trade promotion management

Wrong People on the Bus?

by Lora Cecere on June 10, 2012 · 0 comments

Most people assume that
great bus drivers (read: business leaders) immediately start the journey by
announcing to the people on the bus where they’re going—by setting a new
direction or by articulating a fresh corporate vision.

In fact, leaders of companies that go from good to great start not with
“where” but with “who.” They start by getting the right people on the bus, the
wrong people off the bus, and the right people in the right seats.

Excerpt from the book Good to Great by Jim Collins

My feet still have the blisters from walking the streets of New York.  They are red and cracked.  They were glad to feel the soft lambskin of my slippers waiting for me at home.

Last week, I attended the Consumer Goods Technology (CGT) event at the Roosevelt Hotel and took the opportunity to see clients.  The rain, President Obama’s visit and a couple of wacky parades made the city a mess.  So, I took to the streets.  I love to walk, and it gave me some great time to think.  As my heels clicked on the pavement, and I dodged a myriad of mud puddles, I thought about the conference.  While there is some movement on the use of downstream data, my take is that the Consumer Products (CP) industry is not making progress on Trade Promotion Management (TPM).  In my view, we are stalled … at a standstill.

It is frustrating and I am not patient.  Trade spend is significant, and the opportunities are great; but the discussions are the same ones that I heard back in 2002.  Yes, I have now been studying the Trade Promotion Management (TPM) market for a decade, and I feel that we are circling the drain. It is painful to listen to the same discussions, see the same mistakes and hear the same vendor pitches over and over again, year after year. Over the week, it became a quest of mine to determine ”How can we break the cycle?”   

I count the people that I consider TPM experts on one hand; and last week, many of them were in attendance at the CGT event. So, I pulled up a chair and asked their opinions. No one disagreed.

Over drinks we discussed why the industry had not made more progress on improving trade practices. One person commented that they thought that we had the wrong people on the bus.  The general opinion was that the wheels were going round-and-round and the heads were going up-and-down, but that they were all on the wrong bus going nowhere.  I laughed; but as I walked, I thought about the bus, and decided that the thought had some merit.  Let me ask the advice of my readers.

Most of the attendees at the conference were marketing trade managers or directors of IT.  I feel that they are just in the right positions to drive the bus to drive change.  Here are some direct quotes that I heard at the conference along with my take:

    • “Trade promotion optimization is like teenage sex.  Everyone talks about it; but it is just that, talk.”  This was funny, but true.  It came from a strait-laced guy that I have coached over the course of the last year.  I got him involved in the CGT Trade Promotion Share Group.  His opinion was that he heard the same thing this year as last.  Net/Net:  While the technologies for optimization have improved, I only know of two companies that are doing true optimization of trade spend. The companies were not at the conference.
    • “Picking a trade promotion management vendor is like selecting who to marry in a family of ugly sisters.” Let’s face it, there is no perfect solution for TPM.  While most solution providers take competing postures, most of the solutions are complementary, and no solution is complete.  The acquisition of CAS by Accenture, DemandTec by IBM and ProMax by Wipro makes the decision more complicated. None of the three system integrators do TPM well; yet they have bought a solution.  Net/Net: The selection of a solution is one of the most difficult that I give advice on.  It is messy.
    • “While people are talking about the issues with trade, I am shifting my money to digital.”  Some have just given up. With the advancements in Digital Path to Purchase, I found two manufacturers that are shifting their focus elsewhere.

So, what if you are the Bus Driver?

If you are a project leader for a TPM project, you should first accept that the industry is a mess.  Secondly, you should reach out to the few people in the industry that understand the space.  (If you are a Fortune 1000 company, my short list includes Hans Van Delden from Booz & Co., Rich Essigs from Genpact, Nick Handrinos from Deloitte, Linda Peel from Oracle, and Rob Hand from SAP. If you are a smaller company, my shortlist is slightly different. (If you want more details, shoot me an email.)) At this time, if you benchmark and network, you need to accept the industry for what it is.

So, my advice?  Put the right people on your bus, and determine where to head.  Start with strategy and then determine process and then follow with technology.  And, as you put on your seat belt to start the bus, I would start out in first gear.  It will be a bumpy road with a steep incline.

So, what do you think?  Do you think that we are going nowhere?  Do you think that we need to try new approaches with a new set of leaders to attack the problem a different way? Please let me know your insights.  I will be tweeting from DemandTec’s conference on Tuesday.  I will let you know if I hear anything new.

…and then there were none?

by Lora Cecere on December 14, 2011 · 1 comment

 

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 offers real promise, but was 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 was 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– 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/)