What is Spend Analysis?
The methodical process of mining, refining, categorizing and analyzing expenditure data with the intention of increasing efficiency, decreasing procurement costs, and monitoring compliance is spend analysis. It is also necessary for optimal functioning in areas such as inventory management, planning, and budgeting.
The foundation of spend analysis is based on 3 main areas-
Here are some ways that spend analytics can improve areas in your organization :
To Deliver Savings
To be able to deliver savings while sticking to the same method of service is close to impossible. Providing customers with the same goods and services while making room to deliver savings is no easy task. Negotiation can only go up to a certain point when it comes to vendors. Whereas with spend analysis, you receive great insight over spend data while being able to identify opportunities that previously weren’t visible to you.
Improvement of Processes
Processes can be improved to a great extent using information gathered by spend analysis. Spend Analysis data will allow you to make an informed decision on how processes within your organization could be superiorly enhanced. Apart from improving existing processes, spend analysis data could help substantially while implementing new systems. Not only with configuration, but also spotting people or departments that would help generate an ROI most effectively.
Management of Maverick Spend
Contracts post signatures tend to be downgraded to a filing cabinet or an E recording system where it is ignored until needed. With spend analysis data, there will be a way to effectively track and identify-
- Non-contracted spend that is non-compliant by legal or internal procurement standards
- Spend with non-contracted vendors in categories where a contract is available
- The sub-sects of spend that have no contract in place but have many suppliers
- Other areas of maverick spend within the organization
Overseeing of travel and petty expenses
Spend analysis data allows companies to facilitate methodical expense management. With spend data that is extracted through technology(such as spend and expense management apps) companies have been able to view travel and petty expenses in real time, allowing them to leverage spend analysis data by making budget cuts or spot out-of-policy spend.
Application to multiple business areas
There is a clear and defined link between spend analysis and the successful running of any organization on the whole. Methodically mined spend data results in accurately efficient spend and expense management. The strategically carried out process leads to the smooth functioning of every organization, on the whole, carefully safeguarding its financial well-being.
Organizations are accelerating their spend and expense management capabilities by attaining spend data classification and cleansing applications. They are also boosting their spend data management game by partnering with spend data management services. An effective spend data management service would ideally have resourceful aggregation; competent weeding and cleansing, and clear visibility of historical and present spend data. With the rise in technology, a spend management app is the ideal solution that caters to all these categories while providing your organization with other spend and expense management applications.