How to Tackle Spend, Pick the Right Technology and Gain Visibility
Businesses these days face a dizzying amount of spend information — from supplier transactions, T&E, P-cards, procurement, HR and rogue spend. On top of that, the technologies promising to address these issues can be overwhelming themselves. Companies end up grappling with how to make sense of their transactions and how to navigate the digital transformation of their procurement and supply chain operations.
Many risks arise from not being able to see and manage all of a company’s spend. Each transaction can be fraught with fraud, raise compliance issues or waste time if employees don’t follow company policy. All of that comes at a cost, from leakage of money to lost opportunities. The latest technology can help reveal blind spots and increase visibility.
Artificial intelligence and machine learning for procurement are hot right now, but it’s hard to find solutions that are capitalizing on their advantages. So how do procurement and finance leaders make good on the promises and expectations of AI and machine learning?
We talked with an expert on spend management solutions, Nikesh Parekh, CEO of Suplari, to help make sense of the all the disparate spend and the range of complex technology issues.
Spend Matters: Companies have managed their spend manually, or in ERPs and basic business intelligence (BI) tools, for a long time. Why do businesses need to digitally transform?
Nikesh Parekh: The traditional function of procurement was, in the early days, to enforce a set of processes to prevent employees from making irresponsible or unwise spending decisions. It’s the quickest path to saving money. But today, our customers tell me that they are being asked to provide strategic value above and beyond cost savings and risk reduction. This is where digital transformation comes into play. If organizations want to move the needle beyond the tactics they’ve been employing, they need to be open to leveraging innovative technologies, such as artificial intelligence.
How do artificial intelligence, machine learning and algorithms help manage spend? And do they have benefits beyond finding cost-savings?
Artificial intelligence and machine learning can be used to quickly normalize and analyze procurement and finance data. Algorithms can constantly search for opportunities to increase profit, reduce spend, mitigate risk, ensure compliance, streamline processes, improve visibility and enhance team productivity. With all of these efficiencies, procurement and finance teams are liberated from doing repetitive tasks like normalizing data. They can now focus on proactively seeking out opportunities to drive more value and hit their financial performance goals.
How does Suplari do this?
We do it in three ways: First, we augment a company’s purchasing data (contracts, payables, T&E, corporate card, PO’s, invoices, preferred supplier data and usage data) by moving it to the cloud so that it’s in one unified model. Our artificial intelligence algorithms clean, normalize, categorize and enhance the data by combining it with other data sets that are essential to making informed decisions, including supplier details, news, cybersecurity, parent-child hierarchies, diversity and corporate social responsibility to name a few. By connecting relevant data points from disparate applications, Suplari actually makes your data better than it was originally.
Next, Suplari is able to analyze this data with our best-in-class, modern analytics and BI tools. This capability empowers everyone in the organization with the insights they need to optimize spend, mitigate risk and ensure compliance.
Suplari Intelligence can then automate always-on monitoring, analysis and scoring of spend, suppliers and contracts. Our AI-powered insights are constantly searching for new opportunities to reduce spend and risk as well as increase policy compliance. In addition, we can custom program insight applications to tackle a company’s hardest strategic problems, operational optimization needs and data blind spots. Suplari Insights Generator is our very own proprietary environment for integrated development and data science. It’s used for rapid programming of both built-in and custom insight applications in our system.
With all the insights being generated from automation and digital transformation, what is that information telling CFOs and CPOs that they didn’t know before?
Some CFOs and CPOs rationalize tracking only their top suppliers for opportunities. We often hear that “the leakage amount is not worth the effort to track it,” given the manual, labor-intensive, spreadsheet-bound methods. Suplari’s insights eliminate blind spots by surfacing all savings and risk opportunities from your purchasing data. For example, our T&E and P-card insights run algorithms to monitor spend data and proactively detect savings, issues and activity outside your companies policies and parameters. We also have contract insights that can manage contracts across suppliers. The contract insights algorithms automatically detect and alert about opportunities for contract consolidation, early renewals and missing contracts.
The one technology I mentioned earlier that’s revolutionary for CFOs and CPOs is the ability to build custom insights to solve their most challenging strategic problems. Suplari creates custom insights for enterprise companies so leaders can confidently find ways to improve their business, spend management and financial performance.
It seems that past one-off efforts to go digital have improved efficiency in individual departments. Will the next wave of technology create a digital transformation that’s enterprise-wide?
That’s the vision we have at Suplari. We want to democratize spend data and insights so that spend management is accountable across the enterprise. Doing so empowers business units, beyond procurement and finance, to collaborate and focus on what matters so they can make better business decisions and drive value.
In our next article in this series about controlling spend, we’ll look more at the cost-saving benefit of renegotiating contracts and using the latest technology to ensure that you know when and how to renegotiate with all of your suppliers, which can return more money to your bottom line.