spend360 discussion document

Title Spend360 Discussion Document

Date 08.09.2011

Location Nottingham, UK

Author Adrian Lowther

E : [email protected]

M : +44 (0) 7884 312005

Version 1.1

Spend360 Limited

Suit 4

54 Epsom Road

Guildford

Surrey

GU1 3UF

www.spend360.co.uk

TABLE OF CONTENTS

1.0 DOCUMENT HISTORY & LEGAL STATEMENT ................................................................................................................................................................. 4

2.0 INTRODUCTION .................................................................................................................................................................................................................... 5

3.0 DELIVERABLES ................................................................................................................................................................................................................... 6

3.1. EXAMPLE REPORTS ..................................................................................................................................................................................................................................................................... 7 3.1.1. MAIN DASHBOARD ................................................................................................................................. 7 3.1.2. FINANCE DASHBOARD .......................................................................................................................... 7 3.1.3. CATEGORY MANAGEMENT DASHBOARD ............................................................................................ 7 3.1.4. CATEGORY DASHBOARD ...................................................................................................................... 7 3.1.5. TAIL ANALYSIS........................................................................................................................................ 8 3.1.6. INVOICE ANALYSIS ................................................................................................................................ 8 3.1.7. NORMALISED SUPPLIERS ..................................................................................................................... 8 3.1.8. CONTRACT DASHBOARD ...................................................................................................................... 8 3.1.9. ADDRESSABLE SPEND .......................................................................................................................... 9 3.1.10. MANAGEMENT & BESPOKE REPORTS ................................................................................................. 9

4.0 BENEFITS ............................................................................................................................................................................................................................ 10

4.1. SPEND360 BENEFITS FOR PROCUREMENT .................................................................................................................................................................................................................................. 10 4.2. SPEND360 BENEFITS FOR STAKEHOLDERS .................................................................................................................................................................................................................................. 11 4.3. SPEND360 BENEFITS FOR COMPANIES ........................................................................................................................................................................................................................................ 12

5.0 SPEND360 ARCHITECTURE ............................................................................................................................................................................................. 13

5.1. DATA MODELLER ....................................................................................................................................................................................................................................................................... 13 5.2. ARTIFICIAL INTELLIGENCE ........................................................................................................................................................................................................................................................... 13 5.3. THE VIEWER ............................................................................................................................................................................................................................................................................. 14

6.0 ARCHITECTURAL SIGNIFICANCE.................................................................................................................................................................................... 15

6.1. ADDRESS ACCESSIBILITY ........................................................................................................................................................................................................................................................... 15 6.2. ADDRESS QUALITY .................................................................................................................................................................................................................................................................... 16 6.3. ADDRESS ENRICHMENT, REPETITION & IMPROVEMENT ................................................................................................................................................................................................................. 17

7.0 TYPICAL PROJECTS ......................................................................................................................................................................................................... 19

8.0 DEPLOYMENT SCENARIOS .............................................................................................................................................................................................. 20

Spend360 Discussion Document Created on 08.09.2011

Confidential Rev. AJL/1.1 3

8.1. IMPLEMENTATION – WITHOUT ENTERPRISE SERVER ..................................................................................................................................................................................................................... 20 8.2. IMPLEMENTATION – WITH ENTERPRISE SERVER ........................................................................................................................................................................................................................... 20 8.3. IMPLEMENTATION – TYPICAL SCENARIO ....................................................................................................................................................................................................................................... 21

9.0 SPEND360 PRICING ........................................................................................................................................................................................................... 22

9.1. FREE AND CHARGEABLE ELEMENTS ............................................................................................................................................................................................................................................ 22 9.2. FLEXIBILITY ............................................................................................................................................................................................................................................................................... 22 9.3. INITIAL CLASSIFICATION EXAMPLE ............................................................................................................................................................................................................................................... 23 9.4. CLASSIFICATION AND REFRESH EXAMPLE .................................................................................................................................................................................................................................... 23 9.5. CLASSIFICATION, REFRESH AND CHANGE EXAMPLE ...................................................................................................................................................................................................................... 23

10.0 SPEND VIEWER OPTIONS ................................................................................................................................................................................................ 25

11.0 SCOPING QUESTIONNAIRE .............................................................................................................................................................................................. 26



1.0 Document History & Legal Statement

Circulation

Spend360 Contacts By Agreement

Spend360 Unrestricted

Ver. No. Date Issued Status Comments

1.0 06.10.2009 Draft Internal Draft for Review

1.1 08.09.2011 Update Customer release

This document has been created and submitted following our recent discussions, demonstrations or meetings. The views and comments expressed within it are

not necessarily those of Spend360. The document may contain views and opinions which are solely those of the document author and for which Spend360 is not

responsible in law. This document is not to be taken in any way as a contractual document. Any information provided, indicated, attached or implied in this

document is confidential and subject to legal privilege and unless agreed in writing shall not form part of any express or implied contract between the parties. If you

are not the intended recipient you are notified that any use, dissemination, distribution or copying of this document or data is prohibited. If you have received this

document in error, please notify the author immediately and erase all copies and attachments.

