Unlock Procurement’s Potential with Spend Intelligence
Spend analytics has long been the term most associated with leveraging spend data to drive Procurement’s strategic impact. Yet in recent years, spend intelligence has emerged as a way to dive deeper and correct the shortcomings of spend analytics and visibility.
Here, we will explore how to advance from the basics of spend analytics to true spend intelligence and gain faster access to more of the actionable insights hiding in your spend data.
How it starts: spend analytics
- 79% of executives distrust Procurement’s data for strategic decisions
- 75% of procurement professionals distrust their own data
- 46% of CPOs called cost savings their top concern
- 43% called supply chain risk their top priority
- 60% of teams believe their performance could be better
- More than 50% of teams don’t know where to start making improvements
This isn’t just a matter of Procurement’s pride. As Ardent Partners Founder and Chief Research Officer Andrew Bartolini said in a SpendHQ webinar, every dollar put under Procurement’s management reduces costs by 12-18 cents. Procurement needs a solution to its data problem, and it starts with the ability to see and analyze spend.
Why these insights matters
Visibility reveals opportunities. With spend analytics and comprehensive visibility, Procurement can see its spend, evaluate the factors driving it, and choose what to address.
However, the importance of spend analytics goes beyond simple savings. Analytics also creates a more methodical approach to Procurement. Teams can use their ability to take stock of opportunities to rally resources, prioritize projects, and drive more meaningful impact organization-wide. The result is
- Confident category strategies
- Impactful contracts
- Thoughtful supply chain risk mitigation
- Favorable payment terms
- Holistic supplier diversity reporting
- Stronger supply chains
- Actionable scope 3 emissions planning
- Higher compliance percentages
There are endless scenarios we could explore that demonstrate why spend analytics matters to Procurement. From tactical negotiations to strategic non-financial performance, being able to see and analyze spend comprehensively is foundational to everything Procurement aims to accomplish.
The limitations of analytics
Despite the importance of analytics, many solutions fall short of solving Procurement’s data and insight problems. Even though they give the function a degree of visibility into its spend data, they introduce their own issues, so identifying and acting on strategic opportunities remains a time-intensive process.
Fragmented spend data
Spend data is notoriously spread out, and most analytics solutions are unable to solve this problem. Because Procurement’s data is fragmented between various suites, ERPs, BI tools, T&E solutions, P-Cards, etc., most teams are stuck making decisions based off only 40-60% of their spend data.
Making decisions with a data set this flawed creates several issues including unpredictable impact and severely diminished results.
The wrong foundation
Secondly, most spend analytics solutions are built on data and finance methodologies. They categorize spend in ways built for everything but sourcing. At best, they force Procurement to adjust its operations when analyzing spend. At worst, they place spend in the wrong categories, making the resulting spend cube useless or misleading.
Slow time to value
Finally, most solutions’ version of analytics gives you the data and tools, but makes you do the analysis. In a function as busy as Procurement, wading through data is distracting and will limit the opportunities you can find and act on. Additionally, they deepen Procurement’s talent challenges by requiring teams with strong data backgrounds to make the most of the tool.
Where it’s going: Spend Intelligence
Today’s business landscape is so interconnected that the ability to analyze spend will not drive Procurement performance. The function needs easy access to insights, also known as spend intelligence.
Insights, not data
While analytics provides data and the ability to explore it, spend intelligence turns raw spend data into insights ready for immediate collaboration and action. With it, practitioners can explore a wealth of trends and their implications at a glance instead of diving into data to manually extract desired findings.
This done-for-you type of analysis comes with several benefits:
- Faster time-to-value: You can start driving impact in a fraction of the time
- Fewer missed opportunities
:Opportunities and risks are no longer hidden under copious amounts of data, meaning important trends don’t go undiscovered
- Fewer talent barriers: Less data work means Procurement can look outside of data expertise when hiring.
- Elevate everyone’s “spend IQ”: Having insights for all spend categories, and in readily available and consumable format, improves goal-oriented planning with stakeholders.
Unless your team is filled with Procurement veterans, looking at your numbers won’t mean much without something to compare them to. This is another area where Spend Intelligence takes analytics to another level.
Instead of simply facilitating the analysis, Spend Intelligence uses real sourcing best practices data, acquired from our partnership with the consulting firm Insight Sourcing, to give teams performance benchmarks such as supplier diversity and expected savings data.
With these built-in comparisons, you can better estimate savings, plan proactively, launch new projects faster, become a strategic partner, and develop a continuous improvement culture.
Wider access to data
Accessing information is the first step to solving Procurement’s data problem. However, if Procurement is the only function with easy access to spend data, its relationships with procurement stakeholders remain sub-par.
Spend Intelligence extends this access to data with its cloud-based platform and streamlined reporting. By equipping teams with insight-focused procurement dashboards, key stakeholders across the business can quickly gain a comprehensive picture of organizational spending.
As a result, the business itself becomes more aware of Procurement’s impact, which paves the way for alignment and collaboration. It also allows Procurement data to mean something to stakeholders who might not have extensive data backgrounds, which can encourage them to be proactive about a range of issues Procurement typically oversees, such as compliance and supplier fragmentation.
Most solutions’ spend taxonomies come from a finance or data perspective. They are not built for Procurement, so they usually lack key distinctions that make them useful for categorizing spend from a sourcing perspective. Some of the issues we’ve found include:
- 43% of taxonomies are missing a critical category in at least one tier
- 34% have the same or similar category in three or more tiers
- A nearly universal focus on who is purchasing instead of what they’re purchasing
When spend data is organized incorrectly, there’s a hard limit to what procurement can do with the resulting analytics. However, Spend Intelligence’s spend taxonomy is the result of over 20 years of procurement experience. It organizes spend from a sourcing perspective, using tiers based on product and function.
We pair this unique taxonomy with an expert-led and AI-supported implementation process. With this approach, we classify an industry-leading 97% of spend data into explorable categories instead of the typical 40-60% captured by spend analytics solutions.
Historical data and regular refreshes
Comprehensive categorization isn’t only a function of implementation. Spend Intelligence uses the same blend of procurement expertise and AI to make refreshes simple, fast, and effective.
As a result, most users refresh their data monthly, which allows them to move on from “spent analysis” and leverage a blend of historical and current data to level up their strategic decision making.
Execution, integrations, and enrichment
Even with comprehensive, quality data, Procurement has typically suffered from a gap in the solution ecosystem that makes execution challenging. Even in a world of digital transformation, execution usually takes place over emails, phone calls, and the messy exchange of Excel spreadsheets.
What sets Spend Intelligence apart is its seamless integration with Procurement Performance Management (PPM), the leading procurement orchestration solution. The unified solution allows teams to create projects based on spend data, track progress based on buyer and stakeholder updates, report results based on realized savings, and facilitate stakeholder visibility over the entire process.
Both solutions also come with a host of enrichment and streamlining integrations, including:
- SAP Ariba
- Market Dojo
Accelerate your journey to strategic impact
Your access to data will determine your impact. Don’t limit yourself to manual and incomplete analytics that hide the most pressing opportunities behind missing data. Click the button below now to schedule a demo and discover what you can accomplish when you place your procurement organization on the path to success with Spend Intelligence.