As I child, I spent hours on my bed reading books. One of my favorites was Agatha Christie’s detective novel, “And Then There Were None.” In this book, ten people, guilty in the deaths of others, have escaped punishment; but are tricked onto an island. Each guest is mysteriously murdered one by one, until there were none. It parallels the nursery rhyme, Ten Little Indians. It is one of the best-selling books of all time.

 

Last year about this time, I wrote the blog post on Accenture’s acquisition of CAS. (Reference blog post http://www.supplychainshaman.com/demanddriven/my-take-accenture-buys-cas/). As many of my readers know, I have studied technologies to help the consumer product value chain improve promotion effectiveness for the last 7 years. As I do, I feel that I am reading Agatha’s book: they are being killed off one by one. My question is until there are none?

 

The What

On Friday last week, IBM announced the intent to purchase DemandTec for 440 million. DemandTec, founded in 1999, currently has 355 employees. The company sold optimization software for revenue management (including trade promotion management for consumer products and price optimization for retail) as a Software as a Service (SaaS). The selling price is a 5.3 multiple of revenue to sale price. On a pure number basis, DemandTec served 50 retailers and 400 consumer products manufacturers; but on a revenue basis, DemandTec’s numbers were 75-80% retail. On the calls on Friday, the IBM team cited opportunities with Coremetrics and Unica. The DemandTec prior acquisitions of M-Factor and Connect3 offer real promise, but were not mentioned in IBM’s positioning. I believe that these opportunities offer more promise to retailers than consumer manufacturers.

 

 

I feel that the acquisition of trade promotion technologies is much like Agatha’s novel. They are disappearing one by one, but none of them have been very successful in driving customer loyalty.

 

The So What

The trade promotion market technology market is a troubled space. Retailers feel that they do not need CRM, but want optimization; and the DemandTec solution fit some, but not all of the consumer product companies needs. The Company’s desire to serve the value chain—retailers and consumer manufacturers together—was a great attempt; but at the end, it more messaging than reality. All was not rosy. In 2011, DemandTec posted a series of losses and shares fell 22% through last Wednesday’s close.

 

 

§ What does the acquisition mean for DemandTec Customers? As an analyst, with all acquisitions, I hear a lot of phone rhetoric. This acquisition was no exception. And, I am skeptical, because acquisitions and promises seldom live up to expectations. While IBM has made progress with its recent Coremetrics and Unica acquisitions, there is a risk that when companies are acquired they lose the passion of the founders. This is a consolidation play. IBM is large, moves deliberately, and customers will not see much change fast. DemandTec customers should stabilize their implementations, work with IBM to understand their plans, and be thoughtful on moving forward on new functionality. There will be more uncertainty than certainty.

 

§ What does it mean for the market? The trade promotion market is a mess. In general terms, no customer is happy with any solution (reference posts at the bottom of this blog). SAP’s CRM solution continues to hit implementation roadblocks, and Oracle’s customer satisfaction remains low. The acquisition of CAS by Accenture and DemandTec by IBM should be good news for ProMax. ProMax, a new market entry from Australia, is trying to be the easier to do business best-of-breed solution.

 

§ What lessons can we learn? Just as in Agatha’s novel, the trade promotion market providers are disappearing one by one; and, like the Indians on the island, they are all a bit guilty for the mess that this TPM market finds itself in.

 

The NOW What

In closing, I hope that IBM does great things with DemandTec. I would love to see a deeper more end-to-end solution. I would encourage IBM customers to discuss plugging the three applications– DemandTec, Unica and Coremetrics–it into the IBM Netezza appliance for consumer products and retail. 

 

 

But, things move slowly in this space. <Should I say island?> I don’t expect IBM to make quick changes, but I do wish them well. I am also waiting for Accenture to do great things with CAS. I would love for SAPs TPM solution to be a better fit for the requirements and for Oracle to offer a better level of customer service. However, right now, they are all on this island called trade promotion management. There is time to fix the issue before there are none.

 

 

For more on the trade promotion management market, reference these articles:

http://www.supplychainshaman.com/demanddriven/turning-up-the-heat-a-hot-topic-on-a-hot-afternoon/

http://www.supplychainshaman.com/supply-chain-excellence/crossing-the-great-divide/

http://www.supplychainshaman.com/demanddriven/my-take-accenture-buys-cas/)

Happy holidays to all.

 

I started this blog in 2010, and have grown the readership to over 3000 regular readers. At first, very few people would post back. <To say that the traditional supply chain audience is a bit uncomfortable with twitter and blogging is an understatement.>  As the blog matured, it attracted a different audience. I now have a number of university students of SCM following me. I find it very rewarding to get their comments. Last week, a reader replied to my supply chain trends piece:

 

As a current graduate student in Supply Chain Management, I have seen significant discussion on talent management. Is this a trend that you are seeing? And, can you give some advice to graduates on how to improve their skills to align with what employers are seeking? I stumbled upon your blog a couple of months ago, and have really enjoyed your perspective on the challenges and opportunities within supply chain roles.”