Circulation is restricted to this individuals and companies listed above. Any outline pricing, sample architectures, project plans, correspondence or other

information contained in this document are illustrative only, based on high level research, experiences and precedents, and can only be considered indicative in

the absence of formal acknowledgement by authorised Spend360 personnel.



2.0 Introduction

We are pleased to be able to provide some outline information to you regarding our unique artificial-intelligence-based Spend360 offering. This offering is to assist

Procurement Subject Matter Experts and Procurement Stakeholders analyse their company spend.

This document is intended to provide background information and to facilitate future discussions and hopefully illustrates, in conjunction with other materials and

demonstrations we offer, our desire to partner with you to deliver Procurement savings and increase spend under management.

Spend360 has Public, Private and Academic customers, FTSE and Fortune companies, as well as smaller customers. Each obtains benefit from the use of

Spend360 to support their Procurement and Finance tactics. Whilst the benefit areas may be similar there is a variation on the priorities and emphases of each

customer. This means :

• Spend360 fits the objectives of the user(s) and their priorities

• Spend360 can be adopted by any size organisation

• Spend360 can be, and is, used in a variety of ways

• Spend360 supports multiple Stakeholders and disciplines

• Spend360’s ease of use and personalisation allows support for the real world – ie. Multiple category structures, Geographies, Operating and Business Units, Currencies, Languages, Cost-centres, Stakeholders etc.

The characteristics of typical Spend360 customers prior to them adopting it are summarised by :

• Lack of availability, quality, quantity, or completeness of spend data

• An overload of information, which is not, in fact, useful or relevant

• A sense that more could be accomplished if better quality data was available in context

• A sense that Transactional or Finance reports if they do exist, and are complete, are not in fact the optimum solution since they are not

“Procurement friendly”.

• A sense that greater insight provided by a properly classified spend map, enriched with associated data, would allow delivery of greater value-add by the Procurement Function.

Spend360 uses artificial (and a little human) intelligence approaches to Spend Analysis which dramatically reduces barriers to, resources needed for, and

accuracy of, spend analysis allowing more spend to be managed. If these benefits are of interest then the following sections provide additional information which

might be helpful to explain our approach further and suggest topics to explore for business cases.



3.0 Deliverables

Below is a sample of the types of output we can provide. This is by no means exhaustive and is both highly customisable and user-friendly. Support for the needs

of multiple Stakeholders, with no overhead, and the ability for complex analysis and interrogation of spend data within 1, 2 or 3 clicks means that a user can be

drilling from a summary through to the supporting transactional detail, or using advanced techniques such as pareto analysis, within a few minutes of being

exposed to the spend data. 95% of users’ needs are satisfied immediately, with power-users able to create their own additional, bespoke reports without IT

inhibitors.



3.1. Example Reports

The number of, and type of, reports we provide varies depending upon the scope and completeness of data provided by our customers. We cater for new

requirements easily, but users can also create their own reports over the classified data. Reports are available by Topic, by Stakeholder, Business Area etc. We

provide a helpful data extract template which enables you to determine which source data is required for each report. Data can be viewed and interrogated using

any of the information filters on the left hand of the viewer, which are common to all of the reports, or by a click on the data in any of the displayed panels.

3.1.1. MAIN DASHBOARD

The main dashboard provides answers to most queries in 1 or 2 clicks by

providing information with regard to the top suppliers in each top level

category, by period, Business Unit etc.

3.1.2. FINANCE DASHBOARD

The Finance dashboard provides information regarding supplier spend and

various key financial indicators such as payment terms, local currency of

spend, on or off contract and country / category spend.

3.1.3. CATEGORY MANAGEMENT DASHBOARD

This provides each category manager with the ability to drill into their

category to find out spend by supplier, number of invoices and on or off

contract etc. and interrogate aspects of category spend in context.

3.1.4. CATEGORY DASHBOARD

This provides a top down view of all categories from Level 1 to Level 3 / 4 for

use perhaps in context with trend or budget information and is useful when

filtered by period, Business Units, Regions and Cost Centres etc.



