Spend analysis is an important sub-discipline of overall spend management and is primarily concerned with collecting, cleansing, classifying, and analyzing procurement expenditure in order to find opportunities to improve purchasing efficiency and reduce an organization’s overall spend.
To business people unfamiliar with spend analysis, it can seem a very daunting and confusing world. Even procurement professionals and other staff members with some exposure to spend management are sometimes unsure how spend analysis works.
To help inform and break this topic down a little, we have sponsored a white paper: Spend Analysis in 3 Lessons, by Jason Busch, founder and head of strategy at Azul Partners Inc. (You can download the white paper here).
Below is a brief synopsis of the subject matter covered in the paper:
- Lesson 1: An Introduction to Data Handling — Cleansing, Enrichment, and Classification- Data that comes out of initial spend analysis exercises is often of poor quality, e.g. header and line level detail missing, misspelled, inaccurate, abbreviated, incorrectly coded, or does not subscribe to a specific naming standard. This means that it must be cleaned and enriched to be truly useful.
- Lesson 2: The Visualization of Spend Data and Quantitative Information- Sharing detailed spend data and quantitative information with relevant people in the organization is vitally important — but how information is shared is as important as the type of information that is shared. Visual, easy-to-use dashboards that allow users to drill down into the data go a long way towards making the data more useful and understandable.
- Lesson 3: Spend “As You Like It” — Contextual Information and Driving Insight to Action- Having clean, enriched, accurate data that provides detailed, visual insights is vital, but real change and savings will only occur if the insight leads to action. A good spend analyst helps users drill into the data and discover the opportunities for themselves, leading to greater levels of support and backing. Read More:- Purchase Price Variance
Contact us today to learn more about processes that can help your organization deliver using Simfoni’s best-in-class Spend Analytics, Savings Tracking, Supplier Management, Impact Assessment, & Tail Spend Management Technology Solutions.