Like most multinationals, your company has probably invested millions in implementing and maintaining SAP systems around the world. It’s a necessary investment because without the core ERP infrastructure you wouldn’t be able to run business critical business applications such as payroll.
However, if you’re the CFO or CIO that signed the original check/contract for SAP, the question is now how can you deliver more return on investment? The answer rests with “Spend Analytics”, the process of identifying savings from the efficient management of spending with (and sourcing goods and services from) suppliers.
Yet, the level of success in creating savings from spend analytics is reliant on the underlying data used for analysis by finance, procurement and supply chain teams.
Unfortunately, far too many organizations are not doing enough to obtain and improve the quality of their spend data.
Rosslyn Analytics will soon publish research on the return on spend visibility. Here’s a sneak peek.
We estimate that an organization with an annual turnover of $1 billion can generate in excess of $32 million by obtaining spend visibility at purchase order line item level.
Sadly, based on conversations with hundreds of organizations, it’s our calculation that 60% of organizations have obtained spend visibility at levels one and two. Only 40% are exploiting line item data from invoices or purchase orders. This is a huge lost savings opportunity!
Our projected savings is possible if your organization moves down each of the spend visibility levels; and each step down creates an additional percentage of saving by accessing new insights from untapped data previously not obtainable.
|Spend Visibility Level||Lowest level of spend visibility||Percentage of savings at each level of spend visibility||Savings at each level of spend visibility|
|1||Invoice header||1%||$3.2 million|
|3||Invoice line||3%||$9.6 million|
|4||Purchase orders||4%||$12.8 million|
|Total savings percentage: 10%||Total savings: $32 million|
Creating business value including more return on investment from your existing SAP investments is pretty straight forward. You just need to have good, old fashioned complete data – of the highest quality...wouldn’t that be nice!
Here are steps on how spend analytics can support your savings targets: