SAP Spend Analysis


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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.

7 results

  1. Spend Analysis image

    A Beginner’s Guide to Spend Analysis

    Reading time: 6 mins

    By Shashi Jina, Research Director, SAPinsider and Kumar Singh Research Director, SAPinsider This article is the first in a series of five articles that will explore the fundamental and strategic aspects of spend analysis. While the imperatives today are more focused on providing enhanced products and services to customers, there is no denying that controlling…
  2. The Future of Intelligent Spend Management for the Public Sector

    The pandemic has put the public sector in a pinch. Ever-tightening government budgets require rigorous spend management and AP controls, even as demand for services remains high. Meanwhile, many public sector employees are working remotely, fundamentally shifting a key aspect of spend management and oversight. These challenges are not new, but they have been amplified…
  3. The Next Evolution of Spend Management

    Reading time: 11 mins

    There are many variables that can complicate how SAP customers manage their spend, such as when significant portions of the workforce are external or when consumers have certain expectations for their travel and expense experience. Having a clear picture of every category of spend — whether that is travel, indirect, direct, or contingent labor and…
  4. Direct Spend Management In The Intelligent Digital Supply Chain

    Reading time: 0 min

    Read IDC’s latest Industry Brief to find out how digital strategies for direct material sourcing improve cost efficiency, product quality and time to market.
  5. Intelligent Spend Management at Danfoss

    Procurement Manager at Danfoss, Michal Szlezak, shares his insights on how intelligent spend management enhances their global efficiency, sustainability, scalability, speed, and growth. Hear about the real-world challenges they faced and how they were over come with intelligent spend management.
  6. Treating The Top 3 Pain Points Of Spend Management

    Reading time: 0 min

    This eBook will pinpoint the top three pain points associated with current spend management practices and explore how a holistic, AI-driven P2P automation solution can help alleviate them. This content is available to (General or Premium) members. Sign in or Join for free! Sign In Become a Member
  7. Intelligent Spend Management Insights

    Gain key insights to solve the challenges of uncertainty, complexity, speed, and compliance, with all the enterprise BI/Data Management in one unified view across every source and category.