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Spend analytics solutions vs P2P: What to look for when your company needs insights

11/19/2019 By and

If you’re at a company that’s looking for more insight into its spend, you may be considering a procure-to-pay solution or you may just need to go with a spend analytics tool.

In your search, you’ll see terms like “end-to-end” or “suite solution” referring to P2P or source-to-pay systems — those solutions that, in general, give you purchasing ability via catalogs as well as offer invoice lifecycle management, spend insights and other capabilities that come together with their own benefits and costs.

When you read about spend analytics applications, you’ll often see terms like “best of breed” and “point solutions.” That’s because they focus on one thing really well, in this case, spend analytics.

Taking Next Steps

So, how does a business decide between the two?

P2P is often a robust system that a business considers when it needs to upgrade its processes as well as its technology. It’s often deployed when legacy systems need replacing or old workflows take too much time and effort from your staff.

A company choosing this option should be ready for a long implementation process that has costs beyond the hefty price of the system itself. Implementation, change management and staff training take time and money. And hidden costs can include poor user adoption of the system, which cuts into the return on investment if your personnel don’t use the system you just bought. Also, a P2P system may not be what your need business needs, but any adoption of a large procurement platform like invoice-to-pay or source-to-pay will come with the same pitfalls as well as the same commitments to time and costs.

A spend analytics solution may be a better fit for established businesses that already have serviceable technology and sound workflows. Those companies may just need a system that offers more insight into the data they already have. That’s when you’d look for a best-of-breed spend analytics solution. If your ERP and other systems can already generate the data, the company can use a spend analytics platform to review where the gaps are, evaluate where opportunities lie, and address issues and opportunities that way.

But even if a company has no good system of record and is seeking a basic P2P setup, a spend analytics solution should be considered to give visibility along the way.

What can you expect from a spend analytics tool? Let’s take a look.

The main advantages you’d want to gain from spend analytics is to have better visibility into the data you already have, add control of spend and increase team efficiency. A point solution should be able to seamlessly hook up to your legacy technology systems to have access to the data. You don’t have to rip out the old systems and replace everything. If the chosen spend analytics solution is easy to use and intuitive, you’ll have a better chance of adoption across the company — including key stakeholders like C-suite execs.

“There is significant value in a company’s data and procurement that uniquely has access to mission critical data across finance and operations,” said Nikesh Parekh, CEO and co-founder of Suplari. “Yet, this data tends to be inaccessible and unactionable due to current data silos, outdated enterprise systems, and new SaaS solutions that serve as new data repositories.”

“Procurement analytics solutions, like Suplari, can help procurement teams manage complex data to drive improved financial performance by enabling visibility, analytics and continuous insights across all business units and stakeholders,” Parekh said. “Spend analytics is the gateway to enable organizations to take advantage of both their treasure trove of financial data and apply new technologies like machine learning and artificial intelligence that are on the horizon.”

Implementation of a spend analytics solution should require fewer resources than a P2P installation to get the solution up and running. Spend analytics solutions often come at lower costs and with less time to implement and train your staff. If they’re easy to use, the adoption rate goes up and can speed up the time it takes for your organization to start finding gaps and the cost-saving opportunities.

Looking Forward, Not Back

A Kearney study that examines the value of procurement analytics finds that spend cubes, a traditional way of looking at spend, isn’t cutting it anymore. Spend cubes aren’t dynamically linked to the business, and the results they derive show the past performance of spend, Kearney says, noting that analytics solutions help businesses look forward.

Several case studies of businesses that chose a spend analytics tool show that spend analytics does measure past spend performance — but also helps departments work together better and gives insights into sourcing, suppliers, contracts and strategies that the business should do to drive future value. The businesses reported an array of reasons for needing this kind of point solution, including:

  • managing spend and risk was challenging while trying to offer value across other departments
  • global business divisions complicate sharing
  • disparate data lived in too many areas, like databases, spreadsheets and emails
  • complex procurement systems and processes
  • a procurement team needed to drive sourcing and category strategy to better manage suppliers and drive predictability of spend
  • the CFO asked procurement to cut spending on IT, professional services, contingent labor
  • to help replace manually calculating spend and cut the time that the staff spent collecting data

So here’s the main takeaway: If your business starts with a spend analytics tool first, it may negate the need for the major change management that’s usually part of a procure-to-pay deployment. With spend analytics, you may see results quickly and be able to carry out new strategies using the solution’s insights and capabilities.

In the next part of this series, we’ll look at research about the role of analytics and how procurement departments can benefit from gains in spend analytics.