Spend Analysis Vendors Versus IT Spend Analysis Projects

  

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To approve Spend Analysis projects, project sponsors often need to justify to their management why they need to utilize Spend Analysis providers to do the project, as opposed to internal IT resources. Some companies may not have this problem in that they don’t have IT resources available, so it is obvious they need to use outside help. But sometimes there may be conflicts internally. The simple answer to why Spend Analysis providers should be used is that internal IT resources usually do not have the focused experience and knowledge regarding the unique data cleansing and classification needed for Spend Analysis.

Internal IT resources typically have;

1. Familiarity with the corporate data sets and applications
2. Familiarity with the corporate IT environment
3. Familiarity with a corporate reporting tool

Internal IT resources likely do NOT have;

1. IT resources can easily provide data files, but Spend Analysis vendors are more experienced with integrating and reconciling organizational data to specific Spend fields needed to properly drive meaningful Spend Analysis. Significant relationships exist between Spend data, and vendors know what to look for. They also have structured tools to process the data effectively.
2. Experience with cleansing data – for example, the many different ways FedEx is represented in your Spend data set.
3. Experience with Supplier Grouping. Not knowing parent/child relationships can reduce savings opportunities when negotiating contracts.
4. Experience optimizing Supplier data enrichment from vendors such as CVM Solutions or D&B.
5. Experience with data classification, handling numerous taxonomies for analysis, and grouping Spend data into meaningful sourcing categories for category and sourcing managers.
6. Experience with structured data “refresh” and handling the nuances of combining, re-cleansing, re-grouping, and reclassifying data with rigor to all the taxonomies in use.
7. Experience in foreign languages and associated data processing and translation.
8. Experience in mining and reporting in-depth level s of “savings opportunity assessment and identification” versus basic pivot tables and cubes.
9. Internal IT resources usually do not have authority across divisions and countries to get data, so a vendor can help to make the integration and change happen.

Spend Analysis vendors provide focused tools and resources to implement advanced Spend Analysis within your organization, and can be utilized effectively in place of internal IT resources. And the cost is usually less than 1 or 2 full time equivalent headcount, which is a bargain as you discover savings opportunities.

Rod True, COO, Spend Radar