Top 5 Things to Know About Spend Analysis Technology
Spend analysis technology allows you to take a closer look at where your money is going in the scheme of procurement management. Even if you have a tight budget you look at regularly; every company has rogue spend, unaccounted for, and indirect costs.
It is much easier to get the big picture when you have spend analysis reports that are refreshed regularly in front of you or have software with a procurement spend analysis dashboard. You indeed have to know what data to have and where to plug it in when you’re using spend analysis software, but it’s a vital tool that can save your company both money and time.
Those are the clear benefits of spend analysis technology—but there may be some other aspects and benefits you weren’t aware of.
Spend Analysis and Visibility
This is a fairly obvious benefit of spend analysis technology, but having insight on spending is vital for cost savings opportunities. Visibility offers a clear look into procurement spend patterns, and quite often, you’ll see for the first time which departments or regions are either spending too much or with unapproved suppliers or both.
Supplier Performance and Management with Spend Analysis
Once you begin to use spend analysis tools, part of the spend analysis process is identifying and properly tagging preferred suppliers and related spend. Eventually, your spend will be segregated into “with” preferred suppliers or not, as well as “on” or “off” contract.
Thus, with properly deployed spend analysis technology you should have insight into the spend that is properly under management as well as the spend that has room for improvement. As you’re evaluating spend analysis software companies, you may want to consider a best-of-breed point solution versus a full procurement suite to ensure you get all the features and functionality you require. Typically, spend analysis software will be within procurement software solutions or a suite.
Manage Risk and Rogue Spending with Spend Analysis
Another thing spend analysis reports do give you an inside look into maverick spending. Sometimes you’ll find the team spending with unknown or unapproved suppliers to find goods and services, perhaps to fulfill a job more quickly.
However, when you go off contract, this can negatively affect profitability and leverage. You’ll catch these issues with proper spend visibility and the right reports within your spend analysis solution. Advanced analytics will also be able to provide visibility into the amount of risk in your spend categories as well as by region or department. A spend cube is also an advanced spend analysis technology tool that can help forecast and market review.
Identify Savings Opportunities with Spend Analysis
This is perhaps also an obvious benefit, but you must look at indirect spend analysis when you use spend analysis technology and look at reports.
These items can often get lost in the shuffle when you’re concentrating on procurement spend, but you must include all spend, and all spend sources that exist at your company.
Indirect spending includes travel expenses, maintenance services, equipment services, IT services, and so on. Make sure you factor these when you are plugging in data to get a wholly accurate picture of spend analysis across your organization.
Collaborative Efforts with Spend Analysis
Having smart spend analysis technology allows you to work more collaboratively as a team (because everything is visible). It also improves your relationship with other organizations. It strengthens relationships with your strategic suppliers and helps you identify your best business choices. When it comes to your team, it strengthens you as a unit because of its transparency.
If you’d like to hear more about spend analysis technology and would be interested in scheduling a demo of spend analysis or other procurement software solutions, contact us today at EC Sourcing Group at 973-936-9672 or schedule a discovery call.