Nearly all of the vendor management system (VMS) providers that Spend Matters has recently spoken to suggest that analytics and reporting is what differentiates them from the rest. Yet in terms of absolute capability, Spend Matters believes that procurement, HR and IT organizations rarely get what they need from VMS analytics in the their own deployments. When it comes to services procurement, the fundamental challenge is that rather than using analytics as a means to explore a potentially infinite number of datasets and opportunities, Spend Matters has observed that the majority of VMS deployments rely on no more than a dozen or so canned reports to drive basic insights and reporting on a periodic (e.g., quarterly) basis.
Spend Matters latest Compass report, Getting the Most From Analytics and Benchmarking explores this critical (and often confusing!) services procurement subject, asking the hard questions about analytics and exploring what's possible through better use of analytics for both contingent and SOW spend. For example, we consider what the difference is between relying on standard reports, drilling into datasets or deploying contextual analytics within services procurement applications. We also look at the challenge of arriving at accurate and truly usable benchmarks for services and people relative to goods and processes. Finally, we provide a simplified analytics maturity model for companies to consider.
Among other strategic recommendations the analysis offers, it suggests that all procurement organizations tasked with getting a better handle on services spending should a number of activities, including:
- Developing a competence in data management internally -- companies should never delegate the management and stewardship of the very information that should be driving their overall services procurement strategy to any third-party, MSPs included
- Incorporating domain experts into key decisions -- procurement must involve those who understand all the ins and outs of categories when looking into specific data sets; critical nuance will be lost without it; consult IT, legal, marketing, finance, etc. as you assist in managing services categories on their behalf
- Seeking out benchmarks and indexes that count -- just as metals and energy buyers are increasingly tracking and embedding benchmark index data in their own buying and data analysis activities today, so too will services procurement professionals tomorrow, especially as both contingent and professional (e.g., legal, accounting, etc.) benchmarks become more accurate
If you're interested in actionable and practical use cases, including the types of basic reporting capabilities, queries and data sets that VMS providers can support as well as more advanced analytical strategies and capabilities, the Spend Matters Compass report Getting the Most From Analytics and Benchmarking can provide invaluable perspective. You can download a free copy via the link above.