Category Archives: Spend Management

How to Cut Software Maintenance and Support Costs (and Fund IT Innovation)

- July 23, 2014 2:39 PM | Categories: Guest Post, Spend Management, Technology

The cost just to “keep the lights on” in IT has grown exponentially over the years. Recent studies show that an average of 72 percent of the enterprise IT budget goes to this area, leaving only 28 percent to fund new projects. A big chunk of the 72 percent goes to maintenance and support – and that reality isn’t expected to change anytime soon. Here are four of the best ways to cut maintenance and support costs.

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Managing Complexity – A Reevaluation of Energy Procurement Strategy

There are few areas of corporate spend that invites as much fierce debate in strategy as the area of energy. The sheer number of purchasing mechanisms and strategies available can be overwhelming, and the advice of consultancies and subject matter experts is often contradictory. The combination of electricity, natural gas, and fuel oil is frequently one of the top five areas of indirect spend, and some organizations with energy-intensive manufacturing processes build energy expenditures into standard costs. Such a critical and complex category requires a clearly defined management strategy that is flexible enough to evolve with changing internal and external conditions.

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Trojan Rabbits and Project Portfolios: Procurement Market’s Freemium Applications and Services (Part 1)

The old Trojan horse trick has its place in the procurement market. This Spend Matters Plus research brief, by Chief Research Officer Pierre Mitchell, covers the good, bad, and ugly of “freemium” technology for different types of procurement solution providers across the solution spectrum, from technology providers to membership-based advisory firms. Pierre then makes some recommendations for not just solutions providers, but also practitioners who themselves are providers in their own right. If you are not yet a Plus subscriber and are interested in this topic, contact us to inquire about a free trial.

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Buying VMware? Demand Transparency in Contract Terms

Transparency has always been an issue in IT sourcing. Not only is there no “Kelley Blue Book” for pricing, the degree of detail provided in one customer’s agreement terms compared to the next (even with the same vendor) is often inconsistent. Let’s take VMware for example. Many IT buyers don’t take into account the extent of detail that VMware or its resellers can or will furnish in quotes and contracts. Some wonder if they’re getting enough detail but have little understanding of what a healthy amount of detail looks like. Lately, we’ve seen several common “transparency pitfalls” in enterprise VMware purchases. Here are a few ideas to guide you through your next VMware transaction.

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Designing a Spend Category Taxonomy Properly is Harder Than You Think (Part 2: Go Deep)

- July 15, 2014 2:30 AM | Categories: Spend Analysis, Spend Management

Earlier in the month, we had a client ask us if we could offer specific guidelines or methodologies for creating a spend category taxonomy within the automotive and industrial markets. The question resulted in a discussion among a number of us with industry experience. And since we didn’t have any research already published on the topic, we thought we’d invest the time to document our findings. In this second installment of a two-part Spend Matters PRO research series, Chief Research Officer Pierre Mitchell explores how granular procurement should go in creating a spend taxonomy and concludes with practical tips for implementing a program.

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Designing a Spend Category Taxonomy Properly is Harder Than You Think (Part 1: Do This, Not That)

- July 11, 2014 6:34 AM | Categories: Spend Analysis, Spend Management

We had a question from a client of ours about whether there were any guidelines or an overall methodology to coming up with a spend category taxonomy. It’s a simple question, but there isn’t a simple answer. So, we thought we’d offer some insights to help guide your efforts. But before we say what to do, there’s a quick recommendation on what not to do. In this first of a two-part Spend Matters PRO research series, Chief Research Officer Pierre Mitchell explores how to think about creating a spend category taxonomy, pitfalls of incorrect approaches, and how to embrace an approach that cuts across categories and spend types.

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Five Steps to Communicating Your Spend Management Initiative Successfully

- July 2, 2014 2:34 PM | Categories: Guest Post, Spend Management

An increasing number of procurement leaders are recognizing the value of using strategic, persuasive communications behind new spend management programs to ensure their success. Be it a new technology platform you are introducing, stricter purchasing guidelines, or more involvement from the procurement department, all initiatives require your company employees to accept change in their interaction with the purchasing process. Employees must fully understand the need for this change, comprehend their important role in the process and be motivated to support your new approach.

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Shippers, Get Ready – UPS Moves to Dimensional Weight Pricing for Ground Delivery

- June 25, 2014 2:30 PM | Categories: Guest Post, Industry News, Logistics, Spend Management

Last week, UPS announced that it will move to dimensional weight pricing for all ground shipments in 2015. For certain packages, the impact of UPS’s changes is huge. For lightweight shipments in packages less than three cubic feet, the price increase could be 30 percent or more. Many shippers won’t be able to handle these cost increases without passing it on to their customers – especially those in industries like retail, where margin is razor thin and consumers are accustomed to low-cost or free shipping options. Here are some things you need to do as soon as possible if you are using FedEx or UPS ground services to ship in 2015.

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Coupa Inventory: Expanding the P2P Value Proposition and Surrounding Core Financials

Earlier this spring, Coupa provided a briefing and demonstrated a version of its latest inventory module to Spend Matters. Coupa sells its inventory module as an add-on to core procurement but separately from accounts payable, contracts management, and other suite components. But the question remains: in its initial release, does it provide enough value to justify the added cost and modular expansion for companies using other Coupa suite components?

After seeing it, Chief Research Officer Pierre Mitchell and Managing Director Jason Busch argue in this Spend Matters PRO research brief that Coupa’s new inventory management capabilities are likely to bring the company closer to marginalizing the expansion of an ERP value proposition in middle market deployments (but not necessarily a fit with larger customers who are likely to have more sophisticated processes than the tool can handle – let alone inventory management systems already in place).

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FedEx, UPS, and Volumetric Pricing: A Tale of Three Boxes

- June 19, 2014 1:35 PM | Categories: Guest Post, Industry News, Logistics, Spend Management

By now, just about every shipper has heard the news: effective January 1, 2015, all FedEx Ground shipments, regardless of size, will be subject to DIM (short fordimensional) charges. For many shippers, this will represent a very hefty increase. Are there any silver linings to these new DIM charges? Probably not much, but If you have high density shipments – over 10.4 lbs per cubic foot – there could be minor benefit to you. First, you were not subject to the DIM before, and will not be under the new rules. Secondly, the carriers will argue that since the shippers with “bad” cube will now be paying their fair share, it might translate into slightly lower annual rate increases in 2015 and beyond.

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Beeline Customer Conference Dispatch: Getting Into the Mind of the CIO

At Beeline’s customer conference yesterday, Bob March, the company’s CIO, presented a short but captivating talk on getting into the minds of CIOs. This is a topic of critical importance for procurement. As user interfaces evolve, as mobile goes mainstream, and as best-of-breed application usage proliferates (including apps that users can download directly), the role of IT is changing dramatically inside companies. And procurement has an opportunity to partner with IT rather than just select and use SaaS applications that skirt outside its purview.

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Middle Market Procurement: Got Spend?

- June 6, 2014 6:25 AM | Categories: Friday Rant, Spend Management

Just as many households have still "got milk" like that advertisement that you probably know, so too does every middle market organization (and small business for that matter) “got spend.” But in most cases they don’t have an organized procurement or sourcing function that looks at their purchases in the same way as larger companies. They lack not only controls, policy, and processes, but something even larger – a charter to align procurement with overall business objectives.

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