Spend Analytics

The spend analytics approach to strategic sourcing

Strategic sourcing helps companies form alliances with suppliers. Companies know what the best time for sourcing and requesting proposals is. It offers rich insights into a supplier’s quality and risk mitigation propositions. Corporations can expect better supply chain management, lower cost of products, and higher resilience to any contingencies with strategic sourcing.


What is spend analytics?

Spend analytics is an essential component of strategic sourcing. It uses real-time data and analytics to identify, gather, cleanse, group, categorise, and analyse an organisation’s expenditure data.* It aims to decrease procurement costs and improve efficiency through better visibility of the sourcing ecosystem. Spend analytics also improves contract compliances and cycle times and reduces maverick spending


How to use spend analysis for strategic sourcing?

Spend analytics use three core steps - visibility, analysis, and process - to identify what you spend, where you spend, and the ROI on that spend. Let’s understand each of these steps:

  • Gain end-to-end visibility of spending:
  • A structured approach to spend analysis always works. Whether it is the first or the twentieth spend analysis, the best way to successfully analyse expenditure is to define KPIs. Some of the KPIs could be savings, cost reduction outcomes, cost avoidance on non-essential activities, managing spends, maverick spend tolerance, contribution to total spending, contract pricing with suppliers, variation from the expected purchase price, and supplier management and performance.

  • Analyse the spending data:
  • Once you source the spending data, use intelligent dashboards to analyse and consider leveraging it to get competitive pricing and the current status of your expenditure. This can help improve your relationship with the suppliers that were playing an important part in your business. CPOs and CFOs can analyse this data to spot trends, manage inventory, plan budgets, predict the outcomes, and set a strategic sourcing roadmap.

  • Use fact-based outcomes to improve processes:
  • At this stage, you begin to implement a better course of action wherever necessary. Use the outcome of your analysis to change parameters for decision-making in strategic sourcing.


The outcome of the spend analytics approach

Spend analysis is a valuable exercise that contributes to overall strategic sourcing. Its tangible outcomes are:

  • Comprehensive reports about suppliers and spend patterns

  • Opportunity to reduce spending and consolidate suppliers

  • Information-driven compliance management

  • Real-time view of pricing trends among suppliers

  • Better strategic sourcing decisions in real time

  • Improved cycle time and supplier management

  • Detailed view of all indirect spending

A spend analytics platform focused on strategic sourcing gathers information from disparate systems to create a single source of truth of the company’s spending. This includes information related to IT, travel, infrastructure, raw materials, administration, leisure, office supplies, transportation, and more.

Modern systems use artificial intelligence (AI) for higher processing speed and accuracy. Natural language processing (NLP) handles information that involves human speech and languages. Machine learning (ML) uses trained algorithms to rapidly process and categorise new data sets.

How can Infosys BPM help?

The Infosys BPM spend analytics services augment the procurement ecosystem of an organisation with the help of ProcureEdge. It is a state-of-the-art solution that uses AI/ML algorithms for data management and opportunity identification. ProcureEdge identifies the gaps and presents actionable insights in terms of risk moderation, cost optimisation, compliance, and supplier performance. Its key components are:

  • Data ingestion, cleansing, and de-duplication:
  • Source data from internal procurement systems using pre-built connectors and automate supplier and product harmonisation. Use our AI domain expertise for data-cleansing, quality checks, transformation, and de-duplication.

  • Spend classification:
  • Use a rule-based approach and the S&P industry knowledge with an ML model to achieve accurate classification.

  • Actionable insights and opportunity identification:
  • Use dashboards and intuitive interfaces to shift from a descriptive to a predictive approach. Identify and validate improvement opportunities and monitor real-time procurement health status using a KPI-based method.

View our spend analytics solutions with KPI scorecards, mix-and-trend dashboards, and root-cause analysis.

*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 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.


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