Spend Analysis v. Spend Intelligence: 4 Questions to Ask As a Procurement Team

In 2013, it’s not groundbreaking to say spend analysis is considered a key function within most successful procurement organizations. In fact, Aberdeen Group research found that 89% of best-in-class procurement teams utilized a spend analysis solution within their organization. In the same report, Aberdeen Group gathered that access to data is a critical component to a Best-In-Class procurement team. If you’re curious in reading more about these findings, download the report here: Dynamic Procurement – The CPO as a Collaborator, Innovator, and Strategist.

To no surprise, the overwhelming majority of mature procurement organizations we speak with confidently report to us that they have a spend analysis solution and strategy in place. However, when digging deeper into the topic and conversation, we discover that the term “Spend Analysis” varies a great deal from company to company! That leads me to the question, “You might have a spend analysis solution in place, but do you have easily accessible spend intelligence”?

As you know, many companies struggle with gathering data about spend because it’s residing in numerous systems across the organization. By using a spend analysis solution, companies can take the first step on their journey and bring together all relevant spend data from these silos of information. Companies can start entering the realm of Spend Intelligence when they use technology to bring vital spend data together in custom, drillable, and dynamic reports. Then, they can merge that data with other data points impacting the organizations’ strategic decision making.  Procurement teams can answer questions like these in a matter of minutes, if not seconds:

  1. What did we spend in 2012 with Women Owned Organizations?
  2. What percentage of spend did my IT team have with Diversity Suppliers? Did that meet the organization metrics from our diversity initiative?
  3. What is the spend trend with my identified strategic suppliers in the first half of 2012 v. first half of 2013?
  4. What is the FTE to savings ratio on our Outsourcing & Offshoring Initiative?

How long does it take for you to answer these questions with your current spend analysis capabilities? Can you even find the answers?

Best-In-Class procurement organizations should be able to answer these questions by quickly drilling in to customized spend intelligence reports within a customized spend dashboard.

Hopefully your organization is maximizing the value of spend analysis/ spend intelligence technology. In the meantime, you can start enhancing your sourcing analytics strategy by downloading this blueprint guide .

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