3.1.5. TAIL ANALYSIS

The Tail Analysis reporting tab provides Category Managers with the data

about the top 10 (or any number) suppliers and the number of ‘Tail’ suppliers

in each category. This information can be amplified when combined with the

Parent/Child analysis or analysis of vendors who might supply more than

one part of your organisation. The output can then be used for rationalisation

and to support a programme of work for re-negotiation.

3.1.6. INVOICE ANALYSIS

This provides the breakdown of spend into invoice bands and number of

invoices per supplier. This can be useful to rationalise payment terms and/or

analyse suppliers who may be submitting incorrect or multiple, low-value

invoices which may cost your business more to process than the value of the

good provided. We provide variables and allow “what-if” analysis to facilitate

calculations in this and other areas. These can be added to the filters and/or

we can add them to separate, bespoke tabs for you.

3.1.7. NORMALISED SUPPLIERS

Another key element of Spend360 is the provision of normalised suppliers

and supplier’s global parent/owner data, which pulls together all of the

vendor spend into a single chart element (which can then be exploded into it

components part by simply clicking on it). To determine this we have internal

algorithms we apply to the list of vendor names we receive but also use

external sources such as Dunn & Bradstreet.

3.1.8. CONTRACT DASHBOARD

The Contract Dashboard shows the spend that is On or Off Contract or

Expenses, aspects of contract period analysis as well as normalised supplier

and currency of the spend. When combined with views of Business

Operations, Category Manager etc. this aides contract, compliance and

process analysis, putting into context for Procurement and other

Stakeholders when spend is under management and optimised. It can also

provide “factoring” variables for Addressable Spend.



3.1.9. ADDRESSABLE SPEND

Once spend data is properly classified we can provide views on it which are

supported by analysis of what is Addressable spend. This can be done at a

number of levels and aids analysis and savings projections, “what-if”

analysis and prioritisation when analysing spend by Category, Business Unit, Country etc.

3.1.10. MANAGEMENT & BESPOKE REPORTS

Each customer normally has a set of KPI’s which we can accommodate in

Management dashboards or reports. Typically these are quickly built for

initial delivery and then iteratively improved by power users, or by Spend360

as projects progress. Examples might include budget and forecast

information, “What-If” analysis etc.


Confidential Rev. AJL/1.1

10

4.0 Benefits

It is indicated by Aberdeen Group that only 20% of industry currently has complete, accurate visibility of properly classified spend data. The balance of

organisations make do with transactional reports, monthly or annual reports, or data-warehouse solutions that may be somewhat helpful but “are not quite right” as

they suffer from “Rubbish In – Rubbish Out”. Consequently, “not quite right” in this context means there is either too great a volume of data which is not visualised

and usable, or not enough, or there are issues with accuracy or quality. Some large organisations have the resources to – quite rightly – fix their problem at

source(s). Many do not and so Spend360 provides a solution to businesses who have:

• Poor line of sight of spend data which undermines Procurement improvement programmes

• Multiple Languages to support or analyse

• Master data issues

• Fragmented data entry, misclassifications

• Incomplete descriptions (or none)

• Inconsistent taxonomy or taxonomies (or none)

Consider the following statistics drawn from various professional bodies and industry analysts:

• 91% of purchasing professionals agree they need more, and better, data to manage their relationship with suppliers

• 82% of Finance Directors that have limited or zero view of indirect spend

• 60% of spend, in a typical organisations IS NOT “under management” according to CIPS

• 75% of organisations are adversely affected by current market conditions

• 55% of organisations have recently had purchasing budgets cut

• 59% of organisations recently surveyed had “aggressive” savings targets

• 9 is the MINIMUM average number of sources of spend data in most organisations

If these figures are familiar to you then you probably would benefit from Spend360.

4.1. Spend360 Benefits for Procurement

Our customers benefit by using Spend360 in different ways. Whilst there are commonalities we are able to support our clients’ priorities. Some focus on

aggregation opportunities, some focus on compliance, some focus on vendor rationalisation or “tail analysis”. The chart below shows some of the key reasons,

and the changes in importance of spend analysis over the past couple of years.



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The architecture and capabilities of Spend360 enables you to support Procurement-specific programmes and tactics due to:

• Rapid turnaround spend data – measured in days and not weeks, or weeks and not months - delivering key data to support downstream activities such as

e-procurement, auctioning and supplier performance monitoring.

• Granularity of the data – from management, dashboard views right through to the supporting detail in a few clicks making the data actionable.

