How to Get the Most from Your Spend Analysis Reports
Running spend analysis reports is a must in procurement, otherwise, you’ll never gain proper ROI without knowing where your funds are going and how they are being spent.
If your company struggles determining spend or prioritizing sourcing events, it may make sense to use spend analysis technology as well.
However, if you’re not able to look at the data and understand your procurement spend analysis dashboard properly or know what data to plug in where your software won’t provide you with the right information, and your spend analysis reports won’t mean much.
It’s best to understand how the process of spend analysis works. Read on to learn more about how to get the most out of your spend analysis reports.
Steps for Conducting a Spend Analysis
Even if you are working with spend analysis tools, you must understand the spend analysis steps to plug in the right data.
- Identify all of the spend data – Your data may be stored in different places, such as your ERP, eProcurement systems, your general ledger, P-Cards, and so forth. Make sure you gather it all.
- Standardize and clean the data – You may have to perform currency conversions, ensure there are no double entries, and so forth.
- Tag your preferred or contracted suppliers – Tag spend and categories accordingly. From here, you can view your spend under contract and spend with preferred or non-preferred suppliers.
- Prioritize categories by savings potential – This includes sourcing ease of use as well as supplier availability.
What Type of Spend Analysis Software to Use
There are many spend analysis software companies to choose from. You can go the very basic route and use spreadsheets, such as Microsoft Excel or Google Sheets (which, based on the rich software available, isn’t professionally recommended).
Fundamentally, you want to perform a spend analysis and opportunity assessment, which can offer you solutions on how to cut back spending, and there is only so much a spreadsheet can do. Plus, they are also error-prone.
Other spend analysis options include:
- Business Intelligence (BI) tools. These are dashboards that can display powerful charts and graphs, which can be helpful. The drawback is they require skill to enter the data.
- Procurement suites. These are popular tools and one of the many advantages of eSourcing, as they allow you to do everything from spend analysis to eAuctions in one place.
- Artificial intelligence (AI). SaaS solutions are often used to provide spend analysis reports.
For many, a procurement suite is the best option, which offers you the best look at your spend cube analysis, spend analysis reports at a glance, and procurement software needs in general.
What Are the Benefits of Spend Analysis Reports?
The benefits of spend analysis reports are many, with direct savings being the most obvious. In addition, when data is entered correctly, it can help you solve any currency conversion issues, resolves overpayment, identify any rogue spending, ensure compliance and manage risk, and ensure contracts are in compliance. Of course, you must keep your reports up to date for this to occur.
If you’re interested in hearing more about how to optimize your spend analysis reports, or would like a demo of spend analysis software, call EC Sourcing Group at 973-936-9672 or click here to schedule a demo.