Skip to main content

Implement Spend Analysis Program – get more savings every year

Imagine for a second that you are a global enterprise with more than 10 finance systems located at different locations worldwide. Do you know, how many opportunities are you missing in double payments, missed volume discounts, off-contract spend, who are your real suppliers at Tier 2, even if you have preferred suppliers at Tier 1? Do you know your largest spend categories? Do you know which corporate house you are doing most business with and parent of the vendors that you deal with named as A, B & C are actuall same? Which suppliers are diversity suppliers – woman owned or minority owned?

This is the type of information that you can expect to become visible and get some actionable input from it to increase your savings from a spend analysis project. Now ways and means to implement those spend analysis program can be different for everybody depending on system spread, geographic locations, nature of business and business priorities. There are multiple vendors and consultants available globally to give you headstart on its implementation. There are multiple technologies available to provide greater accuracy, visbility and drill down to these information using jazzy dashboards.

Question that always comes from company is – Whether I should be doing this with internal IT? Can I ? the answer is yes and no. Technological capabilities and leveraging those from internal IT is Yes – and you will have much better control on it. But from a subject matter expertise – prioritizing your requirements, having a roadmap defined and getting into a model which makes those savings real should be your aim and that’s where internal IT fails. Because IT is IT and they know software and tools and its implementation in landscape. The real goal is not having a million dollar new software in your landscape, having everybody train on it and then getting very little out of it. The goal is to identify savings opportunities in business scenarios, with your vendors, in your commodities and your sourcing programs. A consultant may be able to do that in simple excel sheets with $10000 investment and save your million (may be). That’s the goal.

The ROI on spend analysis project is much higher – upto 1% of your total spend I will say – so if your yearly spend is $1 billion, after implementing a spend analysis project your 1% saving in spend means $ 10 Million. And that’s too year by year – every year not one time. If you go ahead and further optimize your program – with the help of specialized consultants (and again – tools comes later) – the savings can increase.

Let me know your feedback. You can always contact me by posting a reply here or sending me an email - pmendki@gmail.com
Thanks
Prashant Mendki

Labels

Labels:

Comments

  1. UnknownMarch 18, 2013 at 4:14 AM

    your blog is informative , you find out the all necessary things for this related post. nice work ......
    spend analysis software

    ReplyDelete

Post a Comment

Popular posts from this blog

Bristlecone Webinar on Supplier Risk Management

Purchasing Magazine, Bristlecone and SAP getting together to bring you very good discussion on supplier risk management. Webinar will be held on June 24, 2 to 3 PM eastern Time, USA. Contributors are - Paul Teague from Purchasing magazine , Jason Buch from spendmatters , Naresh Hingorani from Bristlecone - Supply chain leader company and Padmini Ranganathan from SAP. As we always talk about spend visibility, data issues, strategic sourcing - these distinguised speakers will bring out more strategic views to the table on how all this can be achieved to analyze your business risks better, upfront. You can register for event by accessing this link and register See you there.
Post a Comment
Read more

Master Data Management – Product or Process ?

I have 2 SAP systems and I want to fix my material master, Services Master. I want all that data to be clean, standardized, classified, enriched and load it back to my SAP in next 6 months. What do you suggest ? Chris - one of my key client was explaining during a “solution understanding” call. My sales manager Tom, enthusiastically started talking about new version of the MDM platform by ERP company, tools, technologies, product landscape, licenses etc. After 30 minutes of sales pitch, I could see confusion on Chris’s face clearly. He said - but I don’t want to add any new product in my infrastructure for all this. Can you just implement MDM for me without I adding any new software ?   Both are using MDM implementation as a keyword, but in a completely different context. Chris wants to implement MDM as a process while Tom was trying to sell MDM as a new software. Whats the difference ? Lot I will say. MDM as a product – when you sell a   software license to a...
4 comments
Read more

Data Management - Elephant & Seven Blind Men

I am sure most of you read a story of Elephant and Seven Blind Men. For starters - this is how the story goes - "A number of blind men came to an elephant. Somebody told them that it was an elephant. The blind men asked, ‘What is the elephant like?’ and they began to touch its body. One of them said: 'It is like a pillar.' This blind man had only touched its leg. Another man said, ‘The elephant is like a husking basket.’ This person had only touched its ears. Similarly, he who touched its trunk or its belly talked of it differently." As Wikipedia mentions - This story has been used to illustrate a range of truths and fallacies. At various times it has provided insight into the relativism, opaqueness or inexpressible nature of truth, the behavior of experts in fields where there is a deficit or inaccessibility of information, the need for communication, and respect for different perspectives. The moral of the story is - While one's subjective experience...
Post a Comment
Read more