Sievo: A Missing Finance/Sourcing Link? Implementing/Measuring Savings to Ensure Results (Part 1)

No more than a few times every year, I come across a new technology that truly stands apart. When it happens, and especially when the vendor brings an extremely strong reference user to the table as well, it's hard to turn a truly objective eye to what one looks at on a relative basis because of a lack of comparable solutions. Besides, I'll admit to occasionally being swept up by an idea that others should have thought of (and implemented before), but somehow never got around to. This is especially the case when I believe a technology fits in the category of "how did we ever live without this until now?" Sievo, an upstart organization in Helsinki with growing operations throughout Europe, is just such a provider. The vendor combines elements of spend analysis, savings implementation and performance reporting in a single environment that bridges the gap between procurement and finance to implement and drive identified sourcing savings opportunities to the bottom line, especially in direct materials environments.

There's really nothing else like Sievo in the market today, except for some of the capabilities in a secondary module within Co-Exprise (which don't go nearly as far), and a few of the features in an ICG Commerce tool designed primarily for indirect savings implementation. However, the concept of what Sievo does is something that a number of folks at FreeMarkets, including Co-Exprise's founder, thought of doing over a decade ago (yet never fully pulled the trigger on a software format).

Sievo positions its value proposition on three levels. First, it helps drive savings opportunity identification (yet in a way that goes beyond spend analysis). Second, it accelerates the execution of savings implementation initiatives and objectives by providing a program management platform and cockpit to oversee the execution side of sourcing and related programs. And third, Sievo helps reduce savings leakage, pinpointing and documenting specific areas where lost savings occurred.

Underlying Sievo's capabilities is a direct materials spend analysis-like platform that takes data out of source systems (they have the most experience with SAP, and given the direct materials focus of the solution, this makes perfect sense), normalizes it and tracks information on the item or part level. Yet Sievo is not selling spend analysis. Rather, this level of granularity and source-system data is needed to enable the savings tracking component of the platform which is, in essence, a way to identify and measure all of the components that lead to an actual price paid, leveraging information like volume data, commodity market information, payment conditions/terms, exchange rates, order quantities and specifications.

As Sievo spells it out, their software offers a way to "manage the procurement financial logic and deals with the inherent data complexity within procurement." For tracking information, users can get extremely granular with the inputs they want to report against on a high level including market indexes, rebate structures, baselines, currency rates, cost structures, dimensionality, target costing/pricing, budgets and forecasts. On the actual reporting side, procurement leaders can define specific savings tracking mechanisms and fields (e.g., price savings, market / commodity / index fluctuation savings, currency fluctuation savings, substitution savings, batch size savings, spend reduction savings, external savings, realized savings) they wish to measure against. Much of this information comes out of back-end ERP (usually SAP) systems, but qualitative information can be included as well.

Navigation-wise, when users log onto the Sievo system, they can jump to a range of different information areas that show detailed reporting in areas such as spend visibility (at the unit level, which is critical to both identify and track savings opportunities), profitability, payment terms, compliance inventory, budgeting and forecasting -- and many more. All of this intelligence can roll-up to simplified dashboards that then allow users to drill extensively into information while looking up audit trails, if need be, to examine actual transaction data. Users can also export and copy information into documents, presentations, etc.

Stay tuned as we investigate the impact Sievo can have on manufacturing organizations.

- Jason Busch

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