A Spend Analysis Refresher: Recap, Webinar (Today!) and More (Part 1)

Specialized spend analysis tools have been around for a long time – almost fifteen years. On a webinar today, Vote For Visibility: Yes, Procurement and Data Can Dance at 10:00 AM CT, I’ll share a brief history of spend analysis along with a forward look into what is coming down the pike. I'll also talk about a trend I observed starting back in 2011 – namely, that many companies that invested in spend analysis solutions in the past are now “going back to the table” and re-evaluating their options, including using multiple tools to gain access to different types of data sets and analytics.

Some are looking for greater coverage and flexibility. Others see spend visibility as more than just a tool to identify opportunities. And some organizations are even employing multiple spend analysis solutions to solve different needs. Consider the proliferation of a range of enterprise visibility, reporting and dashboards combined with specialized procurement tools for category-driven deep-dives and tactical strategy development (not to mention upfront cleansing and classification). Moreover, an increasing number of companies are in the early stages of examining the interplay of spend visibility with supplier management, master data management, materials/substance level insights, chain of custody type initiatives.

In many cases, we observe, the buying criteria for spend analysis tools rests on the following characteristics:

  • Thriftiness – we have seen even advanced procurement organizations go with lower-cost solutions for their basic visibility needs
  • Need/want to integrate spend visibility into the rest of a procurement suite
  • Need/want to tie spend visibility, supplier management and supplier performance activities together
  • Need/want to go beyond initial savings waves through new types of analytical capabilities and spend “mash-ups”
  • Budget to invest in other areas or to use spend visibility to meet multiple requirements
  • Willingness to support multiple tools and use cases

 

One area that is we’re seeing with greater frequency, especially on a category basis, is the linkage of spend analysis and sourcing, including end-to-end category solutions (e.g., what BravoSolution has done for transportation and packaging) that starts with opportunity identification and analysis extends to sourcing execution and eventual savings realization and tracks ongoing results and performance.

From a solution perspective, we have see examples from multiple providers that include charting capability to support end-to-end linkages that map such characteristics as difficulty of achieving savings on a category or grouping level (based on a range of weights and variables, including supply markets data feeds, spend complexity fragmentation, etc.) against overall expenditure or potential budget impact.

We’ve also seen more advanced approaches expand on spend analytics and sourcing linkages by suggesting specific categories and strategies based on spend characteristics (e.g., PPV, on-contract, off-contract, underlying commodity market conditions). However, these tend to be generic rather than category focused – or truly end-to-end in nature.

Another emerging element of spend visibility that’s becoming more frequent are what we can best term “spend mashups.” As we’ve noted before, mashups are applications and data sets that combine capabilities and content from different sources. Consider, for example, the ability to layer both PPM and warranty claims information on top of traditional spend data. An analysis might show the a new Chinese supplier is meeting initial quality expectations as a low cost producer, but that the parts they are shipping to a specific facility tend to fail at a higher rate than the norm

Other data mashups we’ve also observed in the past include: tax/VAT payments (and types), budget data (vs. actual), sourcing and category intelligence information (e.g., savings data), commodity market pricing feeds, marketing analytics data (and competitive marketing data), credit and P-card information, supplier financial risk data, vendor files with invoice detail (e.g., line-item detail for computer hardware, commercial printing), inventory data, services/contingent workforce data (e.g., comparing contract markup with actual markup as well as variations in bill rate and pay date), payment terms including working capital / cost of capital (both buyer and supplier), logistics data (carrier direct or aggregated by a 3PL) and claims adjusting information.

If you’re curious about the topic, we invite you to join us for the Spend Matters webinar today at 10:00 AM CT: Vote For Visibility: Yes, Procurement and Data Can Dance. And stay tuned for further coverage on both the basics and advanced deployments for spend analysis.

Spend Matters readers can also download the following FREE research briefs from our library (registration required):

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