The Role of Data in Negotiation
The Role of Data in Negotiation
Are you making decisions based on bad data? Do you even know that your data is dirty? Is your data consistent, organized, accurate, and trustworthy (COAT)? According to Susan Walsh—THE Classification Guru—your dirty data could be leading to poor business decisions that cost money and put jobs at risk. So in this episode of Negotiations Ninja, Susan tackles some of the biggest data disasters that procurement should be aware of. Don’t miss this important episode with the fixer of dirty data!
Mark: Welcome to the Negotiations Ninja Podcast, where we develop and deliver the most engaging negotiation content and training in the world. We host negotiation experts, business people and entrepreneurs, and discuss what works, what doesn't work and how we can improve our negotiation skills. What's going on Negotiations Ninja listeners? You've got Mark here from the Negotiations Ninja Podcast. This week my amazing and incredible guest is Susan Walsh. She's the classification guru. And you could sort of count on one hand the people that you should go to when it comes to the classification and organization and cleansing of data with respect to procurement. By the way, Susan is one of those people that you would count. And this week we've talked all about the role of data in negotiations, especially with respect to procurement. Highly recommend that you check out her stuff online. She's an amazing social media presence. And she talks about the things that people don't want to talk about. And she solves all of those problems and I love the way that she approaches it. Enjoy this incredible interview with Susan Walsh. Susan, we're here. How are you?
Susan Walsh: I'm good, thank you. How are you?
Mark: I'm so excited to have you on finally.
Susan Walsh: This is so exciting.
Susan Walsh: I feel like I know you so well, even though-
Susan Walsh: ...We spoke on the phone maybe once or twice, but yeah.
Mark: Seeing your content, I always smile whenever I see your contents online.
Susan Walsh: Likewise, I love your rants inaudible.
Mark: Yeah. The rants get positive and some negative responses if I'm honest.
Susan Walsh: You are not doing it right if you're not offending someone.
Mark: Exactly. There's going to be some people you're going to offend on the way. For the people who don't know about who you are and what you do, educate them for a second as to sort of a data guru that is Susan.
Susan Walsh: Yeah. So, I am the classification guru fixer of dirty data, but it's mainly dirty procurement spend data. So, I fell into this world by accident and then realized that all these big companies were spending loads of money on sexy dashboards. But the real problem was the data coming in that had to be cleaned before they went into the dashboards. And I just thought, why is nobody just offering this as a service? So, not one single contact in the procurement or data world. And I just went out and was like," I'm here to classify your data." And first it was tough because people didn't look for me because they didn't know I existed and there's not really anything else out there or similar. So, I had to really kind of make myself very present and memorable so that when they did have a data problem, they would know who to come to. And thankfully as this kind of saves effect of that, the data world has welcomed me with open arms as well, which has been really cool. And basically what I do is I take, spend data. I normalize it. So, all your suppliers like your IBM, I. B. M, IBM inks, they all become IBM and then they get classified properly. So, if you're buying servers from IBM, there'll be classified to servers. If you buy an IT services, there'll be IT services. And then when you roll that all up, suddenly you have a true picture of actually how much you're spending with a supplier on port. So, and sometimes that can be a real surprise for people.
Mark: And a scary surprise as well.
Susan Walsh: Oh, yeah. I had one client-
Mark: We spend a( beep) load of money with this company.
Susan Walsh: Yeah. I did some work for a client and it was the worst of worst data. It was supplier name only. 90 different countries, almost as many different languages. But at the end of that, the client then realized they had about a 1, 000 consultants globally on their books and they're like," We need to inaudible. We should not have that many." So, it's a job that not a lot of people enjoy doing that are obviously better data files than others, but it's something that I really enjoy doing. And I think you have to do this kind of job.
Mark: Yeah. Well, I find that the successful entrepreneurs are the ones that do the jobs that no one else wants to do.
Susan Walsh: Yeah.
