Collecting and analyzing data is important to the success of every endeavor. For years, third-party spend data has been collected and interpreted using spreadsheets, much to the incredulity of other, more advanced, technological solutions. However, the explosion of big data has made this approach redundant – in theory, at least.
The increasing volume, velocity and variety of data requires intelligent tools that can gather and integrate data from multiple sources, cleanse and enhance it and enable users to visualize it – all while being intuitive for use, so that users can become closer to their data.
In practice, organizations are still working to understand what the potential of this data means to their business, and how they can build it in to their functional capabilities.
The limitations of spreadsheets for spend analysis restrict the appeal of long-standing methods, methods that yet remain synonymous with purchasing and finance processes. In the past, procurement has used spreadsheets to identify savings opportunities. However, what’s lost through these more basic, linear, techniques is more than just efficiency – information that drives sourcing, spend and operational decisions isn’t captured in the traditional tools used by procurement.
For example, globalization has produced integrated supply chains that make managing risks more difficult than before. Tools are needed that enable cross-functional and geographically dispersed teams to effectively manage and mitigate supply risk. Elsewhere, there’s pressure to know your suppliers, their performance, compliance matters, and to better understand your stakeholders and their spend habits – the realization of recent years is that all these levers rely on having visibility and control. That should be a catalyst for change.
As big data and globalization evolve, so too the market for spend analytics has evolved. Greater automation has improved efficiency so that more data can be more accurately processed and accessed by business users faster. Crucially, self-service cloud-based solutions have emerged that enable lots of people to access the data at a time and place that suits them, and crucially, be able to collaborate on the same data sets from remote locations. And these people are looking for different things so the ability to manipulate and update the data becomes critical.
The business case then becomes a question of demonstrating immediate value to the business, with a convincing case for ease of adoption and, ultimately, better governance already in your hand. This isn’t just a case of tapping into cost savings: it’s enabling spend management right across the organization.
This transformation serves as something of a virtuous cycle: The more procurement can drive decision-making and evidence the value that comes from spend data, the more it can leverage it to positively impact the competitiveness of the business.
Globalization and big data have led to a paradigm shift in spend analytics. It is no longer a static, manual process run by procurement in isolation to identify savings opportunities. Increasingly complex supply chains and a wealth of data have given rise to sophisticated tools that are available to a new audience.
The providers of these self-service tools have approached the market in different ways. There is a compelling case, however, to say that the ones that offer highly automated and intuitive solutions will succeed as the emphasis moves from identifying savings opportunities to more value-oriented activities such as risk management and capturing innovation.
The future of the function depends on the ability to capture and leverage spend data – making the case for that technology and recognising what solution can be best deployed to meet the needs of the business should be top of any procurement team’s list.