Transcript
Page 1: Sub-surface-spend - the need for federated spend analytics

$ub-$urface $pend

Mining the Untapped Spend Economies

Ian TomlinHow Federated Spend Analytics software taps into hard-to-reach sub-surface spend economies with its ‘all seeing eye’ and fine-grained analysis

Page 2: Sub-surface-spend - the need for federated spend analytics

The Pivotal Role of Procurement to Raise Enterprise Standards of Operational Excellence

People not acquainted with procurement so often see the discipline as a reactionary back-office function.

Anyone who’s dealt with high performing procurement teams knows that it’s one of the few discipline areas tasked with looking ACROSS the silos of operation that tend to build up in organizations.

Procurers have the rare opportunity to invest time in seeking better ways of working and find cost reductions through more thoughtful buying approaches.

Often what procurement leaders lack are the insights to drill into deeper sub-surface layers due to short-comings in spend analytics.

2

Page 3: Sub-surface-spend - the need for federated spend analytics

Although there is no obvious single journey to better ways of buying, procurement teams will quite sensibly start cost reduction initiatives by

tackling higher spend areas first.

Next will come the poor performing or poorly controlled areas spend.

Then a third tranche of cost economies is gained through rationalization and compressing the supply-chain (these are typically more complex

‘root and branch’ changes that demand more transformation and change in the way the enterprise works and so quite sensibly fall further down the transitional scale even though sometimes the rewards can be

something akin to a step-change).

3

Page 4: Sub-surface-spend - the need for federated spend analytics

Drilling Down to Deeper Layers of Spend Economies

As procurement teams venture through this life-cycle, they change their own DNA and transition from reactionary to proactive.

Mature procurement teams might well have delivered ALL of these initiatives and are now on the march to find new sources of stakeholder value, cost reduction and improvement (think of it as a mining company that initially searches out mineral reserves on the surface to then move deeper and deeper through the strata in search of new reserves).

Contemplating this next-stage sub-surface procurement initiative is where many procurement leaders now find themselves – but they also know, to achieve the best results whilst keeping their own operational costs down, they need better exploratory tools for their teams.

4

Page 5: Sub-surface-spend - the need for federated spend analytics

When the cost of mining sub-surface spend economies outweighs the return

The obvious areas of cost economy in sub-surface procurement initiatives comes as the result of better understanding the ‘when, where, hows and whys’ of procurement behavior to then benchmark approaches to ‘best practice’ (sometimes happening in different industry sector) to then install new – better -behaviors.

Unfortunately, the costs of identifying, qualifying and acting on sub-surface procurement changes can rack up. Procurement professionals need tools to more easily speculate on areas that look on the surface to be efficient that MAY hide deeper or unpredictable costs.

Time-to-value in turning potential weaknesses in procurement to rewards in terms of cost savings becomes a key measure of success.

One hurdle that most procurement teams encounter when transitioning from a ‘reactive’ to ‘proactive’ procurement stance then is the need to source richer spend-analytics across all disciplines. This is the role of spend analytics.

5

Page 6: Sub-surface-spend - the need for federated spend analytics

About Federated Spend Analytics

Federated Spend Analytics software is cloud-based business software that places a lens across back-office administrative computer systems to expose areas of potential spend economy. In this article I explore how the latest generation of cloud-based applications platforms are facilitating fine-grained analysis of spending behaviors to expose new opportunities for cost reduction and efficiencies in the procurement function.

6

Page 7: Sub-surface-spend - the need for federated spend analytics

Why Federated?• Few organizations truly operate ONE computer system across their business.

Even companies that have committed to a core technology stack - such as SAP, ORACLE, IBM or MICROSOFT - will often have multiple ‘systems’ of their chosen platform to cater for disparate operating divisions, geographical variances, group companies (etc.). This means SOMEHOW data needs to be harvested, mashed together and normalized, then presented in a data-mart that allows it to be interrogated.

• Like most systems that revolve around ‘people being curious’, good Spend Management systems don’t simply regurgitate data in the form of charts and dashboards, what they do is provide a platform for users to ask new questions about what, where, when, how, why and whom in the enterprise spends money.

7

Page 8: Sub-surface-spend - the need for federated spend analytics

Role of Federated Spend Analytics Platforms

8

Federated Spend Analytics platforms are the newest breed of performance

tooling for procurement professionals operating in large and complex

organizations.

Federated platforms should as a minimum provide the following capabilities:

Harvest data from existing applications without requiring manual

interventions

Transform and normalize data to produce coherent data perspectives

Form a unifying data-mart that auto-refreshes with the latest data from back-

office systems

Present user interfaces supporting interactive charts, maps, dashboards, side-

by-side comparison tables and other visualization tools to distill key facts

Support the ability for users to create their own KPIs, alerts, chart

and map views

Install RASCI role accountability to spend analysis process

Provide an always-on (secure) platform accessible via browser-based

devices

Scale to meet enterprise needs

Page 9: Sub-surface-spend - the need for federated spend analytics

RewardsBy implementing a Federated Spend Analysis platform, what should procurement teams expect? While each organization will benefit differently from adopting a federated system here’s a quick run-down of some of the more common ROI outcomes:

9

• Multi-threaded sourcing and multi-linking of data; Tooling to harvest data from multiple sources and augment automation of information flows to route data and place it into a data-mart.

• Ready-to-use design elements; Tooling that provides self-service creation of situational applications and analytical dashboards, interactive charts, maps etc. without coding.

• The means to be curious; to ask ‘when, where, how and why’ questions without hugely increasing frictional costs associated with the enquiry process itself (such as time spent authoring reports, sourcing data, manual data entry and data crunching, time spent working spreadsheets etc.).

• The means to expose fine-grained economies; which, by minimizing enquiry and analytical costs, become economic to act on.

ADD GROW

• Opportunities for sub-surface procurement economies by distilling fine-grained operational behaviors (made affordable by reducing enquiry/reporting/analytics unit costs).

• Time-to-value; expose weak-points in procurement faster by having the ability to interrogate data rather than creating and running ad-hoc reports time and again in the hope that a sub-optimal behavior will be uncovered.

ADD GROW

Reporting and analytical overheadsSoftware change/upgrade costsTechnology complexity; save on the number of tools needed to harvest, analyze, report, share insights and related cost of authoring situational applications to ACT on learning lessons.

Page 10: Sub-surface-spend - the need for federated spend analytics

Thank You.

Article Sponsors:

Workforce and Talent www.workspend.com

IT and Technology www.ustechsolutions.com

Data Engineering and Customer Science www.ndmc.uk.com

Ian Tomlin is a management consultant and

author. He's written several books and

hundreds of white papers and articles on

the subject of customer science,

organizational growth, technology and the

evolution of the workplace.

Books by Ian Tomlin:

Agilization – The regeneration of

competitiveness

Cloud Coffee House – The birth of cloud

social networking and death of the old

world corporation

SOS - Social Operation Systems

10

If you have implemented projects or tools to source sub-surface spend

economies it would be great to hear about them. Otherwise, if you’ve yet

to explore the potential for sub-surface spend projects I would be happy to

talk over the subject with you.


Top Related