How to get more value from your spend analytics

For procurement teams across the globe, maximising value from the supply chain, not minimising cost, is now a key strategic goal. At the heart of this is spend analytics, one of the sector’s most important, yet underrated, tools. Even though the sector has made big improvements in how procurement works with this kind of data, many still have a long way to go.

The fact is, over the last few years, procurement managers across the world have been busy in a race to transform digitally, deploy the latest technologies and in the process realise efficiency gains, as they evolve to a more data-driven way of thinking. With exponential rises in computing power and declining costs, solutions have become even more complex and also more affordable.

“But this doesn’t mean there’s more clarity. It’s one thing to deploy these latest tools. It’s another to gain real vision from them,” explains Arvid Fredin, co-founder of Spendency, a global leader in spend analytics, with 100-plus clients around the world.

What companies actually need is a really user-friendly, yet smart, system that supports and drives action in a process of continuous improvement

“There’s a lot of sophisticated black-box systems out there, but many are selling an idealised version of the future. They aren’t selling actionable insights with transparency. Comparing the new and latest features is not a good way to decide on a system.

“Analytics work best if they take current data and staff into account. Both may be limited. It also needs to be able to engage as many employees and stakeholders as possible. User friendliness in many ways is king.”

Now with artificial intelligence, machine-learning and complex algorithms, there’s even more on offer in procurement analytics. This is raising more questions than answers for managers looking at data-powered solutions.

“There’s no doubt that data and particularly spend analytics is a complex subject filled with new and exciting tech, but also many buzzwords and hype. It’s crucial to separate what a procurement team wants and what it actually needs. They are often two completely different things,” says Fredin, whose company works with the likes of GVC, who own Ladbrokes and Coral in the UK, as well as the airline SAS and Skandia.

“Often people want a sophisticated system that can provide all sorts of prescriptive recommendations and automate frustrating parts about analytics. But what companies actually need is a really user-friendly, yet smart, system that supports and drives action in a process of continuous improvement. Step-by-step, daily incremental changes really matter.”

Analysis of Spendency’s clients has found those who approach spend analytics with a change management approach in mind, rather than focusing on an analytics system’s features, are more likely to be successful.

“It’s all about realising value with any system you deploy, not using imaginary data you might collect tomorrow, but data you produce today. You don’t want to take months to see the results either or collect new data at greater cost,” says Fredin.

“If a solution drives a doubling of those that are able to utilise these insights within a company, then you can engage a lot more stakeholders. This creates value. So to ensure a good fit for your organisation, make sure a cross section of your employees test the system with your existing data sets before deciding what to deploy.

“This is more likely to precipitate change in an organisation or along the supply chain. Analytics is not just about data and systems, but about the people leveraging the insights. It’s vital to realise this. Right now there appears to be a disconnect between current software implementation and desired business outcomes.”

In these uncertain times brought about by the coronavirus, all organisations are striving to gain full control over their costs and find value where they can. That’s why Spendency are making their solution free to any organisation until June 30.

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