Spend data is a gold mine of valuable information for improving the procurement process as well as driving enterprise-wide decision-making. FTSE 100 services provider Serco learned this first hand when it engaged Simfoni, a provider of spend analytics tools, to change the way it gathered, presented and analyzed its data. Using spend analytics as the tip of the spear, the Serco team developed “should cost” predictive cost models to develop better bids for potential clients — and support what every CEO wants: profitable growth.
Spend Matters hosted a recent webinar in which experts discussed the topic. Featuring Serco Head of Procurement Andrew Spafford and Simfoni Managing Director Stefan Dent, the event centered on the role that spend data should play in an organization’s decision-making process. Spend Matters Chief Research Officer Pierre Mitchell moderated.
Procurement and finance organizations are set on analytics as the foremost technology area that will affect business in the coming years, rating it the top technology area for investment in Deloitte’s 2018 CPO survey. If the goal for stakeholders is to gain value from supply markets and suppliers, spend analysis is the place to start. Building a strong analytics capability puts you on the road toward alignment with those stakeholders. This represents a massive opportunity for procurement organizations, but there are a couple of key requirements.
- IT, procurement and finance must all be aligned. You can’t develop accurate predictive capabilities if you do not have full participation. Having all departments provide a complete dataset ensures the big picture is broad enough and deep enough.
- Let analytics and intelligence converge to handle the grunt work. Artificial intelligence is adding more sophistication to the spend analysis process via machine learning. This can accomplish all of your basic workload, freeing you and your business partners up to take a more strategic approach and hunt for new opportunities.
The Serco Vision
In realizing his own spend analytics opportunities, Spafford had three goals in mind: spend visibility, cost control and efficiency. While these goals could not be achieved overnight, the spend analytics aspect proved quicker than expected.
One stumbling block became evident early in the process: Serco’s source data turned out to be poor. This is a hurdle that discourages many organizations attempting to set up a procurement analytics dashboard. Whether the project is in-house or outsourced, the apparent lack of reliable data is often the first-revealed and most concerning obstacle. But this does not mean you should put your project on hold, Spafford said. Rather, it is entirely feasible to do two things concurrently: improve your data resources while also constructing a dashboard. Indeed, the project should serve as impetus to pursue better data.
Serco’s chief prerequisite for spend visualization was user-friendliness — it could not require in-depth, cumbersome training. Much like booking a flight, users needed to be able to rapidly compare numbers and make their decision. Additionally, examining the what-if scenarios needed to be a live capability, especially at the executive level. Having to wait a few hours or a day for a reset can result in frustrating delays to important decisions.
Spafford and his team were able to build all these features and more into their custom dashboard.
Key Lessons from Implementation
Looking back on the engagement, Spafford identified a couple of recommendations that procurement organizations could take into their own spend analytics implementations.
One would involve training: You can only train users up to a certain point. But if the system is easily configurable, you can flip a switch on the back end to adjust a setting and avoid having to re-train users. The humans at the controls will want to play around with the data, but in a proper system, any erroneous input is rectified by the system itself.
This plays into the second key takeaway from the webinar: Modern spend analytics platforms take the dirty work out of your hands via AI and other emerging technologies, freeing your team to look at the big picture and think predictively.
Interested in learning more? Register here for a replay of the full webinar, “Life Beyond Spend Analysis: How $3B Firm Serco Uses Procurement Analytics to Generate Strategic Business Value.”