Alliant Tech Systems — Paving the Right Spend Management Foundation

Along with the industry analysts, I took part in hearing Procuri's latest road-show pitch during their most recent analyst tour last week. Tim Minahan and Rod True, Senior Vice President of Spend Intelligence at Procuri, were joined by client Greg Shifflet, who serves as Director of Enterprise Spend Management at Alliant Tech Systems. In full disclosure, my wife used to work with Greg at Deloitte, and I later introduced him to FreeMarkets / Ariba, his past employer, before he landed at Alliant Tech Systems.

In the briefing, Greg told the story about how Alliant Tech Systems, a $3.4 billion defense contractor and space manufacturer, is creating a center led supply management and enterprise sourcing initiative and using Procuri TotalSpend (which used to be called TotalAnalytics) to gain a better handle on what they're buying and how they are managing categories and internal knowledge. Alliant Tech Systems has deployed the Procuri solution in a behind-the-firewall implementation (dispelling the notion that Procuri is just On Demand) and are using it to integrate to a mish-mash of transactional and information systems with 55 specific types of extracts coming from 20 sources of data.

What I find so refreshing about talking to Greg is how willing he is to defy convention by investing in visibility and analytics before making the jump to e-sourcing and other Spend Management areas. In my experience, far too many companies start with reverse auctions in select categories to get a quick win for senior management when in fact if they had any hopes of creating a sustainable program that would build on itself, providing increasing year-over-year returns, spend visibility would, in fact, make a far better investment area. And coming from Greg, a former expert consultant in the space who has carried our hundreds of auctions, the choice to invest in visibility first says a lot.

As a result of this investment and initial analysis, Greg has queued up an initial pipeline of 50 e-sourcing projects (which include a combination of sealed bids, eRFXs, and reverse auctions) based on company-wide spend -- not individual silos looking for a hammer-driven one-time panacea. And because senior management views the company's Spend Management efforts as so strategic, the team has gotten a seat at the M&A table as well, helping analyze potential targets based on opportunities for cost and risk reduction.

Going forward, following the deployment of TotalSpend, which includes category management and knowledge management capabilities in addition to features traditionally associated with spend visibility and analytics, Greg's team plans to deploy e-sourcing capability, along with a supplier portal and contract management (where they plan to tie together sell-side and buy-side contracts). And ultimately, further down the technology enabled-road, they also plan to invest in eProcurement and EIPP as well.

The case of Alliant Tech Systems offers at least one critical lesson to all companies getting started with Spend Management. And that's the importance of building a visibility foundation before investing in other Spend Management technology areas. Despite the upfront delays it might create to initial savings implementation -- as opposed to diving head first into the execution side of strategic sourcing -- paving the right foundation will no doubt pay dividends for Alliant Tech in the long-term.

Jason Busch

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