Mark: And you're one of those people that I see, right? Because when people are like," Hey, we're going to classify all of this data, we're going to clean it up. We're going to make it look good." People in the procurement department are just like," Good God, how much work is this going to be?" Right? But I start thinking about like, because most people in procurement, I feel like I've at least tried to attempt this before, the amount of hours that get put into doing something like this is just so mind- numbingly daunting so that when they look at it, they're like," Okay, now we actually have to find someone to do this because we can't."
Susan Walsh: Yeah. And it can take years because they've got the day job on top. And it's the thing that always gets put to the bottom of the list because it's the thing they don't want to do.
Mark: And they have to keep doing it.
Susan Walsh: Yeah.
Mark: Otherwise it all gets dirty again.
Susan Walsh: Oh, yeah. I mean data is ever changing. So, there's cut and paste it or there's accidental deletions. There's somebody decides that they don't think it should be classified as that because they know better. But actually that might have been decided and agreed that department wide, that that is what that thing is going to be classified as. Yeah, it can get a bit crazy and out of control again in a very short space of time, if you don't keep on top of it.
Mark: Yeah. One of the things that I think a lot of people, especially in the procurement world fail to recognize is that the quality of your data to a large extent determines the quality of your negotiation that you're going to be going into.
Susan Walsh: Oh, yeah. Totally.
Mark: And the biggest problem that I see is that they don't put the work in upfront to clean the data, cleanse it, classify it properly so that they actually know what's going on. What do you see as some of the biggest problems in data and procurement?
Susan Walsh: So, something that I've been hearing quite a lot of recently is that if the business doesn't already have classified data, they're relying on figures from their supplier on how much they inaudible them. And guess what? Those numbers don't necessarily match up when I classify the data and there could be a number of different things like discounts haven't been added or whatever, but that is dangerous. Could they be hiding something?
Mark: People would be hiding things crosstalk data? Outrageous, I would never inaudible that.
Susan Walsh: Yeah. Or have they missed a massive chunk of your spend off because it's sitting in another department? It's a great example from the last couple of weeks, client now can see how much they're spending on car leases for the first time under GL codes. So, there's about four different GL codes ranging from staff benefits to office supplies to lots of other things. So, how can you negotiate anything if you don't have a true number? You're negotiating-
Mark: Well, I mean, as frightening, as shocking as it might sound there, I've worked with many procurement teams that have no idea how much money they're spending. Actually no idea. And they have a rough estimation because they can pull up GLs," Okay. We think we're spending this." But many and many of them very large have no idea where they're spending their money and how they're spending their money. And more importantly, even if you could classify it, even if they could do that, they can't get into the weeds on deep analytics to be able to say," Okay, as a portion within the supplier, what are we spending money on, right? How much is going into this service? How much is going to that service? And then within each of those services, what does that actually mean?" And that is shocking. It's shocking.
Susan Walsh: Yeah. Well, I'm not shocked. I should be, but I'm not. crosstalk It's terrifying, that that's how businesses are being run. And the other thing is I've worked with a lot of global companies. So, you imagine just not knowing what you're doing within your own country and then multiplying that by all the countries that you work in and then finding out that you're paying different prices for the same thing in different countries-
Mark: crosstalk From the same company.
Susan Walsh: ...From the same supplier. Yeah. Crazy. And even little things like, how many invoices per supplier are you getting a month? Are they sending you a 100 invoices a month. Do you know the cost of processing an invoice? Why can't they put those 100 items on one invoice? Data can tell you so much. And it can tell you fun stuff too like I can tell the kind of culture of a company from their data. So-
Mark: Interesting. Tell me more about that.
Susan Walsh: Yeah. So, you see it in P- Card or expense stipend, like Fruity Fridays is a good one or Thirsty Thursdays, that was my favorite. Or Takeout Tuesdays, they obviously try to give some appreciation to their staff. Well, little things like that. And then also, they're stretching the expenses thing a little bit far, like drycleaning at the hotel for an overnight stay and stuff like that.
Mark: I was fortunate enough to be involved in a P- Card spend project at some point. And we discovered that people were buying lingerie on P- Card.
Susan Walsh: crosstalk nightclubs, yeah.
Mark: ...Nightclubs. Like all sorts of things on P- Cards where you're like," Now, how do you address that situation?"
