Recently I had interesting conversations with numerous business partners, regarding how the market is defining “Spend Management”. The definition can get very wide across Spend, Supplier, Contract, and Sourcing activities; and considering both software and consulting related functions.
At Sourcing Force, our definition of Spend Management is focused on what can be considered end-to-end Spend “Data” Management. What we mean by that is all the data and core activities that specifically drive Spend intelligence, and although important, removing some of the ancillary processes with which the “results” are only important to Spend Management.
Getting an organization sophisticated and truly “smart” about Spend, and further providing an ability to tightly manage that Spend, requires an ability to collect all kinds of disparate data, both inside and outside the organization.
At a high level, the end-to-end Spend data Management process is:
1- Starting with basic Spend Analysis, an organization collects, integrates, and classifies internal Spend-related data. This can be AP, PO, GL, Pcard, expenses, financial data, organizational data, and whatever may be desired to analyze Spend.
2- The organization then collects and integrates data from outside the organization that adds to Spend Intelligence, such as Supplier data, market indices, and any other external data that adds to Spend Management knowledge.
3- The organization needs a flexible reporting tool that incorporates all the above data for deep analysis, to satisfy all users in doing their jobs and monitoring many Spend parameters.
4- The organization requires an ability to easily “Refresh” any portions of the data as often as desired, to monitor Spend parameters in an ongoing manner.
5- And most importantly, the organization needs an ability to lock down the specific organizational data to the specific scope of contracts or management needs, as Spend Sourcing programs are completed.
It is this last item where the definition of Spend Management gets muddied. Having a “contract management” system is a specific process to create and manage contracts, but what is most important for “Spend Management” are the final terms and the scope of the contract.
These key parameters serve as the metrics through which specific refreshed data is processed for performance management purposes.
The same is true for eSourcing outcomes, and Supplier performance outcomes – the resulting data needs to be captured and incorporated into the end-to-end Spend Management process, as related to “Spend”.
Spend is the core.
More and more organizations are “cutting to the chase” and focusing on collecting any and all data related to Spend, and then implementing robust and valuable Spend Data Management reporting for enhanced knowledge, measurement, and tracking across the entire organization.
Lots and lots of data all integrated in one place, with the commonality being “Spend”.