• Flexibility of the solution – breaking down barriers to data collection and usability with easy to use screens and the flexibility to create individual outputs so

that individual requirements are met, but not at the expense of group or company-wide requirements.

Accurately classified spend data, combined with the speed of delivery, are the key elements to what makes Spend360 unique in its ability to deliver business

benefits

4.2. Spend360 Benefits for Stakeholders

The information provided by Spend360 can be used by subject matter experts in Procurement, but we can also support other Stakeholders, typically Finance. This

is entirely under the control of Procurement. The additional insight provided by Spend360 which, for example, allows finance-orientated views of spend data such

as payment terms, invoice analysis, compliance, supplier credit rating etc. is useful to provide a 360 degree of spend in a particular business area, category etc.

This means that different Functions can be exposed to the same data when making decisions. Our expectation is that the accuracy of classification, the ability to

interrogate data in multiple ways, and the speed of delivery supports three things :

• Benefit from existing plans – for example being able to do unit cost comparisons.

• Additional benefit from existing plans – for example using only approved suppliers or leveraging parent/child relationships.

• Additional benefit from new plans – for example rationalising multiple payment terms with a supplier

• Pressures to focus on Spend Analysis :

– 28% Track off-contract (“Maverick”) Spend

– 38% Place more spend under management *

– 40% Improve negotiation leverage

– 41% Identify/prioritise top spend categories

– 54% Identify savings opportunities within categories

* Spend under management delivers 5%-20% savings per each new $ of spend brought under management

*

**

2010 2009 2008



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Spend360 can double or even triple the amount of planned savings from existing or new sourcing tactics. Put simply the business case for Spend360 Spend Analysis comes from reducing effort to obtain enriched, accurate, granular, Procurement-Function-specific data, maintenance of control of spend already managed, and insight into new areas where spend management may not be optimised.Spend360′s ability to accurately classify and enrich multiple sources of spend data (whether internal or external) means that a business case is about workload savings, workload avoidance, workload efficiencies, increased visibility, financial and contractual compliance and many other aspects of sourcing.

4.3. Spend360 Benefits for Companies

Spend360 can ensure leverage of existing plans, and inform new, additional plans. The case below suggests possible percentages and savings in addition

to existing plans. For comparison the example also shows the corresponding increase in sales that would be required in order to deliver the same profit or working

capital contribution. The logic for this case is based on the architecture and capabilities of Spend360 enabling you to more quickly and easily support

Procurement-specific programmes and tactics due to the accuracy, usability and rapid turnaround of spend data to support downstream activities such as e-

procurement, auctioning and supplier performance monitoring.



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5.0 Spend360 Architecture

5.1. Data Modeller

The Data Modeller allows us to map your different types of internal and external data to a format which allows us to accurately classify your spend. This

component of Spend360 is managed and used only by us and provides a rapid means of removing the traditional obstacles to spend analysis in areas of data

collection - such as those described in Section 6 below, but which are normally characterised by inaccessibility or lack of complete, accurate, refreshed

“Procurement-friendly” source data.

5.2. Artificial Intelligence

The Artificial Intelligence ( AI) capability we have developed replaces much of the normally labour-intensive task of manual analysis, or the brittle, rules-based IT-

centric approaches taken in organisations that do not use Spend360. Much of the “heavy lifting” of rationalising, normalising, enriching and classifying your spend

data is done by a mechanism which “learns” from each engagement and enables us to infer and generate patterns which aide classification even with poor quality

data. The AI therefore provides a means of removing the traditional obstacles to spend analysis in areas of classification and enrichment of data.



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5.3. The Viewer

The Viewer is the user element of the system and provides access to all of the specifically tailored reports that exist in the spend360 environment. This is the

single front end that all users will access the data. There are two classes of user:

• Standard Users – which are free of charge - who can view and interrogate data, create complex enquiries on spend data by using intuitive filters:

o Explore files configured by others interactively in visually-rich tabs and filter and select with instant feedback/re-visualisation

o Print and export data via cut and Paste and auto-create PDF/PPT/XLS files

o Build preconfigured queries

• Power Users – which are chargeable - who can view and manipulate data and have more rights over the data than viewers:

o Explore, filter and analyse data and create and edit data sets, as well as define macros and formulas and variable assumption-driven models

o Continuously refresh data from source and customise filters, views, tabs, layout and branding

o Create and share files, secure and highly-compressed, ideal for internet delivery, with unlimited Viewers

o Design and export Flash Data Players, for embedding in documents or websites with full interactivity, as well as export in multiple file formats

More detailed summary of capabilities for users is shown in Spend Viewer Options.