Susan Walsh: Yeah. But even actually worse than that, I see a lot of software going through credit cards, like big software spend. So, how much software are you missing out on because it's going on a card and it's like the Zooms, the LinkedIn, the HubSpots, all that stuff. And sometimes it's even like all the Adobe stuff, all on credit cards, when you could be getting a much better deal.
Mark: And they actually even have, this was an issue at one of the companies that I was at at some point in time. I'm trying to be as vague as I can about that, where there was corporate licenses, right? And there was enough corporate licenses for everyone, right? They had empty seats, but people had gone out and purchased on their own and then trying to consolidate those back in is the most painful process. But there's no way to know, unless you actually go through the analysis, which is what you do best.
Susan Walsh: Yeah. And you have to pull out the company names as well to become the supplier name because yeah. It's just all sitting under American Express or whatever.
Mark: And so, going through the actual line items of the purchase, is that what you have to do?
Susan Walsh: Yeah. You can still play the names. That's not too bad, but yeah. Classifying it as literally keyword searches and you have to be so careful because there are so many descriptions, like taxi from the hotel to the restaurant or hotel cab to restaurant. And you got to check these things because it might seem a bit kind of all seedy to go into the detail of a cab, but all those little transactions add up to thousands of transactions and across a whole range of products. That can be a fair chunk of money that you could save or at least be monitoring.
Mark: Hey, listeners. I want to tell you about another company that I run called Content Callout. It is a thought leadership brand marketing company. Now what does that mean? It means that we take you as an executive or entrepreneur, a leader of a small or medium sized business and we turn you into a thought leader online. We take your personal brand and we amp it up to 11 so that you can lead with confidence knowing that people will recognize you, recognize your brand and recognize your business because of the thought leadership approach that you've taken on social media through content creation and content distribution, as well as engaging with all of your following online. How do you get involved in this? Easy. Just go to contentcallout. com/ getstarted. And you will see there three different options that will allow you to take your thought leadership brand for yourself and for your business to the next level. We are super excited to talk to you about this. We've seen some massive growth with the businesses that we've been working with. Very, very exciting time for us. Look at that. We appreciate it. Now back to your show. When you think about negotiation and that some of the key data points that should exist, or you should have actually planned or have access to prior to going into the negotiation, for a procurement person, what are some of the key things that they absolutely have to know when, for example, buying a service?`
Susan Walsh: I mean, if they have to know just one thing, it should be exactly how much they're already spending either with that supplier or within their competitor suppliers within that industry. Because if you don't know that, how can they give you a good quote or the right quote, based on what the numbers you're telling them, or how can you negotiate a better rate if you are underselling yourself?
Mark: But you have no idea of the leverage that you would have in that negotiation.
Susan Walsh: Yeah.
Susan Walsh: Globally as well. You could say," Well, actually you were doing business with you in 20 countries, so let's talk global here. Let's think of it bigger."
Mark: Yeah, exactly. So, understanding the spend that you have with that specific vendor, and then the spend that you may have with the vendor's competitors that you could potentially consolidate or that now you've got a leverage based situation where you can actually use one versus the other, right? And you don't have to make that decision, but many organizations go and thinks that they only actually are using one. There've been cases in the past where I think some people have gone in thinking that they only do business with one consultant, for example. Or do the vast majority of their business with one consultant. When they find out that they actually got more spend that's disparate amongst 30 other consultants that they should actually be consolidating. And they all offer the same consulting service, right? So, it's not actually different or anything like that. It's just because certain organizations or departments within those companies all over the world have their preference.
Susan Walsh: Yeah. And you have to be careful because sometimes it's just a person's name. It's not necessarily a business name.
Susan Walsh: So, it's not necessarily obvious. I mean, you see a person's name and a really high spend and you know straight away that it's either consultancy or some kind of payoff basically.
Mark: No. Pay off inaudible happen.
Susan Walsh: Oh, no. Of course not because there's, yeah. Some of the numbers are just, you know it has to be a consultant and you know crosstalk-
Mark: Have there've been situations that you've gotten into where you very clearly detected some sort of fraud or bad stuff happening where you're like," I need to tell somebody this?"
