Using a spend analysis solution allows you to uncover the hidden potential lying within your data. You can empower your team with business intelligence to make discoveries that can quickly grow your sourcing pipeline. However, procurement teams implementing a spend analysis solution often have to overcome challenges and roadblocks before they gain greater influence and spend under management with the tool.
Below are four challenges procurement organizations face when implementing a spend analysis solution:
Lack of Spend Understanding: Often, spend data is not up-to-date or is too high level (not line item or part-level). As a result, the “full picture” and power of your data is not exposed. Cleansing and classifying your data is the first step, but your team should also implement data enrichment strategies too.
Insufficient Resources: Spend Analysis usually starts with purchasing and strategic sourcing, who must request IT support or look within their own department for resources. Many times your purchasing team is consumed with daily tasks such as buying basic materials for the organization. Although the need for IT support has lessened significantly, your team still needs to allocate resources to spend analysis and strategic sourcing to drive leverage across the organization.
Required Analytics Capabilities: The 80% solution classification (i.e., 80-90% data accuracy) often leads companies to make incorrect strategy decisions rather than providing sufficient information needed to get the job done. The more advanced organizations now look at expanding the scope and definition of spend visibility to include other data types (e.g., diversity, performance, risk).
Lack of internal relationships (especially with Finance): Your finance team can be a key ally to sourcing and spend analysis initiatives. The finance team can document progress and track any savings achieved from sourcing efforts. They also make sure that identified and implemented savings to the corporation are rolled-up and attributed to departmental budgets. A good relationship with finance ensures that savings are realized and brought back to the organization rather than saving money in one area then spending it on another area that is not in the budget.
Click here to read the entire article on Iasta’s eSourcing Wiki.