May 7, 2014
The Business Case for
Spend Analysis
Outline
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What is spend analysis?
What could you do with better spend visibility?
Where does the data come from?
Why not do spend analysis yourself?
What have other organizations done?
Why you should consider Spikes Cavell.
What is spend analysis?
Accounts
Payable
Spend
What is spend analysis?
Accounts Payable
Spend
Cleanse
Classify
Enrich
Spend data
that you trust
and that
contains as
much detail
as possible
What is spend analysis?
What is spend analysis?
Takeaway 1: A spend analysis
project starts with
data that you trust and
tools you can use
What could you achieve?
• Deliver savings and efficiencies by:
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always getting the ‘best rates’;
using data in competitive processes and negotiations;
using category analysis to drive down costs;
identifying internal and external collaborative
opportunities; and
• spending time using the data rather than cleaning and
classifying it.
What could you achieve?
• Bring spend under management by:
• providing a solid foundation for decision making that
includes all data sources;
• identifying areas of spend that should be targeted by
professional procurement teams;
• identifying non-compliant spend;
• profiling and managing suppliers accordingly; and
• benchmarking and measuring performance.
What could you achieve?
• Change buying behavior by:
• providing key stakeholders with visibility;
• creating departmental spend reports to help budget
holders better manage their spend;
• identifying non-compliant spend and using data to
have informed conversations;
• monitoring processes to identify potential efficiencies;
and
• engaging departments in collaborative procurements.
What could you achieve?
• Maximize the impact of dollars spent:
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with small businesses;
with local companies;
with minority owned businesses; and
assess the potential impact of procurement
decisions on these groups.
What could you achieve?
• Calculating an ROI for spend analysis can be
difficult without actually seeing the data so
pragmatism is required:
– Calculate percentage of overall spend you would have to save
to break even and assume you can do much better.
– (Spend analysis project cost/ annual goods and services
expenditure – percentage of total spend saved to break even
– $13k/$20m = 0.065% of total spend would have to be saved to
break even.
What could you achieve?
• Another pragmatic approach to ROI
– Calculate value of spend you would have to bring under
management to break even
– Spend analysis project cost / (Annual expenditure *
Savings through bringing spend under management) =
percentage of spend to bring under management to break
even.
– $13k / ($20m * 15%) = 0.43% of spend brought under
management to break even.
What could you achieve?
Takeaway 2: A spend analysis
project provides the necessary
basis for you to deliver savings,
bring spend under management,
change buying behavior and
maximize the public benefit of
your expenditure.
Where does the data come from?
Purchasing
Card Spend
(Some transaction detail but <
< 20% of spend)
Accounts Payable
Spend
(100% of spend, but not
necessarily 100% of the
Detail)
Contract Record
(Software system, Excel,
or Manual)
eProcurement
Transactions
(Usually orders, not spend
and < 20% of spend
comes through
eProcurement)
Where does the data come from?
Hardware
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Duplicates
Classifications
AT&T
Dell
ATT Mobility
AT& T
ATT Reston
ATTM
ATT Wirless
AT&T
AT and T
AT & T Wireless
ATTM Store #2323
• Computer
hardware
• Classroom Supplies
• Software Licenses
• Other Supplies
• Misc. Contracted
Services
• Capital Project
equipment <$10k
Where does the data come from?
Takeaway 3: Raw data from AP,
pCard, eProcurement and contract
management systems needs to be
aggregated, cleansed, classified
and enriched in order to be made
fit for analysis by the
procurement team.
Why not do it yourself?
We need good quality spend data.
Getting that data will require us to
extract the data from multiple
systems, validate the extract,
consolidate it together, then
cleanse, de-duplicate, classify and
enrich that data each and every
time we want to update our
analysis. It would be more cost
effective to have this done for us
rather than by us.
Accounts Payable
Spend
Why not do it yourself?
We need analysis tools we can use.
We don’t have to install or
configure, can use without a steep
learning curve, that were built for
business users, that multiple
people can use at the same time,
preferably with pre-built reports so
we aren’t starting from scratch, and
which can support strategic as well
as tactical decision making.
Why not do it yourself?
Takeaway 4: A spend analysis
project will allow you to focus your
time and energy in developing your
procurement function, monitoring
compliance and strategic sourcing
rather than data transformation
and report writing.
Recap of the takeaways
• A spend analysis project starts with data that you trust and tools you can
use
• A spend analysis project provides the necessary basis for you to deliver
savings, bring spend under management, change buying behavior and
maximize the public benefit of your expenditure.
• Raw data from AP, pCard, eProcurement and contract management
systems needs to be aggregated, cleansed, classified and enriched in
order to be made fit for analysis by the procurement team.
• A spend analysis project will allow you to focus your time and energy in
developing your procurement function, monitoring compliance and
strategic sourcing rather than data transformation and report writing.
Why consider Spikes Cavell?
• We need good quality spend data
without having to do it ourselves.
• Transformation of the data is done for you
by an experienced team.
• Data Fitness Checks are carried out on
your raw expenditure at the beginning.
• Collection, cleansing, classification and
enrichment are low touch on your staff.
• You want to know more about your spend
than is available in your raw data today.
• Join contract and expenditure data
together.
Why consider Spikes Cavell?
• We need analysis tools we can use.
– The analytical tools (the Observatory)
were built for procurement and finance
business users
– There are over 200 reports pre-built and
ready to use on day 1.
– Compare and collate your expenditure
data with other organizations.
– Record and report your achievements.
Why consider Spikes Cavell?
• We want to work with a company
who:
• has done spend analysis for
organizations like ours before;
• are specialists in data transformation
and spend analysis for public sector and
higher education organizations;
• work with professional associations that
we know and trust; and
• have competitive pricing and
contracting options that will work
within our procurement rules.
Why consider Spikes Cavell?
Takeaway 5: Spikes Cavell has
worked with over 1,000 public
sector organizations like yours,
transformed over $550b of spend,
and can provide the data and
tools that you need to transform
your procurement function.
For more information or to request a copy of the
business case in Word format, contact Spikes Cavell by:
Phone: (571) 313 – 5257
Toll Free: (800) 990 – 0228
Online: Request a call back
E-mail: info@spikescavell.com