Susan Walsh: There's definitely areas where you're like," That looks a bit high. That doesn't look quite right." And the flip side is the client is telling me that they should have higher numbers and it's lower. I'm like," Well, this is what the data says. I've been back to basics and checked what you've given me." So, they are getting potentially different information from say, finance. Finance telling them what they should have and it's like maybe five times higher than what the actual spend is. So, they've been going along thinking crosstalk-
Mark: So, wait. Finance is telling them that it should be five times higher than what the actual spend is?
Susan Walsh: Yeah.
Mark: Where are they getting that information?
Susan Walsh: Well, that's what they're need to go and investigate, but this is what I love about my job, it's like detective work. You pick out all these little things that just don't quite add up.
Susan Walsh: Or sometimes hotels, like lewd suspended hotel. So you know, it can't be accommodation. So, it must be conferences or events then you hire. But yeah, you've got like a five grand taxi then you know there's something going wrong.
Mark: Now that people are doing less travel, obviously with everything that we're dealing with, there's less hotel stays. There's less airfare, all that other kind of stuff. Has that spend disappeared or have you seen it move?
Susan Walsh: Office furniture, that's appeared a lot. And PPE suddenly. I knew what PPE was before because I've been classifying it for years. But suddenly it's like, in credit cards and here, there, and everywhere. And it just never was before, but yeah. Lots of office furniture.
Mark: Office furniture because people are working from home?
Susan Walsh: Yeah. So, they need a better setup. And again, that's just the kind of rule expanding. Everyone's off doing their own thing and when you add that up at the end, you probably could have had a better deal on furniture if-
Mark: crosstalk Interesting. And so, I wonder like leaders are probably telling their employees, like," Here's the card, buy whatever you need to work from home." Instead of approaching it strategically being like," Here's the vendor, here's the contract, here's the list that you get to buy from, go buy from that list."
Susan Walsh: Yeah.
Susan Walsh: Yeah. I mean, I'm sure some of these desks and vetted commerce are very nice coffee tables. I mean, I'm sure there must be some of that going on.
Mark: Yeah, exactly. When you're thinking of all these sort of data points that go into the negotiation, one of the things you said was, okay, you got to know how much you're spending, what you're spending it on and potentially the competitors that you're spending it with. Do you, for most of the companies that you're working with, is that sort of where the spend level stops? Is that top tier spend level of like," Okay, at least we know how much money we spend?" Of the percentage of companies that you work with, how many of them actually know within that supplier, what they're spending their money on?
Susan Walsh: Actually, so most of my clients that come to me haven't got classified data already.
Mark: Oh, I see.
Susan Walsh: So, they have no visibility. Of the ones that have had classified data, it has been worse than not having classified data because it's been so misleading. You can make worse decisions with wrong data than you can with no data.
Mark: So, it's been misclassified?
Susan Walsh: Oh, massively. Yeah. Or just massive gaps. Or you can tell where they've had someone in maybe, and they've run some kind of automation program and it's just bulk classified. A whole load of stuff is building services when it's definitely not building services. Well, I can tell for data when it's been done by a person or a machine.
Mark: And when that stuff gets misclassified, then people are making decisions on that misclassified data and the quality of the decision goes down.
Susan Walsh: Yeah. And it's not always an overtly obvious mistake. So, it could be something kind of subtle.
Mark: Like what? Give me a inaudible.
Susan Walsh: So, could be, you've classified some stuff as professional services consulting, but is IT services or something like that. Kind of looks right. So, nobody really bats an eyelid at it. You wouldn't necessarily look the other way if IBM had some consultants in there, but if that's not what you're paying for, then how can you negotiate on the services or how do you even know what you're paying really for that? Or say, there's a contract with IBM and there you get X amount of service time a year or something, are you even measuring that to make sure that you're using at all? Or have you gone over or any, all those different things. I can tell you so much.
