What’s the Difference Between Spend Visibility and Spend Intelligence?

In a recent flurry of analyst reports and breaking news, visibility has surfaced as a critical ingredient of procurement success in 2023. As Ardent Partners reports in its new CPO Rising report, visibility is one of the core differentiators between best-in-class procurement departments and less mature organizations.

So if spend visibility is so important to today’s businesses, just imagine what your team could accomplish by taking it a step further and harnessing spend intelligence. To prepare you for the next level, let’s dive in and explore the two concepts, how they differ from each other, and why spend visibility is just the first step in the journey to procurement excellence.

What is spend visibility?

Procurement teams achieve spend visibility when their spend cubes show them how much they’re spending, what category or subcategory they’re spending it in, and which suppliers they’re spending with. Most importantly, true spend visibility is defined by the ability to see this information at a glance.

Easy access to data is important because it allows Procurement to operate strategically. When decision-makers can quickly see the organization’s entire spend profile, they don’t have to be the “You can’t buy that” gatekeepers. Instead, they’ll have holistic oversight, which allows them to drive organizational wins instead of managing budgets out of fear of overspend at the end of a month, quarter, or year.

What is spend intelligence?

If spend visibility allows procurement teams to keep a finger on the pulse of their business, then spend intelligence empowers them to drive the entire organization toward success. It takes visibility to the next level by using spend information to uncover trends, evaluate critical data points, and identify risks and opportunities. The difference between the two concepts is similar to the difference between looking out a window and climbing through it to interact with what’s on the other side.

Unfortunately, many procurement teams have traditionally stopped at visibility, thinking they’re capitalizing on its full potential by using it to monitor cost, compliance, and process. As a result, many organizations continue to view Procurement as a cost center whose role focuses on maintaining the status quo and reducing costs. But intelligence puts Procurement in the strategic driver’s seat by:

  • Interpreting the meaning of historical trends
  • Catching developments before they happen
  • Evaluating large-scale initiatives
  • Identifying strategic opportunities
  • Surfacing unnoticed risks
  • Uncovering non-compliance
  • Capitalizing on cost-avoidances
  • Executing on critical projects

The difference between visibility and intelligence is simple, but it makes a significant difference in practice. Procurement departments that simply use spend data to guide decision-making tend to have a low impact on their overall organizations. In contrast, teams that voraciously dig into data and leverage it to find and execute new opportunities can simply accomplish more. As a result, they become drivers of strategic development and have greater buy-in with internal stakeholders.

Making intelligence easy…and systematic

Spend intelligence is clearly a requirement for procurement organizations that want to maximize their strategic impact. But to get there, they need to start with spend visibility. Doing so may seem like a simple step in today’s digitally-focused procurement world. However, getting the necessary information to achieve this level of oversight remains a hard ask for many procurement teams. In fact, in a joint study we conducted with Procurious, almost half of the respondents reported that inconsistent processes and reporting get in the way of spend visibility.

The cause of this inconsistency is simple: decentralized and coordinated procurement operations rely on fragmented technology stacks, preferred vendor profiles, and SOPs. Even more mature organizations often have a blend of systems and processes across departments, which leads to a mix of data formats, reporting cadences, naming conventions, and data accessibility. Trying to turn this fragmented data into spend visibility is much like putting together a puzzle when you don’t have the picture on the box.

Additionally, the flow of data never ends, so it can be difficult to establish consistent visibility instead of brief, outdated windows. Ideally, digital transformation would make this a non-issue, but many suites simply don’t aggregate and consolidate spend data thoroughly enough to solve the data problem.

Because of these challenges, achieving spend visibility is often difficult enough on its own. Moving beyond visibility to intelligence, then, may not feel worth the effort or expense. However, the returns that come with spend intelligence are priceless—cost avoidance, increased spend under management, achievable CSR initiatives, organization-wide compliance, strategic impact, and much more.

Even better, moving to genuine spend intelligence isn’t difficult. With the right best-of-breed spend analytics tool, you won’t need to aggregate, clean, or categorize any of your spend data. You can choose a hands-off implementation that allows you to guide the process and ensure its accuracy without doing any of the data entry yourself.

The result is immediately actionable insights, which is what our platform, Spend Intelligence, provides. Its wide range of analytics tools allow procurement teams to focus on any data point imaginable and then put them to use:

  • Customized filters for slicing-and-dicing data
  • Graphs for visual data presentation and easy trend identification
  • Various modules that allow you to look at spend from different angles
  • Category and subcategory breakdowns for easy categorization
  • Personalized KPI trackers so you can easily quantify performance
A graph in Spend Intelligence allowing users to turn spend visibility into insights that drive impact.

The above image is only a small sample of what procurement professionals can find in Spend Intelligence. For every graph you click, filter you set, or module you enter, there’s a wealth of data waiting for your attention. Spend Intelligence is spend visibility taken up several levels. If you’re ready to see what it can do for your organization, click below to schedule a demo with our team and discover the results that come with embracing spend intelligence.

Visibility or Intelligence?