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6.0 Architectural Significance

The following chart indicates just some of the hurdles which organisations face when addressing spend analysis requirements.

As you can see the hurdles appear to be consistent over the past few years of the analysis and increasing in significance. The key ones, which can be addressed

without significant process implications by Spend360 are data quality and access to spend data sources. Procurement is normally not responsible for data quality

and cannot necessarily influence it. Similarly Procurement does not necessarily “own” the sources of spend data. Not owning, and not being responsible for, spend data, but being expected to analyse and use it presents some challenges to most organisations. Spend360 removes or reduces these challenges and positively influences the other hurdles too.

6.1. Address Accessibility

The common claim here is that there is not enough (or too much) spend data available at the right time, whenever that is. The reasons for this are normally

numerous but are typically characterised by difficulties in obtaining the right data, in a useable, familiar format when it is needed, overcoming any political, fiscal,

resource, geographical or other organisational barriers. To boil this down you need several things to get good spend data:

• Knowledge of what you want and from whom and when, together with a willingness and ability on their part to provide it or for them to nominate (and

indirectly or directly fund) someone who will.

• Some standardisation, normalisation and rules explanation, building and maintenance rules by which the data is to be provided, sorted, and structured to

make is usable plus a set of complex, IT-centric conversion tools and rules or expertise to merge everything together and a further set of complex, IT-

centric rules to classify the data into something which represents “Procurement-friendly” spend data

• A willingness to probably accept that you will have to operate at the lowest common denominator or try and factor in an error rate or means of converting

Materials Groups, GL codes, cost centre numbers, incomplete fields etc. to something meaningful.

**

*

2010 2009 2008

• Hurdles to successful Spend Analysis :

– 43% Insufficient process automation

– 45% Lack of standardised processes

– 51% Too many sources, where and how data is stored

– 55% Poor data quality, extraction and aggregation



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Spend360 removes or reduces these barriers to a practical level since we can, within reason, accept most formats of AP, PO, Supplier Master etc data and provide you with a spend analysis “service” which requires very little IT involvement or infrastructure investment. Typically we receive multiple files, in multiple formats, from multiple places, or multiple files which have been made available for us to collect electronically. This is easier for most customers as it removes the needs for a large number of people to be involved and is “practical” as an approach to data which will only need to be refreshed periodically. It also means that once the initial data extract has been done it can simply be added to a schedule and run automatically at say a monthly or quarterly period.

6.2. Address Quality

The common problem with quality, if you can fix the quantity and availability, is that the sources of spend data are often incompatible with good Procurement-

specific requirements. This is because spend is a result of multiple other, interconnected processes where IT has been set up to support them. As a result you

might get data which has supplier details but PO or invoice descriptions are poor because of process deficiencies, knowledge gaps or compliance issues.

If you can manage to get all of the spend data you need together, without gaps, then the problem is how to get it from its different formats into a common format,

and from that into a classified and meaningful structure (or structures) upon which you can act. This is a form of “sorting” and typically requires a significant

contribution of time and effort from a dedicated resource just to try and understand the data. Bearing in mind the data is, as mentioned above, not normally the

province of the Procurement person doing the “sorting” this is a labour intensive task and often results in a series of restrictive, brittle “rules” which ultimately may

undermine the results and a hope that the business does not in any way change.

Spend360 removes or reduces these barriers by eliminating all human involvement in these tasks and passing them to an artificial intelligence capability which does the “heavy lifting” of rationalising, normalising, sorting and classifying the multiple sources of data.

This means that, irrespective of the source, wherever possible we can organise and classify internal and external sources, enriching the data, making it “Procurement-friendly” and adding perspectives to support multiple Stakeholders - for example Finance – not just by classifying it, but by enriching it – for example by adding supplier parent/child relationships and credit ratings.

GET DATA FROM BUSINESS A in

FORMAT A

GET DATA FROM BUSINESS B in

FORMAT B

PASS TO

SPEND360

GET DATA FROM BUSINESS C in

FORMAT C

GET DATA FROM BUSINESS D in

FORMAT D

Data :

AP, PO, Supplier

Master, GL Codes, Org

Structure, Currency

Conversion Tables

etc.

The format(s) can be

different system

types, data type s etc

but as simple as XLS,

CSV files and include

multiple formats,

structures, language,

currencies etc.

GET DATA FROM EXTERNAL SOURCE

E in FORMAT A

GET DATA FROM EXTERNAL SOURCE

F in FORMAT D

Get helpful template from

SPEND360



17

Supplier Name Account

No.

