Tungsten – Is It Playing a Whole New Spend Analytics Game?

Tungsten is the AIM-quoted e-invoicing and supply chain finance firm created last year from OB10 and the purchase of the FIBI Bank. Whilst e-invoicing is really the heart of the business, a third string to its bow was put in place when the firm was created. But that string needed some tuning, to extend the analogy, but is now starting to form an important part of the Tungsten offering.

The third string is a spend analytics option, which the firm is now offering to clients. The application is 100% cloud-based, and at the moment 20 current clients have seen it. So real data has been run through the system and the evidence of savings opportunities (see below) comes from that data.

But this is quite different from the ‘traditional’ spend analytics solution that picks up data well after the event from the organisation’s systems, and usually sees the analysis run monthly, quarterly or even annually in arrears as it were. Tungsten’s product and process is different, in that the data is picked up in a virtually “real-time” manner directly from the invoice via the Tungsten platform. As an electronic invoicing company at heart, Tungsten has the ability to pull the appropriate detail from the invoice, at an invoice line level, and on a very regular basis.

That often gives better information than pulling the data out of an AP or Purchase Order system, where line-level detail may not be present. There is also a high degree of consistency from invoices in terms of how suppliers describe products, so if the purchasing organisation is dispersed from a procurement point of view, the system can spot where the same item is being purchased across multiple points. And, unsurprisingly, there can be very different pricing for the same items.

And that defines the main benefit of the platform as it stands now anyway. This analysis can pick up those pricing deviations and variances in what is almost real time. Unlike traditional spend analysis, Tungsten is pulling the data on an hourly basis, and is generally updating the client-facing front-end every 24 hours. So actionable information is available far more frequently than most analytics customers will be used to seeing it.

Tungsten is providing what it calls a “vanilla” application, with some degree of possible customisation, and is generally putting two years of past data into the system. When a user logs in, the home page shows an overall summary of invoiced activity - total spend, number of invoices, some banding by supplier size, etc. There is also analysis relating percentage of spend and number of active suppliers per month (i.e. “the 8 largest suppliers account for 87% of spend this month”).

It is all clearly laid out with an attractive user interface. For instance, whenever there is a table, users can click to look in more detail at the data, or filter on different fields. Perhaps most impressively, you can click through quickly from total spend all the way down to actually viewing a single original invoice. (I wish I’d had that capability in my past CPO life)!

Back to price variation though, which forms the current business case for the product really. “If we had bought the whole volume at the lowest price we have achieved for the item, the saving would have been X”. That is the core of the opportunity analysis, and is particularly useful for organisations with different buyers in different locations. From the users so far, Tungsten has found average savings of 0.9% to 4% simply looking at this same item, same supplier analysis. (So not getting into differences across suppliers or across buying organisations).

However, as Tungsten points out, this is largely restricted to goods rather than services and, as Stefan Foryszewski (one of OB10’s founders, now leading product development at Tungsten) pointed out to me during our demo, “ we don't provide a magic wand to realise the savings.”

But even so, the price variances they have found have “blown away” some of the CFOs and CPOs Tungsten has met, according to Foryszewski. However, this does require careful positioning in terms of how procurement has previously performed! But another advantage of this approach is that the variances are being highlighted before the invoice is paid, meaning action can be taken where appropriate prior to payment.

It’s worth stressing however, that the platform is not fully mature in terms of capability. You can’t run an overall classification by spend category for instance, something that is a basic of most “traditional” spend analytics. And there is no cost comparison for similar items across different suppliers or across different buying organisations buyers – yet. Foryszewski says he “has a list” of future enhancements though and is well aware of where there are gaps at the moment.

But certainly, current Tungsten (OB10) customers should be looking at the platform, even as it stands with the current functionality. And in time, we suspect this is going to change the world of spend analytics, and the associated world of spend recovery, quite significantly.

So in part 2, we’ll give you some further thoughts about the future, and how the Tungsten product fits into the solution landscape.

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Voices (2)

  1. David Gustin:

    Haha Peter the Geek. Good stuff Peter, banks are now coming out with their own Integrated Payable analytic tools, but takes a corporation’s spend file and recommend various ways the company can improve their cash flow and working capital. It is clunky at best and doesn’t allow the user to do their own what if scenario modeling. This is way cool!

  2. Jason Busch:

    Thanks for the write-up, Peter. Great stuff as always (and you say you’re not a tech geek — you are!) As important, any potential customer that thinks Tungsten has gone over too much to the financing side of networks/invoicing (without the procurement / data grounding) should talk to Stefan. He is exceptionally grounded in this stuff and a great guy to boot. The analytics piece is nifty and original — not yet an SA replacement solution, but a complement.

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