Validation from CPOs on What We Understand about Spend Analysis
Constantine Limberakis, Director of Product Marketing at SpendHQ, shares his findings from the Marcus Evans Fall Summit.
Product marketing can sometimes appear to create ideas that come from an ivory tower. So it’s always refreshing to get validation from practitioners in the field on ideas that we are sharing with the wider procurement community around the topic of spend analysis. This validation came at the Marcus Evans CPO Event in Las Vegas this past week. Based on the many conversations we had with CPOs and VPs of procurement, I don’t recall one discussion where an executive felt that they had a 100 percent complete view of their spend.
During our most recent webinar, Avoid Common Spend Analysis Pitfalls, we discussed why spend analysis and visibility are foundational to any procurement organization. It is clear that most teams are still struggling with poor-quality data and sometimes find it difficult to justify investing in third-party data solutions to solve this challenge. Combined with the challenges of data lakes, corporate changes from mergers and acquisitions, and an overall pressure to get more savings year over year, procurement leaders are finding it difficult to align their talent and technology strategies. Moreover, while many organizations are implementing procurement suite solutions or using business intelligence solutions as their spend analytics solution, they find themselves in the same position they started in, struggling to obtain full spend visibility while also lacking the expertise they need for building data-driven procurement strategies.
There were many stories shared during the two-day event, but here are some of the stories from procurement executives that struck a chord with me:
- The heads of indirect procurement from a large commercial real estate services organization shared their story of merger and acquisition of three separate companies that came together. They shared how the synergies of various teams and their expertise helped them build a new procurement organization that included a center of excellence and models for direct and indirect procurement. While they still have many initiatives in play since the completion of the merger in 2015, they noted that the challenge of putting three companies together had led them to focus on becoming more employee-centric. As a result, their strategy for technology is focused on a “best-of-breed” approach across the entire company, which includes spend analysis as one tool that supports several different technologies across four business lines.
- A VP of procurement in the gaming industry shared that they chose a procurement suite solution. They have been trying to implement it for years and have found it difficult to get all the modules from source-to-pay to work together as they expected. Moreover, after deploying the solution, the expectation was to get better visibility with one tool. While they have much of the data captured that they need for spend analysis, years later they are reluctant to accept the reliability of this data. And while their solution vendor provides a service to consolidate and normalize their data into a spend cube as part of its offering, the VP and her team have questioned the data accuracy coming out of the spend analysis tool. As a result, they’ve had to delay further opportunity assessments because they simply don’t feel confident executing sourcing strategies against the spend data they have today.
- In a similar one-on-one discussion, the new CPO of a large manufacturing organization shared how organizational effectiveness and spend analysis are a priority to his organization. While a BI tool was selected by IT to give them visibility across the organization, the lack of category knowledge in his nascent procurement team has made it difficult for him to make much progress in his effort at mechanizing spend data and required an additional dashboard configuration. Coupled with the lack of deep category knowledge among members of his team, they aren’t getting the insights from the data for how they want to see it. On top of this, the challenge of getting a new IT person on staff to help with spend analysis has further exacerbated their need for partnering with a spend analytics provider that can provide both procurement expertise and data management skills.
- Finally, during the last session of the conference, four VPs/CPOs from a variety of industries shared their respective struggles for how CPOs should communicate with their direct report. Whether it be reporting to the CFO or COO, a major challenge in this dialogue with C-level direct reports continues to be how efficient and effective procurement is at identifying savings opportunities that hit the bottom line, whereas managing rogue or maverick spend remains a challenge. Further still, being able to easily demonstrate spend compliance against negotiated contracts is also lacking, given procurement’s challenges in effectively communicating the procurement policies and procedures that promote the business to buy from preferred suppliers. It was clear from the panel that there is a need to get procurement talent from a wider sphere of skills that includes skills in data science and analytical skills for improving wider spend and procurement analytics efforts.
Based on these discussions and panels during the event, it was pleasant to get an endorsement of many of the best practices and approaches we preach here at SpendHQ. It is clear to me that spend analysis is still seen as a pivotal initiative in the age of big data.
SpendHQ is a spend analysis solution that provides rapid, accurate and detailed visibility into enterprise spend data. This full-service SaaS (Software-as-a-Service) spend analytics solution delivers actionable insight for sourcing and procurement professionals. With SpendHQ as your command center, you give procurement leaders inside your organization the power to impact the bottom line.
Recognized for innovation and industry impact in the procurement space, SpendHQ was named the best Best Big Data Reporting & Analytics Solution and Best Data Visualization Technology solution in the 2018 SIIA CODiE Awards. With SpendHQ at their fingertips, clients ranging from Fortune 500s to mid-market companies are finally able to see their enterprise spend clearly and drive savings confidently.