Spend Matters Research: Spend Analysis Quantum Leaps with Three New Strategies

I've come to feel that at least a portion of our research over the years has become as pedantic and distant from the actual practice of procurement as much of the traditional analyst/research house material we set out to complement. But when it comes to purchase-to-pay and e-sourcing, it can be difficult to bring the nuances of different functional technology capabilities alive in two dimensional prose -- often seeing is believing and there is no replacement in an evaluation or even shortlist exercise without touching, feeling and having a provider create demonstration scripts based on your own unique requirements. Despite the challenge of enlivening this material outside of an application environment in an actual notebook, desktop or mobile client, I think we're making strides in some of our recent research to quickly get at the tangible business impact that specific approaches and tools can have. Our latest Spend Matters Perspective, Spend Analysis -- Making Quantum Leaps: Exploring the Realm of Possibility and Savings with Three New Strategies attempts to get at the core of how new spend analysis approaches are changing the practice and even charter of procurement and traditional cost reduction exercises.

Our hypothesis is centered around the fact that over time -- sometimes over very short periods -- technology markets trend toward a combination of consolidation, monotony, and then, eventual and sometimes radical evolution. Consider how Cisco went from purchasing the hot new low-cost consumer camcorder company, Flip, to closing down the business unit that acquired it all within a span of less than five years. Yet enterprise software and BI is often far more staid -- with life spans measured in human rather than dog years (or even insect years). However, a radical evolution is afoot in spend analysis at the moment. It's not just the advent of next generation platforms, nor is it about technology for technology's sake; rather, it's a new understanding of what the right set of tools can enable business users and analysts to accomplish.

Most important, this shift relates to users discovering that they can redefine the role and reach of spend analysis itself. This Spend Matters Perspective explores three specific areas in which we see companies deploying a next generation of spend analysis approaches to help pull a range of additional savings levers that they previously didn't have at their disposal. These include the discovery and incorporation of new datasets into spend analysis, new types of internal and external communication and compliance strategies based on greater data visibility and leveraging spend data to fundamentally change contracting approaches and supplier behavior. This perspective provides concrete examples and case guidance in each of these three areas.

We end by suggesting nine actionable items that companies can use to take advantage of the latest in what spend analysis approaches can offer. These recommendations include:

  • Working with business and functional stakeholders to understand what types of data sets are available to utilize in tandem with G/L and invoice-derived spending and payment data, plus taking the time to understand stakeholder needs and provide data that let them do their jobs better, rather than telling them what to do
  • Not being afraid to ask (e.g., turning to suppliers for access to invoice information when it is not available internally and/or asking for rate cards)
  • Using spend visibility as a tool to close the compliance gap where contract management, P2P and ERP technologies alone are insufficient

Whether you're new to spend analysis or are looking to hit the hyper-drive switch to vastly accelerate the benefits of existing programs, it's our hope that this analysis will prove invaluable. You can download Spend Analysis -- Making Quantum Leaps: Exploring the Realm of Possibility and Savings with Three New Strategies for free today.

Jason Busch

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