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I’ve looked at clouds from both sides now

Joni Mitchell

The classic Joni Mitchell song Both Sides Now contains the line “I’ve looked at clouds from both sides now”. In my recent career I have been selling pricing solutions to sales teams in order to keep prices as high as possible, and prior to that selling purchasing systems to procurement teams in order to keep prices low.

When I worked at Ariba previously, I sold cloud-based sourcing systems. The fundamental strategy back then (mid 2000s) was to essentially construct a format whereby the suppliers could be “lined up then beaten up”. The buyer constructed a highly constrained evaluation matrix, and forced all suppliers to compete in the same way, and for the coup de grace, made them participate in a Reverse Auction. It was a cloud based solution, sure, but could not really be called collaborative.

Then I went to a couple of Pricing Software vendors, who sell price optimisation to sellers. The value proposition here was reversed, the idea was extreme segmentation. Huge gains can be made by discovering and exploiting small differences in customer response to price. Segments can be constructed by customer size, end-use, geography, season so that the same bottle of oxygen can command a price five times higher when it is shipped to a hospital compared with going to a welding shop. These solutions were also cloud-based.

I’ve looked at clouds from both sides now

.. and this is what I have learnt: a cloud is not the same thing as a Network at all. I don’t think I am qualified to unpick all of the stanzas of the great Joni Mitchell’s song, but here’s one of them:

I’ve looked at clouds from both sides now

From up and down, and still somehow

It’s cloud illusions I recall

I really don’t know clouds at all

Don’t make my mistake of trying to “know clouds” by looking at a series of traditional business processes which have merely migrated from your IT system to someone else’s. These cloud solutions are not really disruptive business processes at all. The cloudy nature relates to how the software is licenced, installed and upgraded. Interesting to the IT team, but not fundamentally changing the way commerce is transacted.

There’s much more to a Business Network than just moving an existing Purchasing or Pricing solution from your computer to ours. Here’s a short list of the types of applications that are possible on a Network

  • A Purchasing System which allows suppliers to collaborate on the RFP to reflect their different capabilities and solutions to a business problem, rather than jamming them into an evaluation matrix, and actively seeks new suppliers that you may not have heard of
  • A CRM system that actually goes out and locates leads, based on active sales opportunities discovered on the network, rather than the administering the tired-old leads you already have
  • A Pricing system that can get econometric data from the network as a basis for better pricing decisions

Business networks are different, they live in the cloud, but they are collaborative rather than exploitative. Both sides of the transaction gain from the use of the network. The Cloud/Network is too important a change to be viewed as merely a change in software licencing. If your justification for a Cloud Solution is a convenient saving for the IT department then maybe you “don’t know clouds at all”.

About the author
James Marland
Vice President of Network Strategy - Ariba (Twitter: @JamesMarland)

James is responsible for defining and rolling out strategies for the Network with particular focus on Europe. He joined Ariba at the launch of the Ariba Network in 1998 after previously being a Solution Consultant at SAP America. In addition he ha... Read More >>>

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