Account

Name

Cost Centre Cost Centre

Name

Description Spend

Duplikat Sweden AB 5490 Vrinvigt

fvarbSDukings

material

K3016500 Print

Mvdindal

DVD-R taiyo

Yudrn Vit inkjet

printable Fvdr

Accent

$2,347

AI :

The Artificial

Intelligence matches

patterns and infers

classification based on

the wealth of “learned”

classifications.

Secondary Keys

Primary Keys

PATTERN MATCHING

CONFIDENCE

LEVELS

Artificial

Intelligence

UNSPSC

Code

Level 1 Level 2 Level 3 Level 4

14111507 IT, Broadcasting &

Telecommunications

Information

Technology

Media

Storage

Services

Read Write

Digital

Versatile Disk

DVD

There are no rules to write, understand and maintain and the artificial intelligence “learns” from each engagement. What the AI learns is used to accurately classify and categorise customers’ data, support multiple languages, and plug gaps.

When we classify customer data we “ignore” any existing classifications and use the AI to analyse the data to look for patterns in full and partial records and descriptions and combinations of factors. We use industry standard classifications like UNSPSC for those organisations that do not have a taxonomy, and/or map this to customers’ own taxonomies if they do.

6.3. Address Enrichment, Repetition & Improvement

In order for spend data to be useful in feeding cost control, reduction or avoidance programmes it must be refreshed and in line with changing business practices,

products, process and environments (supplier rationalisations, mergers and acquisitions, new product introductions and so on).

If this is easier it is more likely to happen, and consequently this increases the opportunity for benefits of the analysis to be accurately monitored and delivered.

In addition data can be enriched with external data sources, such as parent/child relationships for vendors, together with their credit scores and other information.

The process shown below can be repeated as required and covers initial classification of data as well as refreshes. The time taken to complete the process varies

according to volumes and complexity but is always shorter and significantly less labour intensive than in-house approaches. Where in house solutions take months

Spend360 takes weeks, where in-house solutions take weeks spend360 takes days.



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We have a good right-first-time accuracy but we supplement the artificial intelligence (it is artificial after all) with some quality assurance for the small percentage of

transactions which cannot be classified or perhaps have been misclassified.

For this reason we also have a quality assurance and personalisation phase with customers which is typically measured in a few hours due to the drag-and-drop

reclassification capability we have that provides new “learning” for the artificial intelligence engine. In other words reclassification is quick, easy and one-time and

time to delivery of cleansed data is very short.

RECEIVE

CUSTOMER DATA

PASS TO ARTIFICAL

INTELLIGENCE

QUALITY ASSURE

OUTPUT

PASS TO ARTIFICAL

INTELLIGENCE

Repeat as necessary

QUALITY ASSURE

OUTPUT

CUSTOMER Q.A. & PERSONALISATION

DATA

ENICHMENT

FROM 3rd

PARTIES

E.G. DUNN &

BRADSTREET

RELEASE TO

VIEWER

Repeat as necessary



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7.0 Typical Projects

To provide some idea of the resource requirements and elapsed time for a typical project the chart below shows the key tasks and milestones that could normally

be expected. This is for guidance as it varies by organisation, scope, size and complexity. There are checks and deliverables at various stages of a project so that

project sponsors and Stakeholders can be apprised of progress and quality throughout the project(s). Timescales for refreshes of the data are significantly shorter

than for initial classification since they are scheduled and the artificial intelligence will have “learnt” classification rules for your data.

Activity Key : Spend 360 Activity Customer Activity

Task Month 1 Month 2

7 14 21 28 35 42 49 56

Planning & Preparation Kick-off Meeting - Procurement, IT, etc.

Distribute data request, obtain extracted data from participants

Extracts Available ★

Review, clean and validate extracts

Collect top-line spend estimates

Compare data collected to spend estimates

Collect supporting data (exchange rates, GL codes, Business Units etc.)

Normalisation Domestic and International Parent Child, Credit Risk, SIC, DUNS numbers etc.

Auto-normalisation of suppliers

Review and refine normalisation ★

AI Auto-Classification

Develop classification hierarchy using automatic UNSPSC structure

Develop/apply customer specific hierarchy map to UNSPSC

Categorise suppliers, materials and commodities to hierarchy

Validate Classification/Normalisation

Data Complete ★

Configure and Deploy spend360 Administrator/Viewers

Deliver ★



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8.0 Deployment Scenarios

Irrespective of geography Spend360 can be adopted by organisations or all sizes. There is little to install beyond the Viewer normally and therefore little if any IT

impact. The scenarios below can be used in combination and represent practical solutions to Procurement’s need to get good spend data without a large IT

overhead. This has been done to achieve optimum costs to get started and also to keep ongoing costs to a minimum.

