Sourcing and Procurement

Unlocking misconceptions and realities of spend analytics

There is much more to procurement than getting vendors on board. Global procurement leaders are aware of innovation and digital transformation that spend analytics brings to the table. Successful procurement organisations are four to five times more likely to have a fully deployed advanced analytics and visualisation solution. High-performing Chief Procurement Officers (CPOs) are dealing with procurement challenges head on by using spend analysis in supply chain management while simultaneously meeting a high number of KPIs. However, a cloud of misconceptions still looms over the value proposition of spend analytics for many businesses, which hesitate to undertake this transition. Let’s understand the common misconceptions and the value of spend analytics.

Common spend analytics myths

How you implement a spend analytics solution depends on the organisation’s structure and its business requirements. Many business owners fail to reap the benefits due to the following myths around spend analytics.

The business has the expertise to manage spend analytics in-house

Spend data comes from different sources spread inside and outside the organisation. These sources include:

• Accounts payable (AP) systems
• Purchasing cards (P-cards)
• Travel and expense data
• Payment consolidators (transportation, utilities, etc.)

Traditional spend analysis methods often perpetuate spend analytics myths by failing to provide a unified view of where spend data actually resides. Managing spend is not a one-time process but an iterative data exercise. Optimising spend data that is spread across systems, departments, and geographies is a tedious task,  which demands a structured approach. It is beyond the scope of a traditional IT consulting engagement. Understanding the nuances of procurement and spend analysis requires specialised skills. You also need data handing technology, categorisation taxonomy design, technologies such as artificial intelligence (AI) and machine learning (ML), and other automation technologies to create repeatable processes. Even for large companies, it is not cost-effective to try and build this capability in-house.

Spend analysis is just BI for procurement

Many businesses have already invested in advanced business intelligence (BI) technologies to replace the use of in-house tools and MS Excel. One of the goals of BI is to engage in data-driven analytics. However, a study by a leading research and consulting firm has concluded that 87% of organisations have low BI and analytics maturity. BI tools are not meant for a specific business function such as spend analytics. They do not provide insights such as complete spend visibility, as well as lack procurement intelligence and demand expensive manual vendor resolution and categorisation.

A ‘spend suite’ will fulfil all spend analysis requirements

Some strategic sourcing or source-to-pay suites have spend analysis as one of their many offerings under a single umbrella. However, one of the common spend analytics myths is that these suites provide a comprehensive solution for all businesses. Often they treat spend analytics as a minor component rather than a crucial source of business data. These suites assume that all information flows through a single system, arguing that placing all data analytics under one roof enables better data sharing. However, spend data rarely arrives in a clean, normalised, and categorised state.

A spend analysis system automatically extracts complicated and extensive procurement data from all sources. Once the extraction is complete, the system uses AI to cleanse and classify. It happens according to the rules and in consultation with the decision makers. Intuitive and user-friendly dashboards display the categorised and cleansed data. They contain a range of graphs and charts that help you identify opportunities for savings, operational inefficiencies, and maverick and tail spend.

For organisations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed on organisational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like a living organism will be imperative for business excellence going forward. A comprehensive, yet modular suite of services is doing exactly that. Equipping organisations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organisations that are innovating collaboratively for the future.

How can Infosys BPM help?

The ProcureEdge platform by Infosys BPM enhances spend visibility across categories, products, and business units. It is an AI-powered spend intelligence platform to assist businesses in their holistic digital transformation. Its main features are:

• Data ingestion, cleansing, and de-duplication
• Spend classification leveraging AI and ML models, rule-based engine, and industry knowledge
• Actionable insights and opportunity identification
• KPI scorecard, root-cause analysis, and mix-and-trend dashboards

View the spend analytics services from Infosys BPM.