I was quite surprised to encounter this relatively prescriptive Spend Management-focused column on Forbes' site earlier in the month. The topic you ask? Spend visibility, which represents a corner of the Spend Management world understood by few outside of the procurement community. In it, the author suggests that folks should take a look at analyzing spend "before it happens". He further suggests that "this sort of pre-emptive penny-pinching is made possible through the tools provided by operational intelligence, a real-time form of information gathering that focuses on what is happening right now, not what happened yesterday". Now, I'd expect to read this type of thinking on these pages or perhaps an analyst report or trade publication article. But in Forbes?
Perhaps it's a reflection of just how far the current economic realities have penetrated the mainstream business world. But regardless for the reason, it's great to see a topic like this described by a non-expert in our field. For it's these types of descriptions and explanations of the subject matter that can help all of us to sell the concept of spend visibility -- not to mention other Spend Management initiatives -- to others in the business. What are some useful examples of his arguments worth repeating and taking to heart? I'll excerpt a few below:
"The return on spend analysis goes straight to the bottom line. Purchasing is the largest single use of funds in most companies and one that has the greatest effect on net income ... Viewing purchasing as a financial function and not as a logistical service is the biggest difference between the leaders and laggards."
"The typical playbook involves analyzing all the money that is being spent, and that's where the first problem arises ... you look at the checkbook, you can't tell which specific items are being purchased. If you look at purchase orders and invoices, items may not be consistently coded. The first task of spend analysis is to clean up this mess so you can tell what you are spending money on."
"Pre-emptive spend analytics takes advantage of the way that operational intelligence looks at data before it becomes trapped in systems of record ... What operational-intelligence products have done is to lower the cost of creating systems to examine real-time data, so that the return on pre-emptive analysis can be found in many areas."
"The goal of spend analysis is not to stop spending arbitrarily or to create bureaucracy, but to promote systems, policies, attitudes and habits for spending money effectively."
If these types of arguments don't help make the qualitative case using non-procurement jargon to help your organization get excited about a broad-based spend visibility initiative, I'm not sure what will. Have you got another example of an outsider describing our sector in language that could help others? Please send it along if you do.