 

Abby, I don’t know you, but this blog post is designed to answer your question. In short, the answer to your question is YES. I feel a bit like I am answering the inquiry by Virginia on September 21, 1897 which was answered by the famous editorial of The New York Sun, “Yes, Virginia there is a Santa Claus.” His reply was that Santa exists as love and generosity. My answer is that there will be very different jobs than the jobs that you see today.

 

If you are the Abigail Mayer of Plymouth University, UK born in 1990, you are in the third generation of supply chain leaders. My generation is currently passing the baton to the second generation.  I write this blog post so that all of you and your classmates may find rewarding jobs in the world of supply chain management. Here I answer your question, and give advice to new graduates entering the world of Supply Chain Management.

 

Making the Transition

The term supply chain management is new. It was first used widely by the audience in the period of 1992-1995. As the baton is passed, let’s celebrate the legacy. Within the last two years, leaders like Donald Bowersox of Georgia Tech, Dick Clark of Procter and Gamble, Eli Goldratt leader of the AGI-Goldratt Institute, Tom Mentzer of University of Tennessee and Stefan Theis of SAP have died. 30% of the people that I am interviewing have retired or are ready to retire. My first words of advice is spend time with these folks to learn the evolution of the concepts. Understand what it was like before technology made the concept of Supply Chain Management possible. These were the days when writing meant a pad of paper and a pencil, when a presentation focused on the right transparencies and bulbs for the overhead projectors, the creation of a report involved lots of white-out and typewriters, and the final report was sent by inner-office mail. Calculations were done on adding machines and mainframes. The concepts of near real-time data and predictive analytics were are much a fantasy then as Santa Claus is today.

 

The second generation of supply chain professional (ages 35-50) is where we are currently seeing the greatest talent issues. This is the generation that implemented ERP, ecommerce, and Advanced Planning Systems (APS). They were often the boots on the ground for the global supply chain. Many of them were pioneers: relocating their families and learning the nuances of global supply chain management the hard way. In short, there are too few of these trained individuals to fill the gaps of the retirees. The good news is that you learn fast, you can help fill-in the gap.

 

I see from LinkedIn, that you are in the third generation. We give thanks that academic programs are fueling the wave for the third generation of workers, but we are unsure what your world will look like. We think that the forecast entry-level jobs will be rosy, but we are unsure of how SCM practices will evolve. To help you, I share five pieces of advice:

 

  • Get good at Math. SCM is a world where math geeks excel. Be proud of it, but learn how to use data to drive value-based outcomes. Think analytically, and use it to influence cross-functional groups. Data for the sake of data or math for the sake of math does us no good.
  • It starts with Clarity of Strategy. I cannot count the times that I hear that it is about “people, process and technology.” Yawn, I say. I think that the REAL secret to supply chain excellence is alignment on supply chain strategy. If this is done right, it is the foundational building block to aligning people, building processes and selecting technology. Without the clarity on what is supply chain excellence, the world circles, functional organizations cannot align, and the technologies never work. Help to forge clarity in the organizations where you go on supply chain strategy.
  • Take what you have learned in School with a Grain of Salt. No two supply chains are the same, and no one company has it all figured out. Leave school with a solid foundation of the concepts, but realize that these practices are evolving. The real world is not as absolute as the writings of textbooks. Embrace the fact that SCM is ever-changing based on market drivers. Learn to think outside-in. Start first with what is happening in outside markets and then map the possibilities outside-in.
  • Learn to ask the Hard Questions, but nicely. It is not a world for a “bull in a China Shop”, but there are a lot of paradigms that need to be broken. Learn to ask the tough questions, but with respect. Ask how processes evolved, and what they could become if we could improve data quality, reduce latency and build stronger cross-functional processes.
  • Learn to Dance with the World of Gray. In SCM, there are no black and white answers. Success happens when you can take the world of gray and see patterns, build processes and forge bonds cross-functionally.

 

I am spending the month of December, staring out my window, writing. I am working on a book on Supply Chain Management (SCM). The working title is Bricks Matter, a Market-driven approach to Supply Chain Management. To prepare, I have interviewed 50 supply chain executives.  It has been a time to reflect, and give thanks for a rich career in SCM. Abby, I hope you have the same.

 

I would love thoughts from others. This is my start on insights for Abby and her peers. Any advice to share for Abby?

Filter Blog

By date:
By tag: