Comprehensive Spend Management is the next step companies are taking to manage Spend and Suppliers.
The majority of company’s who are doing “Spend Analysis” projects (and many companies have not yet done a formal Spend Analysis project), are primarily focused on doing a basic Spend “snapshot” of some organizational scope (usually not the entire organization) and analyzing that data for sourcing opportunities.
This process can go on for quite some time, as typically there is much data to analyze, and many sourcing opportunities to pursue. What we have found is those organizations that are maturing past this stage, and establishing a robust and ongoing Spend Management capability within their organization, are realizing significantly greater benefits.
Spend Management not only entails continually refreshing Spend data across the entire organization, but also having specific integrated applications to manage and measure savings and compliance programs category by category, as well as manage ongoing supplier intelligence.
These applications add significantly more value and capability to manage costs and suppliers, not available through other systems within the organization.
Companies that have put in place the ongoing cycle of Spend Management have maintained greater savings over time, and have better managed their organizational Spend as the organization grows and changes.
We have worked with customers in different industries that have been early adopters of the entire Spend Management process, that have literally realized over $100 million in savings, have won awards, and can provide testimonials that “if not for the Spend Management tools and technology”, these opportunities would have been much less, or not realized at all.
The return on investment is not only realized, but is much greater than 1-time Spend Analysis and sourcing event activities. The future of “Spend Analysis” as done today will be much more in the year(s) ahead.
It is the maturity to Spend Management that the majority of companies have yet to realize.
It is becoming clear that ERP investments and systems do not provide these capabilities, and Spend Management will be a new investment need and evolutionary process for many companies.
Recognizing this need for advanced Spend Management, Sourcing Force provides seamless products and services to effectively evolve organizations from Spend Analysis to Spend Management.
What is key to making this happen in a more advanced way than previous market offerings are advanced data management capabilities that serve as the foundation for Spend Management applications to manage specific types of data processes as an integrated whole (see illustration).
All companies start with an initial data cleansing/classification/Spend Analysis/Reporting project to drive sourcing opportunities and better understand Spend and Suppliers.
This initial snapshot effort typically evolves into the need for an ongoing Refresh of the data for better reporting and insights. This further evolves quickly from quarterly to monthly refresh cycles, as capabilities to manage ongoing data are put in place.
This then quickly evolves into specific performance/compliance management of suppliers and specific contract terms, category-by-category, to support the completed sourcing activity/scope and “lock it down” for specific measurement, dashboards, and specific organizational management.
This then evolves into a desire for more data beyond the historical Spend information – data from outside the company to support key supplier intelligence and commodity/industry benchmark information. This is more a “forward” looking Spend Management capability.
And in the most advanced customers, the final evolution involves variations of enterprise analysis and financial management, such as Spend Allocations, as more and more data can be collected, integrated, and tailored for specific Spend Management needs.