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.
Getting ready for spend analysis
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:
- Incomplete and inconsistent data – nobody’s records are perfect, and often companies are faced with spend data that is incomplete and inconsistent to enable accurate decision-making.
- Data aggregation and harmonisation – it can be difficult to piece together procurement data from various sources across the organisation so it can make sense – and not having an integrated spend management tool can make things even more difficult and data even harder to read.
- Inefficient use of spend analytics tools – these tools should not be an impulsive purchase, but the result of in-depth analysis of the company’s spend objectives, behaviours and data. Because at times this becomes an impulsive purchase companies are left with inefficient tools (for their needs) or don’t use the tools to their full extent, thus missing saving opportunities and accurate insights into their spend data.
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.
Things to consider during the implementation process
When digitising spend analytics, there are a few aspects companies should watch out for in choosing and implementing a spend analytics tool:
- The company’s needs and specifics – not all available tools are going to be a match to your company’s needs. More important than choosing the most advanced software is choosing the software that best fits your company’s needs and specifics
- What the business wants to achieve – every implementation process should be the result of a strong business case. We’ve previously talked about the importance of building a strong business case when implementing a digital contract management solution – the same arguments are valid for implementing a spend analytics software
- Tool features and company goals – it is important to make sure your spend analytics tool has all the features needed to achieve the companies’ goals and has the potential to go beyond that. More sophisticated solutions now incorporate AI which means data consolidation and analysis is now faster and you get real-time insights into saving opportunities.
- Integration with current tools – such as ERP and other financial systems and ability to centralize data in one location
- The change won’t happen overnight – companies need to be aware that spend analysis is a long-term commitment that needs to be done repeatedly in order to provide the intelligence and visibility to create saving opportunities, increase profitability and avoid risk
- Reporting – not all spend analytics tools are integrated solutions that would allow you to consolidate all your reporting requirements. An advanced spend analytics tool should help you create a single centralised reporting environment and provide the behavioural information you need to make informed decisions.
Is it worth it?
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.
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.
Getting ready for spend analysis
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.
Things to consider during the implementation process
When digitising spend analytics, there are a few aspects companies should watch out for in choosing and implementing a spend analytics tool:
Is it worth it?
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.