I've been asked on more than a half-dozen occasions to spend a day with clients (both practitioners and vendors/services providers) to provide my view of the rapidly unfolding spend analysis landscape, discussing a diversity of approaches to identifying savings opportunities and reducing supply risk. The most recent extensions of my research in this area -- most of which I've not featured on Spend Matters, but which I plan to share in two upcoming Compass Series on the subject -- focus on the intersection of spend visibility, supply risk management, and supplier information management. I'll go many layers deeper than Purchasing's recent effort to look at the space.
An increasing number of companies also use spend visibility as a means to support other initiatives, including supplier diversity reporting, rather than have individuals and small groups tackle these processes independently through different platforms. (The exception to this is in the case of multi-tier reporting requirements, which few spend analysis platforms support without significant customization). If we look at spend analysis independently today, what is the best way to segment the landscape and the various providers within it? Whom should companies shortlist?
When lecturing on the subject, the first, highly technical way I typically describe the landscape is "frigging confusing." Consider how many kinds of providers offer spending analysis solutions today: strategy consulting firms, BI vendors, ERP vendors, spend/supply management suite providers, Big 5 consultants, offshore data-crunching firms, outsourcing/BPO providers, best-of-breed providers, data enrichment/content companies with front-end software -- the list goes on. The long and short of it is that it's possible to get spend analysis capabilities from just about any flavor of software company, outsourcing firm, consultancy, or content provider. Moreover, it's possible to get spend analysis at just about any price point (including free, from consultants and BPO providers, who will often do it on a one-time basis, to assess savings opportunities).
We typically look at the spend analysis software landscape in three buckets: ERP/suite providers (e.g., SAP, Oracle, Ariba, BravoSolution, Emptoris, Ivalua, Zycus), analytics and other best-of-breed vendors (e.g., BIQ, Endeca, DataFlux/SAS, Spend Radar, Rosslyn Analytics), and content/enrichment providers (e.g., CVM Solutions, D&B). There are many more vendors that fall into each of these categories, and I'm not purposely ignoring them here, but they don't make it to the shortlist as often as others (or they fail to deliver an innovative approach).
The shortlist we typically recommend to clients is based on specific requirements, including the need to drive to line-item or part visibility, the need to incorporate significant forms and types of third-party information, and the importance of analytics capabilities to a company (and its skill set in using analytics capabilities). In many cases, we conclude that companies just getting started with spend analysis may be better served by a provider that can deliver it as a service. Fortunately, as tools have become easier for services firms to work with over the years (and less expensive), dozens of consultancies (and outsourcing providers) have access to software that can drive one-time analyses. These can then become the basis for an installed (or hosted) spend visibility roll-out if a company wants to take it in-house after an initial engagement.