Spend Visibility and M&A

Earlier in the month, Purchasing published an article describing the procurement and sourcing environment that Newport Corp. faced when it acquired Spectra-Physics in 2004. A good portion of the story focuses on the challenges of information systems and data access -- specifically the issues that Newport had consolidating purchasing data. While Purchasing does a good job reporting the story, what's most interesting about the case is what goes unsaid: namely, that companies waste far too much time in merger situations gaining a handle on spending data because of system challenges and decentralized execution and process. But in today's world, there is no excuse for taking months -- let alone years -- to develop an integrated category sourcing strategy in a post-merger environment. With off-the-shelf spend visibility applications from providers like BIQ it's possible to begin to gather and opportunistically hack away at spend data from disparate systems environments in a matter of hours. Or if it's really messy, why not outsource the opportunity analysis entirely to Ariba, Ketera, Verticalnet, or Emptoris so that it's possible to get started with spend rationalization, consolidation and sourcing strategy development efforts, avoiding the systems blame game?

As long as companies spend time focusing on the data -- or the systems -- rather than specific Spend Management cost reduction opportunities in post-merger situations, they will continue to leave tremendous opportunity on the table, as millions in potential savings slip through their hands each month. While in this case, the acquired organization came with "six strategic sourcing specialists who were given the two-pronged task of identifying new global supply sources as well as rationalizing and consolidating the company's existing supply base and commodity list," all newly merged companies should focus on data rationalization and analysis as a rapid means to an end, regardless of how nasty the back-office technology environment looks. With the great capabilities that today's analysis and visibility solutions bring, legacy systems, disparate ERP, and decentralized environments are no longer excuses for stumbling over the process of creating an integrated Spend Management approach.

Jason Busch

Share on Procurious

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.