Spend Analysis in the SMB Market

While there's been quite a lot written -- and quite a number of products offered -- in the sourcing and P2P arenas in the small and medium business (SMB) market, I've seen relatively few analyses of products and approaches targeting spend and supplier visibility in the same market segment. Purchasing is bucking this trend, however, running a piece that just investigated spend analysis in the SMB area. Among other recommendations, Purchasing suggests that companies, among other tactics, "start by identifying the short- and long-term objectives of spend analysis tools and prioritizing those objectives to focus on highest return benefits" and "focus on producing a few key metrics across all spend categories".

I'd like to throw something else onto the fire when it comes to the SMB market and spend analysis. And that's the importance of using -- and treating -- spend analysis as a means to an end. In smaller companies, spend analysis should be a quick hit effort -- at least initially. Getting to a high-level of classification and accuracy, while useful down the maturity road, provides only minimal incremental value over aligning the spend troops around near-term, low hanging cost reduction fruit opportunities. They key is rapid, accurate analysis. SMB organizations should most certainly invest in spend analysis. But they should do so entirely from the vantage point of driving rapid savings opportunities if they're just coming up the Spend Management maturity curve.

In many cases, this might involve outsourcing or getting a free spend analysis from a consulting provider. In others, it might involve some relatively inexpensive licensing of tools. But don't let anyone try and sell you a six-figure spend analysis deal if you're a small or medium-sized organization unless you've already achieved at least 50x the proposed cost of the solution in sourcing savings already.

Jason Busch

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