Using Spend Analytics to Earn Procurement a Seat at the Table
Most procurement departments know that collecting, improving, and analyzing spend data through spend analytics is a crucial first step toward achieving a more streamlined and strategic purchasing function (which can unlock everything from increased value perception to higher budget for expanding FTEs, technology investment, and more). But it can be a journey to get there ─ starting with a spend cube.
With good spend data, you can develop an execution plan to influence impactable spend and use your spend cube to bring insights to leadership. But in order to do that, you need a way to analyze and internalize what your data is telling you about your spend (i.e., is it compliant, how much of it is impactable, do you have supplier fragmentation, etc.).
Using Spend Analytics to Impress Leadership (and the Rest of Your Organization)
Poor spend visibility is a common problem in many organizations, if you can even find all of the data in the first place. Spend analytics tools, whether you choose a suite, an internal solution, or a best-of-breed SaaS solution like SpendHQ, enable you to do more with your spend data by delivering a consolidated and clean view.
New Insights, Who This?
An organization-wide view of spend unlocks the doors to having data-based insights that C-suites crave. Many SpendHQ clients, post-implementation, have found that they think people are sticking to suppliers with negotiated contracts, but find fragmentation and noncompliance. Looking at IT spend data often uncovers individual subscriptions to vendors like Adobe, Slack, or Zoom, that can be consolidated into a single contract to eliminate the shadow spend.
And there are always departments who sidestep processes (oftentimes unintentionally) to get the goods and services they need, which brings us to…
Procurement and Other Spend Managers are the Helpers (Not the Spend Police)
Ideally, procurement teams should function as internal consultants who are there to act as helpful guides to stakeholders, not the spend police. “How can we help you find the exact right supplier?” and “I think there’s a savings opportunity here!” go a lot further than “I’m not approving payment for your supplier because you didn’t enter the address of their fourth global entity into the ERP.”
Spend data, and the insights derived from it, is a non-emotional means to tell a story that will bring forth new ideas and generate excitement – rather than resentment – for procurement processes (and people, for that matter).
Procurement Knows Exactly What to Do (and When to Do It)
Spend intelligence = human intelligence.
Nagging questions such as:
- What is your average payment size?
- Where are you spending the most, and with which suppliers?
- Why does this other department spend so much?
- How are we spending so much more in Q2 vs. Q4?
- Are suppliers being paid on time?
- Why aren’t we optimizing invoicing to reduce processing costs?
… can be easy to answer when all of the data necessary to answer them is cleansed, aggregated, and lives in one place with meaningful dashboards built to tell you what to do.
Gaining insight into trending costs isn’t just a historical exercise; it can help procurement teams plan for the future, reduce risk, and have answers for Sally in finance or Rick in corporate development within seconds, not hours.
Control, Context, and Impact from Spend Analytics = A Seat at the TABLE
Good spend data lends credibility to procurement by providing insights that have perhaps never been considered before. Working with a provider like SpendHQ, built for procurement experts by procurement experts, can make sense of the most complex environments. Data will always be messy, but you can’t manage what you can’t see. Spend analysis is key to helping you find and resolve these issues so you can not only reduce cost, but also add material value to your organization – proving that procurement is a value driver vs. a cost center.
SpendHQ shows you where you should be impacting spend and helps you use your spend data to track savings. Our procurement data optimization service cleanses, consolidates, normalizes, and strategically categorizes your procurement data to a target of 97%+ accurate spend categorization.
SpendHQ was built with the needs of procurement professionals in mind to help you plan, track and maintain your spend. And with that knowledge, you can more easily come up with a strategic sourcing strategy that will drive long-term cost-optimization – a future we’d all love to live in.