See also the Pricing and Spend Viewer Options sections of this document.

8.1. Implementation – Without Enterprise Server

In a scenario where Enterprise Server is not used, manual receipt, security and distribution tasks must be completed. A nominated Power User can receive the

transmitted Spend360 file(s) and distribute around your organisation. This can be done by email or file distribution on your network.

8.2. Implementation – With Enterprise Server

In a scenario where Enterprise Server is used tasks can be automated. This adds to the costs however for larger organisation this may provide a cost-effective

means of automating receipt, security and distribution tasks electronically.

ENTERPRISE

SERVER

SPEND DATA

FILE(S)

FREE OF CHARGE

VIEWERS

CHARGEABLE

POWER USERS

Enterprise Server automates certain

administration and distribution tasks.

CHARGEABLE

POWER USERS

FREE OF CHARGE

VIEWERS

SPEND DATA

FILE(S)



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8.3. Implementation – Typical Scenario

For most of our customers the scenario below represents a viable initial starting point and project development.

CHARGEABLE

POWER USERS

FREE OF CHARGE

VIEWERS

SPEND DATA

FILE(S)

By Priority

Some of the data for

some of the companies or all of the data for

some of the companies

CHARGEABLE

POWER USERS

FREE OF CHARGE

VIEWERS

SPEND DATA

FILE(S)

By Geography


some of the Regions or all of the data for

some of the Regions

CHARGEABLE

POWER USERS

FREE OF CHARGE

VIEWERS

SPEND DATA

FILE(S)

By Decree


the entire Business or all of the data for

the entire Business

Then/Or Then/Or



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9.0 Spend360 Pricing

We have provided options for our customers which are cost effective compared to other solutions, and to the actual or opportunity costs of doing spend analysis

themselves. This is in part down to the removal of barriers as described in the preceding sections of this document but also due to the way in which Spend360

charges for classification services and deliverables.

The Spend360 pricing model is influenced by a number of factors;

• The number of items to be classified

• The complexity of the project – measured in numbers of different data sources, languages etc.

• The frequency of refreshes of the data

• Whether chargeable, external data sources are to be included for enrichment

9.1. Free and Chargeable Elements

Spend360 currently offers Viewers free of charge. The optional chargeable elements of a Spend360 solution are made up of the following:

• One-Time Charges for initial classification (based on the volume and complexity)

• Optional Charges for refreshes (based on the frequency of the refreshes, but a planning assumption is quarterly)

• Optional Annual Charges for Power users (based on ability to manipulate data once classified)

• Optional Charges for external data enrichment such as Dunn & Bradstreet credit details and suppliers parent/child relationships

9.2. Flexibility

A charge model based on volume and complexity and optional refreshes means that:

• The cost of our solution is proportionate to the size of the project

• We can accommodate one-off, bespoke tactics or support long-term strategic programmes

• Costs are only incurred when the service is consumed

• Costs are variable insofar as you have choices as to refresh frequency (if at all)

• Costs for external enrichment are variable. For example if you have 5000 suppliers, you may not need credit scores and parent/child relationship

information for all of them so you can decide if you want, say, the top 2000 measured by size of spend.

Pricing for projects can be provided upon application but for planning purposes and to articulate the model the following examples are provided.



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9.3. Initial Classification example

This illustration is for an organisation that requires a one-time classification of spend data, enrichment with D&B data and no power users or refreshes of the data.

This might be useful for a specific tactic where costs must be kept to a minimum.

9.4. Classification and Refresh example

This illustration shows a 3 year scenario for an organisation that requires classification of spend data, power users, refreshes and D & B enrichment. This is useful

for most organisations as costs for refreshes are only incurred when they happen and are a percentage of the initial classification costs.

9.5. Classification, Refresh and Change example

This illustration shows a 3 year scenario for an organisation that requires classification of spend data, power users, refreshes and D & B enrichment etc. but also

requires additional classification later in the project. This is indicative of an organisation taking an incremental approach to a project, perhaps acquiring a new

company during the project, or adding in a new part of the organisation to the analysis which changes the original scope.

