Supply Excellence — Aberdeen’s Spend Intelligence Report: There’s Gold in Your Data!

Aberdeen’s Spend Intelligence Report: There’s Gold in Your Data!

July 14th, 2006 · by Tim Minahan · No Comments · best practices, spend analysis

Aberdeen Group’s second benchmark on spending analysis, “The Spend Intelligence Benchmark Report, Turning Data into Action“, has just hit the wires. (I oversaw Aberdeen’s first benchmark on this subject back in 2003. I also authored Aberdeen’s spend analysis best practices study in 2004.) I have asked Rod True, president and CEO of Supply Excellence’s newest sponsor, TrueSource to share some of the highlights of the new study. A 30-year IT veteran, Rod has been a successful practitioner (at Abbott Labs), consultant (at Ernst & Young), and software solution provider. Here are Rod’s thoughts on Aberdeen’s latest study:

The Market is evolving! And Aberdeen has done the best job to-date defining what is going on in the evolution to Spend Intelligence. Companies are beginning to see that the real value is way beyond basic top-level Supplier and Spend information.

The “end game” of Spend Analytics, Contract Creation, Sourcing, and Supplier Enrichment efforts is to capture all that activity and information, and channel it all into a holistic commodities Program Management. Repeatable, structured Program Management allows a company to measure and churn “source-able” spend to capture savings over the long haul. It provides the structure to continually improve the company’s knowledge base, their processes and efficiency, and the company’s overall effectiveness with what and how items are acquired.That’s how to become “Best-In-Class.”

Abbott Laboratories is one such company – also identified in Jim Collins bestselling business book, Good to Great. Abbott has automated Spend Intelligence since 1999, and has experienced tremendous benefits in channeling their automation and processes around their “Long Range Plan”, which is centered in the many Commodity Programs they are managing across their commodity base.

Aberdeen’s benchmark most companies (53%) companies do not have Spend Intelligence Automation or are only in the “early phase” of developing it. Instead, these companies rely on manual heavy lifting backed basic Excel spreadsheets and jerry-rigged Access databases to aggregate, classify, and analyze data. Such rudimentary tools make it difficult if not impossible to get accurate, timely, and detailed visibility into spending data on a repeatable basis.

However, Aberdeen found that enterprises are cognizant of their shortcomings. Leveraging Spend Intelligence solutions to enable repeatable and accurate spending analysis to support category spend management programs is now on the map, with 35% of supply managers saying they are budgeting for such investments. This level of demand was not apparent in previous studies by various analyst groups.

Spend Analytics is the top area enterprises have queued up for investment, with 73% of those budgeting investments in Spend Intelligence solutions saying their purchases will be in this area. As a solution provider, we can corroborate this finding based on the demand and interest we see that in the market place. But executives also are beginning to recognize that spend analytics is part of the overall supply management toolkit and a critical first step to get to category spend management programs in place.

Given that some vendors on the market have worked in this area for 10 years, and have automated/perfected software around this area, it makes sense to leverage all that experience and expertise to get to the “end-game” now. That’s where the exponential value lies.

Integrated software toolkits including Spend Analytics, Contract management, e-Sourcing, Supplier Portals, Supplier Enrichment, and Program Management as the end goal, are the necessary components to get there. The total package truly pays for itself in a short amount of time and, in the words of Aberdeen, “Turn Data into Action”.

Aberdeen’s Spend Intelligence Benchmark Report is valuable reading to benchmark how your organization can be “best-in-class”.

Thanks, Rod. With global economic challenges, compliance requirements, and ERP consolidation (and stalled e-sourcing programs), spending analysis is among the most in-demand solution areas. Aberdeen’s benchmark is indeed a valuable resource for any executive looking to improve spend visibility and control.

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