forecasts here and abroad that impact one third of America’s economy. And now your hosts Lew Weiss and Tim Grady.
Welcome to this segment of MTR. We’re at ISM 2017 in Orland, Florida and we’re going to speak with Mike Brak. He’s Group VP, Commercial Enterprise Sales with Jaggaer.
I think the small to mid-size enterprisse are going to be very excited to hear some of the things that Mike has to share about Jaggaer.
Welcome to MTR.
Mike: Thanks for having me on today guys.
Lew: We’re excited that you’re here. Can you tell our listeners about Jaggaer? And we’ve had some pre-show discussion about some of things he can do for small and mid-size enterprises and we really want to delve into that.
Mike: Jaggaer is an end-to-end eprocurement solution that attacks 100% of a company’s spend. What we try to do is help companies save money and also get their spend under management in terms of contract, compliance and managing risk.
And when you say ‘under contract’ what are you talking about?
What we want to make sure is that if you have contracts in place, you have certain price points, you have arrangements with companies contractually, that you’re adhering to those contracts. You also want to make sure you understand when your contracts expire, what special terms and conditions you may have with suppliers.
Are you involved at all in the negotiation of contracts that a manufacturer may have with their vendors?
Mike: We’re not involved in the negotiation but we provide the software that allows them to load their contracts in, to manage their contracts that help their attorneys write and manage terms and clauses within their contracts and also make sure that they’re in compliance with their contracts. Nothing worse than when something happens in a contract and you’re on the hook for something that you should have known about. We get some of those calls after the fact!
Lew: You brought up an interesting point about terms and conditions. We have a metals company, All Metals and Forge Group, and we produce open die forgings and sell them to multiple industries.
I’ve been doing it for five decades. And there was a time when there was almost no such thing as terms and conditions, it’s getting worse and worse. To the point now that we get contracts that have 30-50 pages of unreadable legalise that are pure ‘gotchas’. As a result of our ISO registration, and last year ISO implemented risk assessment and risk management to their programme, we had to take a look at risk management and risk assessment.
So we started studying these T&Cs. They are impossible. They are only meant for one reason, and that’s to trap you. We’ve now turned it over to our attorneys to come up with something, a ten-page response: ‘We don’t like yours but here are ours.’ Let them read a ten-page document that may say nothing, so that’s the long way around the barn.
Do you run into those types of situations with terms and conditions?
Mike: Absolutely. There’s a couple of different ways in terms of contract management and managing T&Cs or a company managing how they write clauses. A contracting group using our solution to help them understand what are the things that they can they accept and not accept – we assist companies and do that, we have a clause library that they can repurpose and reuse, so it doesn’t impact them too much.
Now if you put the shoe on the other foot, what is the dynamic between the supplier and the person that they’re contracting with? We face a lot of, as our company with a lot of the bigger companies that we do business with, they provide us with 75 pages of legal terms and we’re supposed to live with that and we have a much shorter version of that.
It does get down to leveraging and having a discussion on what is fair, equitable business terms that everyone can accept but it is a dynamic that we see getting worse and worse because of how risk-averse that the companies are becoming and you’re looking for every possible thing that could go wrong and they’re unilaterally push that on their business partners.
It is becoming a bigger and bigger issue, not only with the legal terms but also with information technology compliance and how that part of the business is run and how they interpret risk assessment and what T&Cs they want around that.
Lew: I addressed this problem with a customer of mine a couple of weeks ago, talking with the Director of Purchases and I told him, ‘there are 40 pages that we’ve had three people going over for three days. I find that a good part of your T&Cs have nothing to do with our product.’ He says, ‘Well that’s true. We wrote one document that covers all of the types of vendors that we do business with and that should take care of all of our T&C needs.’
I said, ‘Yes but I don’t want to be responsible for $5 million of insurance on a logistics company or on a truck hauling the goods that I sent you at some point in time.’
He told me what to do and I did it. The point is that this is a huge problem, a huge time waster.
Mike: Absolutely, in terms of unlimited liability. We see that all the time in agreements and contracts, even in our business. If you’re dealing with some of the biggest companies in the world, unlimited liability could be (Tim: billions!) quite big problem. And also indemnification language. Your point is a good one. In terms of the boiler plate approach that may not germane to your business, some of the things they may have in their may not make any sense to your business.
