Why The Time For Intelligent Spend Management Is Now

Tobias Dosch

Part of the “Intelligent Spend Management” series about how to manage more spend, more intelligently

In 1692, Sir Isaac Newton settled a fundamental scientific question: What do you get when you mix all the colors? In his work with prisms, he proved that all colors combine into a pure-white light.

So today I ask a similar question: What do you get when you mix different categories of spend management? What happens when you bring together direct and indirect spend, travel and expenses, and contingent labor and services procurement?

The answer is: intelligent spend management.

Go toward the light

Intelligent spend management brings together three traditionally siloed categories of spend management and turns the colorful mix into one bundle of pure-white light. With intelligent spend management, we can bring our customers more intelligent experiences, more intelligent processes, and more intelligent insights in a single pane of glass (or prism – to extend the metaphor) for a unified view of spend across categories.

The time for intelligent spend management is now

Why? We see three fundamental shifts happening right now in the market and with our customers that will affect the future of procurement. The opportunity to elevate spend management from an operational function into a critical strategic function for the business has never been riper.

Here are three reasons the time for intelligent spend management is now:

1. Digital transformation realizes more value from procurement.

Digital transformation is a key priority for chief procurement officers (CPOs). A recent study makes it clear: 84% of purchasing departments consider digital transformation a key to improving procurement performance.

In the past, CPOs have focused on cost savings and efficiencies, but the procurement mandate is expanding way beyond cost control. More CPOs are looking to technology to help reap more value from procurement spend and to increase purpose for their companies and departments.

In conversations, CPOs now ask how we can help them achieve a variety of goals:

  • How to become a strategic adviser to the business
  • How to automate processes around unspecified spend like services
  • How to predict demand and have the system react fast on change
  • How to help their organization with predictive insights to influence value generation and the supply chain

The active CPO wants to transform from a reactive cost center manager into a strategic business partner.

Finally, CPOs need to increase the transparency of all spend, not only to enable systems and people to come up with the right decisions but also to avoid supply chain risks.

2. The advancement of technology is nearly limitless.

Whereas my generation has seen tremendous advances, I believe the next generations will see unbelievable technology changes. The numbers alone are astonishing:

  • Data volumes are exploding: more data has been created in the past two years than in the entire history of the human race.
  • By 2020, our accumulated digital universe of data is expected to grow from 4.4 zettabytes to around 44 zettabytes, or 44 trillion gigabytes
  • In 1969, the equivalent computing power of two Nintendo consoles brought the first man onto the moon and back. The supercomputer Cray 2 built in 1985 had the equivalent computer power of an iPhone.
  • Since the 1970s, the total computer power has increased 1 trillion-fold.

Of course, new technologies are not only adopted by consumers but by enterprises, too. As technology transforms and advances, so do business models.

Perhaps this is the most astonishing fact of all: Only 0.5% of all the data collected is being analyzed or used for intelligent decision-making. Imagine if you raise that number of your analyzed business data to 50% – or 70% or even 90%. Imagine the impact of business decisions you could make when you are fully informed by more intelligence-infused data. Combine the powerful potential of data science with increased computing power plus (of course) the Internet, and there are virtually no limits.

3. A second wave of digitalization will deliver the promise of the intelligent enterprise.

The term “intelligent enterprise” was coined in 1992 by James Brian Quinn. In Quinn’s book, he describes how companies can differentiate and grow by focusing on services and services technology. Knowledge management and services technology, he argued, enable not only economies of scale but also economies of scope in which companies could grow into adjacent markets and create new offerings and business models.

One of the limitations back in 1992 was the fact that the knowledge and data reaped by those systems simply could not be consumed and utilized. But with the development of intelligent technologies such as machine learning, artificial intelligence, and the Internet of Things, we have a second wave of digitalization. Huge volumes of digital data can be analyzed and condensed into high-value insights that can then be used for real-time business decisions. You can imagine the opportunities for new models and new offerings – well, the sky is the limit. And you can also see how the most innovative companies today are embracing the next phase by driving significant value out of economies of scope.

Your intelligent spend management journey starts here

By putting intelligence to work across all your spend categories, you can equip your entire company to:

  • Make better decisions faster. Sort through more spend, supplier, policy, and risk data than any individual or team can view or manage – guiding you to the best course of action at key points in the process.
  • Get more focused and more effective, and get more work done. Make every step of the source-to-settle cycle quicker, simpler, and smarter. You’ll put mountains of data to work in an instant – in real time – so you can finish the work that really matters.

To learn more about intelligent spend management, visit our website.

Tobias Dosch

About Tobias Dosch

Tobias Dosch is the Head of Solutions Management Product and Innovation at SAP Ariba, responsible for product strategy alignment and customer innovation engagement, based in Walldorf, Germany. Before taking on the role with SAP Ariba, Tobias held a number of senior and general management positions at Capgemini, SAP, SuccessFactors, and Concur in product management, engineering, operations, business development, and consulting. Tobias holds a degree in Management Administration and Business Computing from University of Mannheim and University of Florida.