Total Spend Management: Simplifying Cost Control In Real-World Complexity

Henner Schliebs

Every new digital technology brings us closer to the promise of a simpler, faster, and more convenient life – and our shopping experiences are no exception. From ever-growing e-commerce giants Amazon and Alibaba to Walmart, which is acquiring India’s largest e-commerce business, Flipkart, buyers can go from researching and pricing purchase options to getting the product in their hands, all within a matter of hours.

While most lines of business view these digital commerce channels as the perfect opportunity to accelerate and optimize their processes, CFOs have a more reserved opinion. The ease and speed at which products and services can be purchased now are, without a doubt, incredible. But the finance function cannot ignore that these capabilities create a trap between the need for agility and open innovation and the need for control and fiscal responsibility.

Maybe it’s time for CFOs and the rest of the business to come together to find a middle ground between these two seemingly opposing sides. The key is to work together to move from a culture of manual, siloed activity to a more streamlined, automated, and integrated way of doing business with real-time visibility into every purchase.

Simplicity in supplier access brings real-world complexity to finance

The majority of employees – regardless of role, function, and contingent status – are allowed to spend money for business purposes. Whether buying a new laptop, organizing travel arrangements for a customer site visit, or hiring agency services, workers are expected to use this responsibility wisely, effectively, and objectively as they decide what’s best for the company at all times.

However, this dynamic has become more complicated for companies of every size because they can tap suppliers from anywhere in the world more easily than ever. No longer are goods and services procured from local partners; instead, many of us are willing to look for suppliers that meet business needs better than anyone else no matter where they’re located. And to make matters more interesting for CFOs, these activities can happen anytime, especially outside of business hours.

The concerns of CFOs about these changes in the workforce’s mindset and attitudes towards procurement are rightly justified. For example, buyers might engage multiple suppliers in a single vendor-management system that are subsidiaries of the same conglomerate – leaving behind an opportunity to optimize service-level agreements and costs. Meanwhile, ever-increasing industry and government regulations make it more likely that an employee will unwittingly break a rule and cost the business upwards of millions in penalties and potential damage to the brand’s reputation.

Spending by the total workforce calls for total spend management

From workforce management, supply chain, and procurement to real estate and travel and expense, every organization uses business funds. Managing spend in a decentralized way across all these functions will inevitably result in daily ad hoc purchases that never consider the need for cost optimization, compliance, and relationship synergies that benefit the entire company.

Every business area needs to see all spending clearly, especially where it’s challenging to gain visibility and control. The way businesses buy is changing. The number of vendors used is growing. Even the role of the employee is evolving.

A workforce culture that understands the importance of knowing who is spending capital and engaging suppliers is better equipped to make conscious decisions about the “what,” “why,” and “how” behind every item bought or invested in. For CFOs from companies with this level of total spend-management awareness, this holistic and real-time view into all spend categories is a strategic advantage.

Centralizing all capital funding helps businesses ensure that every investment adheres to the corporate strategy and is aligned with functions that are not involved. With full visibility across all sources of spend, decision-makers have the foundation they need to weigh financial and reputational opportunities and exposures, identify supplier and cybersecurity risks, and detect fraud. At the same time, the business furthers its cost-reduction initiatives while improving the value of every supplier.

Spending decisions are best made with collaboration and guidance

Now more than ever, employees expect more freedom to spend capital much in the same way they buy their personal items. And while most finance organizations are finding ways to eliminate paperwork, streamline processing, and provide mobile access, CFOs are only chipping away at what they need most – total spend management.

Let’s face it, taking away the power to spend from employees is a losing battle. But with the system of checks and balances that total spend management delivers, employees are given the tools and insights they need to purchase quickly, appropriately, and, above all else, intelligently.

Hear how businesses such as the Electrify America unit of Volkswagen Group, Houghton Mifflin Harcourt, IBM, and Old World Industries are using the latest digital technology to increase savings and promote lucrative business actions. Watch the replay of the SAPPHIRE NOW session “Increase Your Company’s Bottom Line with End-to-End Spend Management.”

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About Henner Schliebs

Henner Schliebs is global vice president Audience Marketing for SAP S/4HANA and Finance at SAP. He is a progressive sales/marketing executive with 15+ years of experience in business software solutions focused on corporate functions. He has strong marketing and go-to-market skills and a proven track record in enterprise software solutions, along with significant experience in solution management and customer engagement.