CHARGEABLE

POWER USERS

(B)

INITIAL CLASSIFICATION

COST (A) +REFRESH COSTS

x 3 (C)+EXTERNAL DATA

ENRICHMENT

(e.g. D&B) (D)+ (A)+(B)+(C)+(D)=

CHARGEABLE

POWER USERS

(B2)



x 4 (C2)+EXTERNAL DATA

ENRICHMENT

(e.g. D&B) (D)+ (B2)+(C2)=

CHARGEABLE

POWER USERS

(B3)




ENRICHMENT

(e.g. D&B) (D)+ (B3)+(C3)=

Year 1

Year 2

Year 3

CHARGEABLE

POWER USERS

(B)




ENRICHMENT

(e.g. D&B) (D)+ (A)+(D)=

Year 1



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The illustration also shows that power users have not been added or renewed in subsequent years and that the external data enrichment has not been applied to

the newly classified data in Year 3. Consequently these items have not been charged.

CHARGEABLE

POWER USERS

(B)




ENRICHMENT

(e.g. D&B) (D)+ (A)+(C)+(D)=

CHARGEABLE

POWER USERS

(B2)




ENRICHMENT

(e.g. D&B) (D)+ (B2)+(C2)=

CHARGEABLE

POWER USERS

(B3)+

REFRESH COSTS


ENRICHMENT

(e.g. D&B) (D)+ (A3) +(C3)=

Year 1

Year 2

Year 3

ADDITIONAL CLASSIFICATION

COST (A3)



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10.0 Spend Viewer Options

Most organisations and users are supported with the Free of Charge Viewer provided. However for comparison purposes the table below indicates the functionality

of different classes of user.

Viewer Power User Enterprise Server

Main Functionality Read only/view spend files

Manipulate and create views of spend files

Location of Spend data published by Spend360

Open and navigate all existing Spend360 files (read/query only) Yes Yes Yes

Print to PowerPoint and Acrobat Yes Yes Yes

Automatically refreshable files Yes Yes Yes

Access to manipulation/what if functions Yes Yes Yes

Import/Export data to Excel: create and save publishable Spend360 files that can be opened by any activated Spend360 AND free Spend360 Viewer

Yes Yes

Connect directly to databases and SWL-generated tabular reporting views using ODBC/JDBC Yes Yes

Produce interactive Flash Dataplayers for documents and the web Yes Yes

Refresh data from (and back to) source spreadsheets. Refresh/update from database or Spend360 source file in real time over a local network or the Internet

Yes Yes

Merge multiple spreadsheets and/or databases Yes Yes

Create multiple tabbed reports and presentations Yes Yes

Branding of files by inserting logos, images, backgrounds, banner ads etc Yes Yes

Protect data with locking and passwords Yes Yes

Connect to/import real-time updates from Bloomberg terminal services Yes Yes

Commercial publishing of Spend360 files Yes Yes

‘Zero Footprint’ Web Start Spend360 deployment options for clients lacking installs Yes Yes

Scheduled automatic data refresh and re-distribution of files Yes

On-demand generation of files using customised data sets Yes

Advanced file security and anti-copying/revenue protection features e.g. locking etc Yes



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11.0 Scoping Questionnaire

We use the following questions to guide us to the areas where data needs to be gathered, scope needs to be agreed or other volumes are required in order to

clarify requirements, validate pricing or other estimates. The more detailed an answer we can obtain to each question area the more detailed our responses will

be.

Enterprise Company 1 Company 2 Company 3 Company 4

Sourcing Organisation

• How many buyers do you have ? • Where are they located? • Do they cover direct and indirect purchases? • How many locations/facilities do you have ? • Who is the key business contact for this division? • Who is the key technical contact for this division?

• What are the key milestones and timescales for this/these project(s)?

Spend Profile

• What is your overall spend?

• What are your highest priority sourcing categories for the division?

Scope

Do you have a desired timeframe for rollout of the solution/results? • What Geographies are in scope? • What Spend and currencies are in scope? • What languages are in scope? • What categories are in scope? • How has spend analysis information been obtained in the past? • Is supplier name standardisation required? If so, approximately how many suppliers do you estimate you have? • Is third-party content required? (Parent / Child, D&B, SIC, Risk ratings?) • Is there a standard spend categorisation scheme defined yet?

• What is the desired frequency of spend updates?



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Systems Landscape

• How many sources of information are available? AP, PO/MRO, PCard, Vendor, 3rd Party, Other? • What is the level of detail available from these systems? • Are transaction level details available? • Are transactions internally classified by system? • Who owns the systems? Describe your IT organisation; is it centralised or decentralised? Are there any existing processes in place to extract data? • Are there major changes going on the systems landscape? Major ERP rollouts?

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Documents

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category dashboard

spend360 architecture

category management

main dashboard

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contract dashboard

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