Friday Rant: Spend Visibility and Services Spend Visibility Must Come Together

If you stirred the marketing and solutions caldron from services procurement software providers of late -- from pure-plays such as IQNavigator and Fieldglass to suite providers like Ariba and Emptoris -- you'd see a similar message bubble up to the surface from nearly every provider. And that's the critical nature of linking improved analytical and reporting capabilities to better decision making. Even managed services providers (MSPs) in the sector are touting the same concept with their clients, albeit quite often in a hybrid online / offline manner, using what my old friend, Pierre Mitchell, refers to as the BASS method -- Big A&& Spreadsheets. Undoubtedly, no one can overstate the importance of analytics in services procurement to better overall savings and performance (as an aside, I consider external benchmarking data a component of analytics, so we're not just talking about analyzing and reporting on internal numbers and metrics here). But despite this universal group-think and alignment, I have an issue with the notion that services procurement analytics and reporting must take place outside of a regular spend visibility and BI environment.

In fact, I'd go so far as to say that it's ultimately counterproductive for companies to tackle services spend in isolation from other spending areas without having the ability to integrate these disparate analyses (e.g., contingent labor spend analysis, marketing/campaign spend analysis, print analysis) into a single environment, even if it takes a virtual form. Why? Because the more category silos that exist from a data standpoint, the greater the probability of decision silos and suboptimal choices within the procurement function. Moreover, I'd argue that delegating analytics on a category-by-category basis to individual owners with their own enabling toolset can jeopardize procurement's ability to identify, track and manage to overall savings programs.

Of course there's a reason these silos have begun to simmer at the same time for companies that are more advanced in services procurement spending categories. For one, most existing off the shelf spend analysis tools do not provide the level of granularity required to report on all the fields that individual services categories require. And for another, most procurement leaders who are not in touch with the particular nuances of services categories would not even know half the questions to ask when it comes time to report on individual category performance metrics and KPIs. But neither of these excuses makes individual spend reporting silos for services procurement the right answer by default.

What companies need to do to bridge these services spend silos is drive their software and services providers to pursue one of two options. The first, which makes sense in the case of integrated suite providers like Ariba and Emptoris, is to more closely link the reporting and analytical capabilities of their spend visibility tools with those of their services procurement capabilities. It's worth noting that Ariba does this to some effect today through the analytical capabilities within its services procurement module, albeit without the type of granularity that best of breed contingent labor platform providers can provide, enabling analysis entirely within the application vs. Excel in all key areas (Emptoris also appears headed down a similar path, but like Ariba, is not 100% there yet). The second solution approach -- and arguably the more powerful and appropriate one for companies with a disparate Spend Management toolset environment -- is to pursue an integrated spend and services reporting and analytics dashboard that bridges the information gap between diverse source system, application, OLAP and reporting packages coming from the different application providers that you're working with (many of which may pull external feeds, as well, which is the case in marketing campaign spend areas).

At the end of the services spend visibility day -- and at the end of this Friday Rant -- it's clear that organizations need to think more about the new spend information silos they're creating as they become more advanced in individual services spend categories. It's a spend Catch 22. Given this, it's better sooner rather than later to think about how best to integrate services spend information to drive the level of reporting and visibility we've all come to expect from indirect and direct spending areas up until now. Just as part or line item level visibility for spending data has become an industry standard, so too will greater overall visibility and granularity of integrated services spend reporting. We're not there yet (nor are the vendors). But we will be soon.

Jason Busch

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