Spend Analysis: The Time Is Now. Really.

Annie Vaseekaran

Technology has changed everything in our lives – from the way we make phone calls and drive our cars to how we manage our homes. Yet every so often, I run into a friend or relative who just doesn’t see the value in the technological advances available to them. They don’t trust them, they believe switching to something different is a challenge, and they think it’s too difficult to learn something new. So they complacently stick with the antiquated products they’ve had for years.

As I work with procurement executives, I surprisingly find that they are often also hesitant to embrace new technologies. While cost savings will always be a priority, there are only a few chief procurement officers (CPOs) in intelligent enterprises that recognize how the digital transformation of procurement is about much more than just saving money. The forward-thinking CPOs are readily taking advantage of vast amounts of data and innovations in procurement solutions to deliver significant transformative business results.

This hesitancy to digitalize was recently highlighted in the Deloitte Global Chief Procurement Officer Survey 2018. For instance, in the survey, 54% of procurement executives said they expect analytics to have the most impact on procurement in the next two years. However, only one-third of them use technologies such as predictive analytics today. It’s no surprise then that 65% of these folks have limited or no visibility into key procurement factors such as their Tier 1 suppliers. In related research, a survey of CPOs conducted by the University of Applied Sciences Würzburg-Schweinfurt found that while 83% of the respondents believed that a digital transformation would be impactful, only 5% of them had highly automated processes.

Seriously, the time is now

If you look at surveys like Deloitte’s and other research in the industry, it’s readily apparent that procurement organizations are falling behind other departments to digitally transform their systems

This is not breaking news. More than a year ago, I discussed how procurement organizations were struggling with data quality and integration from varied and disparate sources systems around the globe – and this is still true today. A recent BriefingsDirect podcast, Building the Intelligent Enterprise with Strategic Procurement and Analytics, shared this insight: “The procurement process is rich in data, but the information is historically difficult to use. It’s been locked away inside of servers where it really couldn’t be beneficial.”

Intelligent enterprises know they have to move beyond these limitations. And it truly is time for every organization to embrace the innovation that digital transformations can bring to procurement functions. It’s time to use advanced technologies and intelligent solutions, such as spend analysis, that can bring significant value and efficiency to the enterprise.

The “why” is crystal clear

The BriefingsDirect podcast highlighted a few of the many benefits organizations are realizing as they digitalize procurement. One is how the time to execute spend analysis activities has been dramatically reduced. Spend analysis can now be done in hours or even minutes instead of days and weeks. This kind of advancement allows C-level executives to approach spend analysis differently. For instance, CPOs can gain insights into data that can help them make strategic cost-saving decisions and predictions almost in the moment, rather than historically, after an opportunity has passed.

The podcast I mentioned also pointed out that data can now be used in ways that procurement couldn’t even imagine before. What-if questions can be analyzed rapidly so that procurement can optimize inventories and supply chains. This data can even help forecast demand and analyze trends using core technologies such as artificial intelligence and machine learning.

Here are some of the benefits I mentioned in my previous blog that organizations leveraging comprehensive spend analysis are experiencing today.

  1. Data integration is no longer a barrier to digital transformation. With spend analysis, organizations have a more effective way to collect, store, and manage the enormous amount of data they have from all their various sources.
  1. When data is converged as a single source of truth, the procurement staff has quick and easy access to it, allowing them to acquire a better understanding of current and historical spending habits, trends, and patterns. They can also gain deep, insightful intelligence into the how, where, why, and with whom of future spend.
  1. As the Deloitte survey indicated, the majority of companies today have little visibility into their top suppliers. But when using spend analysis effectively, intelligent enterprises can get the spend visibility they need to identify and leverage opportunities with vendors and reduce risk. Organizations can identify duplicate vendors and consolidate and optimize the number they work with by determining which vendor opportunities are the most valuable and cost-effective.
  1. With spend analysis, intelligent enterprises can gain a higher degree of visibility into their spend because diverse groups of products are easily identified and categorized within industry standards and customized taxonomies. This kind of consistent and intelligent classification uncovers insights – such as spend patterns and trends – that reveal the true value of spend analysis and allow for faster decision-making.

To find out more about how to take advantage of spend analysis, listen to the full BriefingsDirect podcast (or download the transcript), and read the University of Applied Sciences Würzburg-Schweinfurt CPO survey. To learn more about the SAP Ariba Spend Analysis solution, visit us online.

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About Annie Vaseekaran

As a product marketing manager on the SAP Ariba Portfolio Marketing team, Annie Vaseekaran handles product marketing for the SAP Ariba Spend Analysis, SAP Ariba Sourcing and SAP Ariba Contract Management solutions. She has over 11 years of experience in the IT products and services industry. Prior to SAP Ariba, she was with Oracle in marketing and business development roles. Annie holds an engineering degree in Industrial Engineering and Management from Visvesvaraya Technological University, and an MBA in Marketing and Human Resource from Mount Carmel Institute of Management, India.