Mark: This whole idea is so mind blowing to me because I find that when we're dealing with data and decision quality and the quality of data leading to the quality of decisions, you think about the poor decisions that have been made. And they've probably were, they had the right decision making mindset, right? When they went into it. They're like," Okay, this is the right decision based on the data but the data was wrong, which led to the bad decision." So, you can't even blame the people for it because they made the right decision based on the information that they had, right?
Susan Walsh: Yeah.
Mark: And so, when you're doing this, how do you convince people that this is a worthwhile endeavor? Do you just say," Here's how much money you could have saved had you used me before?" How does that conversation go?
Susan Walsh: I am really lucky that I have now positioned myself that people know to come to me when they have a problem. So, I don't have to buy and sell. They just normally come to me via LinkedIn and say," Here's my problem. Can you help? How much is it going to cost?" And then either we go ahead or we don't. So, for them, they're already at the point of crisis where they just need some help. They know they can't do it themselves.
Mark: You're like the special ops data team essentially.
Susan Walsh: Yeah.
Mark: inaudible solve the problem.
Susan Walsh: Yeah. Definitely. But there's so many kind of intangible of having someone like myself come in because I've been doing this for 10 years. So, I can see. I've worked across all the industries. So, when you work in an organization, you have a very narrow view of your organization, whereas I've seen data on all businesses and there are certain things that are the same in every one. And there's certain things that should be in taxonomies that if you work in one company, you might not even think about putting in things that guess mid left off the list are things like charitable donations and license fees and taxes. People forget to add those in. And then they end up in some random bucket that's well, I hope nobody's using miscellaneous as a category. That's for sure, Yeah.
Mark: Yeah. Where there's just a bunch of extra things they classify as quote unquote, tail spend.
Susan Walsh: Oh, yeah.
Mark: Where you're just like, is this actually tail spend or should've this been classified in something else?
Susan Walsh: Well, quite often. So, there's a couple of things around that. If you don't no9rmalize your supply or some of your like inaudible expand could be sitting in what you might think is tail, but it's actually strategic spend. And it's maybe like, I don't know, 50K here or there on a couple of things that should be going in a bigger bucket. The other thing is a lot of companies, they'll do like the top 95% value of your data. They want, the last 5% could be like hundreds of thousands of rules and not worth their time to do. Whereas I'm like," No I'm coming in." And when you get a file classified, you get it a 100% classified. There will be no tail spend unclassified or miscellaneous other classifications. It will be properly classified because, say you are taking a cut at the end of a financial year. So, it's the last month of the financial year. And there's something sitting in tail spend, that's maybe like 10Ks worth of spend because it was a scoping project. And then the next year that same supplier is going to do like 500Ks worth of business with you. But you're not going to look at classifying that data again for a while. You're probably not going to look at it to the next quarter or something. So, you're missing all that information. You might not even realize that that's happening. And then you go and try and find another supplier or your colleague does because you haven't talked to each other and there's a whole load of things that can reasons why you should still classify your tail spend. It's all those little small change down the back of the sofa. Imagine all the sofas in the world. If you added all that small change together, that would be a big amount. And that's what-
Mark: Well, and especially during a time where people are unsure about finances and stuff like that, right? Like when we've entered into this phase during a global pandemic, where many companies have been hit financially by being unable to sell in the same way that they're able to sell in the past. So, budgets have become tighter, right? And so, they're looking for every opportunity they can to find money where they have previously not been able to find it and what I'm hearing you say is, unless you go through that classification process, you're not going to be able to find the money properly.
Susan Walsh: And yeah. It's going to take some time. It's going to be the worst to force jobs, but it's going to be really valuable.
Mark: That's why we have you.
Susan Walsh: Yeah, exactly. crosstalk Yeah. I mean, my team are happy to do it. Yeah. But it's like everybody is scrutinizing their spends now.
Susan Walsh: And it's actually only getting more and more popular, I would say. I haven't got more and more inquiries because they're looking for opportunities where they didn't need to worry before, because the business was doing really well. So, we didn't need to look at anything. And now especially the travel industry, they were fine. They didn't have to worry about looking at the little bits and bulbs. But suddenly, 12 months without many passengers and people traveling and every single penny needs to be accounted for.
