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Business intelligence for spend analysis – the data you need and the importance of accuracy

Adam Hamlington


By Adam Hamlington, Solutions Architect
Friday 17th July 2015

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It is generally accepted that gaining insight into your business data provides massive benefits for an organisation. Awareness of Customer behaviour, cross selling opportunities, sales trends, KPIs etc.

Often when a company implements a business intelligence (BI) strategy the focus is on sales and sales related activities. But BI can also provide visibility needed to improve procurement processes.

Comprehensive spend analysis provides deep insight into your procurement activity across all categories. It should include data from your procurement system, contract database and also finance applications so as to give a complete overview of spend. This total view of spend can easily be achieved through ‘out the box’ tools, secure data handling and minimal services. No longer does BI have to be a lengthy time consuming task.

Return on investment can undoubtedly be achieved, whether it’s a new business intelligence implementation or your current platform being extended to include procurement data. Understanding where your company spends its money can produce efficiencies and deliver cost reductions by analysing product and service costs, contract spend, inventory costs and sourcing cycle times.

In short, spend analysis is the process of collecting, classifying and analysing all procurement data with the specific goals of controlling spend, ensuring compliance and producing process efficiencies.

The Aberdeen Group suggest the following steps generally will lead to savings:

  • Enhanced supplier performance and procurement operations
  • Recognising and minimising non-compliant spend
  • Recognising the opportunity to negotiate superior contracts

However, in order to achieve savings it is essential that in order to produce accurate spend control analysis the gathering, cleansing and re-classifying of data will have to be taken into account. Data quality is critical, and as with any application ease of use is critical for user satisfaction.

Once these practical steps have been taken then your organisation will have the platform to improve control and reduce the cost of all spend with all suppliers.

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