In part one of our “Driving value through Digital Procurement” blog series, we uncovered the top 10 processes that help build a digital procurement function and we expanded on how to digitise contract management – one of the “messiest” and most time consuming of the 10 processes.
Data analytics is now a well-known and acknowledged element of a company’s performance. Gone are the days when companies were wondering whether investing in data analytics would bring any benefits. As part of this strategy companies have taken into consideration spend analytics to help procurement teams work more effectively.
In theory the benefits of spend analytics are obvious as it helps companies obtain cost savings, reduce risk and get a better view of their spending habits. However, there are a few things that companies often forget to take into consideration when embarking on a spend analytics journey:
Things are pretty much clear – the way to digitising spend analysis is implementing a spend analytics software tool. But, as we’ve seen above, things are not that easy as a lot of thought and consideration needs to be put into this process so that businesses make the most out of their new tool in terms of saving costs, gaining insights and getting better visibility over their spend data. Often there is a lot of undiscovered potential in spend analysis and the data that goes into it – telling you half the story and delivering half the benefits that it could potentially deliver.
When digitising spend analytics, there are a few aspects companies should watch out for in choosing and implementing a spend analytics tool:
There are obvious benefits to digitising spend analysis – not only for the procurement function but for the whole business. Effective spend analysis can have a significant impact on a company’s profitability and operating margins by enabling intelligent planning, forecasting, budgeting, and risk mitigation. Spend analysis has also proved to be a great way of minimizing maverick spend.
Most importantly these tools will enable you to centralise data from different sources, that don’t speak the same language, by normalising the data.
Powerful digital tools will help you gain control over your spend, and help you identify opportunities while providing real-time insights so that you can make better informed decisions.
As part of a digital procurement strategy, spend analysis can provide the backbone to decision making and help shape a long term digital strategy.
Moreover, in a world that’s moving faster and faster, in terms of technological innovation and access to information it is important to be able to quickly adjust your decisions and grab opportunities by the hand as soon as they appear.
Don’t miss part 3 of our blog series, as we explore supplier management and risk as part of a digital procurement strategy.
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