Mark: So, there is people that are listening to this right now, I'm sure that are going to say something like," Well, I mean, that's why we're getting a Spend Analytics platform, right?"
Susan Walsh: Yeah.
Mark: You know we have a problem. That's why we're getting a Spend Analytics platform. The platform will solve that, right? It's going to be fine. What do you say to those people?
Susan Walsh: Okay, let's go back to the consultant. That's just a name in the data. How is the platform going to know that? It's not a big company. It's not going to be on someone's master list probably. They could maybe guess that it's consultancy or there's a place for it, but really you need to do that first round with either your team or someone who knows what they're doing so that when you do your refreshes, it knows to learn from the right data because the big companies will be recognized. And if you look at your top 80% spend, it will look pretty spot on. But if you start digging into that bottom 20%, you'll soon start to see a lot of stuff that's not quite right. And it only takes a quick pivot to do that.
Mark: Do you have to then go in like, go right down to root cause on vendor set and stuff like that in many cases?
Susan Walsh: No. I don't really get involved in all that. I just get a spreadsheet, I populate it and then I send it back and then it goes into systems. Or actually quite often it doesn't go into systems. It stays within procurement because procurement has a very different lens to finance or any other department within the business. So-
Mark: The PLs and spend may not necessarily match up.
Susan Walsh: Oh, yes. Yeah, no, they'll never match up. And GLs for procurement are just don't even bother. It's no good. Like I said, that was like four GLS for one thing and it's subjective as well, depending on who's put it in. It's their opinion of what it should be.
Mark: Yeah, exactly.
Susan Walsh: So, if you've got dropdowns, that's even worse because they tend to just go for the first thing on the dropdown.
Mark: That's right. Susan, the main takeaway that I'm getting from this is you got to know where you're spending your money. You got to know what you're spending your money on in order to be effective in procurement and in negotiations. And I know that sounds like an obvious thing to say, but so many people who might listening to this right now probably have no idea where they're spending their money. And even if they think they know, they still probably don't know. So, if people want to reach out to you and they want to say," Hey, I've got a data problem. I know I've got a data problem. This is what like a come to Jesus moment, right?" We're going to an AA meeting and we stand up and we say," Hi, my name is Mark, and I have a data problem." What do they do? How do they reach out to you?
Susan Walsh: So, while LinkedIn is the best place to find me, or theclassificationguru. com, and I can offer either tips that they can do themselves in inaudible, or I can tell them how I can help them too. Most of the time, they don't have the time to do it themselves or the resources.
Mark: And you've got an army behind you, which is nice.
Susan Walsh: Well, my data elves, I'm calling them.
Mark: Data elves?
Susan Walsh: Yeah, I love it. Yeah. We're not an army, but that's the whole point. We are a small, highly skilled team. We are the kind of assassin of... crosstalk Yeah, exactly. But we can achieve more between the four of us than you could with 10 or 20 unskilled, unexperienced, inexperienced people. So-
Mark: All I imagine is you getting dressed up in a Navy seals outfit with inaudible repelling into a corporation with the tops and stuff. Well, listen for the listeners, just so that you know, I'll link out to all of these resources and where to reach out to Susan and how to reach out to her in the show notes, as well as on the website. Susan, I appreciate what you do because it adds value to everything in negotiation and in procurement. Without people like you, we'd all be lost.
Susan Walsh: Thank you.
Mark: So, we do appreciate it. Listeners, please do me a favor, go follow Susan on LinkedIn right now. Check out what she's doing there in terms of the content that she produces. It's fantastic. Thank you so much for being on today.
Susan Walsh: Thanks for having me.
Mark: Hey friends, thanks so much for listening to this episode. If you enjoyed it, please share it with friends and colleagues so that they can benefit from it as well. If you find Negotiations Ninja Podcast worthy, please go on to iTunes and give us a cool rating with a nice review. We certainly appreciate every single one that we get because it helps us to understand who is listening, how they're listening and what it is they like. If there's something that you would like me to discuss around negotiation, influence or persuasion, give me a shout. You know how to reach me on social media, or you can get me on my website, which is www. negotiations. ninja.