When it Comes to Spend Analysis in 2019, Remember These Three Things

The modern Chief Procurement Officer (CPO) and procurement functions, in general, rely on a specific level of intelligence in order to not only drive more educated sourcing decisions, but also to paint a vivid picture of enterprise spend visibility. The ability to leverage spend data and spend intelligence to identify sourcing opportunities is a powerful benefit of the spend analysis process and the associated systems that automate it. The visibility and intelligence afforded by data deep-dives that uncover key spend patterns and trends can help to identify areas for supplier and spend consolidation and optimization, as well as categories that should be sourced or marked for potential savings. The data culled and refined by spend analysis efforts can also fuel long-term cost analysis and a deeper understanding of how complex spend categories and various commodities affect corporate finances and enterprise performance.

The ability to drive full visibility into enterprise spend is an attribute that not only unleashes procurement’s visionary expertise, but also propels the CPO to new and strategic grounds in regards to corporate forecasting, planning, and budgeting. Spend analytics, and the visibility it provides, can arm procurement teams with the insight and standing to become better collaborators with their functional peers and business stakeholders. And, more importantly, the underlying foundation of the Best-in-Class spend analytics initiative is frequently developed with automated tools and process standardization:

Thus, for enterprises seeking to drive optimal value from their spend analysis efforts in the new year, it’s important to remember these three things:

  1. Automate and link the different phases of spend analysis (extraction, cleansing, classification, and reporting). Automation is the linchpin to spend analysis success. Since there are multiple phases within the spend analysis spectrum that ultimately determine the value of spend data, it is critical that enterprises not only link the extraction, cleansing, classification, and analysis processes, but also automate these key phases to ensure that they are repeatable (and accessible) for procurement, finance and other key stakeholders across the enterprise. In an age of procurement’s convergence with other departments and processes, this data can be valued by other groups for things like greater corporate planning, forecasting, and budgeting.
  2. Integrate Big Data strategies with spend analysis initiatives. Big Data means different things to various stakeholders, thus, it is helpful for all enterprise-wide data intelligence efforts to be part of a larger strategy. With its impact on profitability and operating margins, spend visibility should be a critical asset for the executive team, and should be considered as important as data culled from finance, operations, or marketing. The CPO and other procurement leaders should drive the effort to understand the source of spend data, determine how it is analyzed and used, and interface with the leaders of other ongoing and future Big Data projects.
  3. Utilize spend analysis to develop a proactive strategic sourcing program and a more comprehensive spend management approach. The age of reaction is over. Procurement sits in an ideal position to proactively mitigate enterprise risk. Spend intelligence culled from spend analysis efforts will assist CPOs and procurement/sourcing professionals better anticipate future financial and operational risks…and build the expertise to effectively address them.


In this day and age, it should be codified procurement law that possessing a great understanding of and visibility into enterprise spend is better than not possessing these things. Procurement teams that take no action towards mining and refining the spend data that gushes within enterprise systems are destined for mediocrity, if not failure. But unlike oil prospecting, drilling for spend data is a low-risk undertaking. Many procurement teams, including a majority of the Best-in-Class, have used spend analysis to hit a sourcing and savings “well” of value that can generate royalties for many years.


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