SAP Spend Analysis

Spend Management: SAP Spend Analysis

Spend Analysis Defined

Spend analysis is the process of identifying, gathering, cleansing, grouping, categorizing, and analyzing your organization’s spend data. It is important because it converts raw data into actionable information. An organization should have a goal of decreasing procurement costs and improving efficiencies while increasing visibility and transparency. Visibility of spending and suppliers is critical to improve customer service and to consistently grow return on investment.

4 Stages in Spend Analysis are:

1. Collecting
2. Cleansing
3. Classifying
4. Analyzing

Spend Management: SAP Spend Analysis

Spend Analysis Defined

Spend analysis is the process of identifying, gathering, cleansing, grouping, categorizing, and analyzing your organization’s spend data. It is important because it converts raw data into actionable information. An organization should have a goal of decreasing procurement costs and improving efficiencies while increasing visibility and transparency. Visibility of spending and suppliers is critical to improve customer service and to consistently grow return on investment.

4 Stages in Spend Analysis are:

1. Collecting
2. Cleansing
3. Classifying
4. Analyzing

Rogue, maverick, and tail spend are common terms in the procurement business. They all mean roughly the same thing – unexpected, unpredictable, or unorthodox spending. This spending can happen when purchases are made outside of agreed supplier contracts, often ignoring defined procurement processes. The most immediate task of spend analytics is to provide transparency and insights into where money is spent. Data integrity is a central element in obtaining true transparency. A long-term plan of transparency is to increase supplier negotiation efficiency and effectiveness by having fact-based conversations.

7 Steps to Success are:

1. Identify the objective
2. Identify spend data sources
3. Collect and consolidate data
4. Clean the data
5. Link suppliers and categorize spend
6. Perform the spend analysis
7. Rinse, reassess, and repeat.

Benefits of Spend Analysis are:

• Visibility into organizational spend
• Ability to define measures and track KPI’s
• Tool for supplier management and strategic sourcing
• Automation and simplification of contract management and renewal
• Control maverick buying.

There is an opportunity to consider how spend transparency, analytics, decision rules, alerts and warnings can help organizations respond faster to challenges. Automating the collection and analysis of spend data significantly helps save time and resources. Spend analysis is usually done through a dedicated software or one-off spend cubes. Generally, an enterprise resource planning (ERP) system solution is used to provide a single source of truth for business transactions.

Vendor partners helping companies of all sizes to drive better business decisions with software or data integration are: SAP, Qlik or Deloitte.

Key Considerations for SAPinsiders are:

• A Beginners Guide to Spend Analysis: Shashi Jina shares insights into spend analysis and why strategic sourcing is one of the most critical functions. Learn about the critical balance between the art of balancing cost while enhancing customer service.
• The Next Evolution of Spend Management: Drew Hofier of SAP shares an article on how spend management is ever evolving — from the elimination of paper, to electronic spend solutions, and the current move toward intelligent spend management.
• Intelligent Spend Management Insights: Watch the video to see how BI/data management in one unified place across every source and category can give insights to solve complex challenges of uncertainty.