Lew: They do not! But you’re signing it.
Mike: At some point it depends upon your risk, the balance of that risk and how it’s been interpreted.
Lew: I appreciate your input on that. I don’t want to dwell on terms and conditions. You can tell I hate them!
When you say that Jaggaer has a 100% end-to-end solution. What does that mean? Are you talking about supply chain procurement end-to-end solution or what?
Yes, one of our biggest differentiators would be around the supply chain spend spends. Most procurement solutions are built for indirect procurement which are the simpler buys. We’re more interested in manufacturing, in the supply chain, the direct materials, transportation, packaging spends and some of the more complex things. We do everything from supplier management to spend analysis, strategic sourcing, contract management which I mentioned, and even eprocurement and accounts payable. You have a whole closed loop system.
I call it the 80/20 rule. Most companies spend 80% of their time sourcing 20% of their stuff. When it should be the other way around. We take a look at those types of issues and how we solve those for companies and it’s a very differentiated offering for us in the marketplace.
If you were to pick up a potential client, let’s say it’s a medium-sized company, say 40-50 people, what’s the first step you would go through? Give our listeners have an idea of what they would have to deal with in regard to creating a programme for them.
One of the first things we would do is come in and talk about their business in terms of what their challenges are and areas they’re trying to improve. We like to think of that as consultative.
We also like to help companies understand the value that we bring. We work with them on a value assessment. We’ll talk about the different things we can do for them, make some recommendations on areas where we may want to attack first. These days I think everyone is aware of the global economy and you have to look at your business holistically and the better the intelligence you have in your business the better you can run it. That’s generally our approach. We try to go in with a very pragmatic approach to understanding what a company is facing and what they’re trying to do, what the CEO is trying to accomplish.
When you go in and you do an analysis do you get much pushback from upper management when you say, ‘You’re doing this wrong.’ I know you don’t say it that way. You say that and they say, ‘…but we’ve always done it that way’.
I call it ‘sensitivity analysis.’ You can point out things that they can improve upon but with the return, you want to ratchet down the actual return. You want to get them to agree to something that’s very safe and minimal. Then you can come to an agreement.
No one wants to live with, ‘We can save you 25% because you guys run a loose ship and you guys are wrong.’ The whole idea is, say you did a spend analysis and you understood and you aggregated your spend and you leveraged that when you did sourcing and procurement, what’s the kind of return you could get from that? Or if you took that information and you understood your supplier base better? And you’re able to work and negotiate with your suppliers and get better information, what efficiencies and savings are you getting in those areas?
And then what do normally we then see? The conversation usually turns to, ‘What are you comfortable with?’ You don’t want to give them a number. That’s when everyone seizes up and hide your stuff in a drawer. You don’t go very far that way.
You gave a couple of examples, and made a couple of comments, I want to go into. What’s the smallest number of employee organisation that you would work with?
A lot of the smaller to mid-size organisation, they’re not going to have a lot of the resources to hire the big consulting companies to come in. What they want is someone to come in and work them fairly quickly to deliver a return on investment.
We have some shared services organisations or purchasing co-ops. Those organisations have 50 – 150 people on the low end. A lot of the mid-sized companies are looking for an alternative to SAP Ariba, Oracle and the ‘big guys’. They want something they can build upon, they can start with the parts that are important to them but then have an extensible platform to build over time that delivers fairly fast value. It’s not going to cost them millions of dollars and take years. They want something that might take weeks and start to deliver value. It’s something very tangible that they can get their hands on. We work with the whole spectrum, from mid-sized companies to the biggest companies in the world.
Where are you located?
We’re headquartered out of Raleigh, North Carolina.
Lew: If any of you have heard the name SciQuest out there, they’re now Jaggaer.
Tim: It’s always interesting to see what the big guys are doing, but when you’re not a big guy then you’re stuck waiting for the trickle-down in technology before you can implement. I’m glad to see that Jaggaer has something that can be implemented today. Neat piece of software. Thank you for being on Manufacturing Talk Radio.