Paris Hilton may be on her way out, but spend analysis has mounted a comeback that rivals Tony Bennett’s.

Interest in spend analysis approaches and solutions have reached an all-time high. As noted here, 300 supply managment execs recent cited improving spend visibility and analysis as the top of their Top 5 Supply Strategies prioritized for the next two years. And the blogsphere is jammed with posts and outright brawls on the pros and cons of spend analysis. (Is it me, or does it seem that every third Spend Matters post seems to touch on the subject? Just kidding, Jason.)

The latest evidence comes from Aberdeen Group’s new report, The CPO’s Strategic Agenda (available free here). According to the study, 72% of CPOs will prioritize spend visibility initiatives as their primary lever for increasing spend under management. Writes report author Vance Checketts:

“Accurate spend data is perhaps the most powerful tool for CPOs as they work to gain executive support and end user compliance.”

Vance focuses most of his analysis of this subject on the importance of being able to support role-based views and analyses of spend data. He pushes supply management executives (and spend analysis solution providers) to present spend data “in the same terms that enterprise financial performance is measured,” such as earnings per share (EPS) for public companies or net income or profits for private firms. Vance also takes a page out of Straight to the Bottomline, recommending that spend data be linked to return on invested capital (ROIC), weighted average cost of capital (WACC), and economic value add (EVA).

This is sage advice. For supply management to sustain its increasingly strategic role, supply metrics and performance need to be intricately linked to the overall metrics and performance of the company.

However, a CPO quoted in the Aberdeen report highlights an issue that can’t be overlooked: the best analytics and reporting capabilities are irrelevant if you don’t have spend data that is accurate, complete, and classified to a common schema that detailed enough for meaningful analysis. (How else can you build all those pretty charts for the CFO?) Says the CPO: “Even with the global rollout of our ERP system we don’t have full spend visibility. The problem is the difficult end users have categorizing non-catalogable spend. A similar problem occurs in AP with master agreements and summary billing when there are no requisitions or POs.”

This is not isolated commentary. The deficiencies of ERP-based spend data analysis has been highlighted here in previous posts. Earlier this week on the Jumpstarting Spend Analysis Success webinar, Pricewaterhouse Cooper (PwC) consultant Jason Josko said, “ERP systems were built for high-level financial analysis. The attribute and classified data procurement managers require to develop informed sourcing strategies is often missing [from standard ERP reporting].”

These comments were echoed by Greg Shifflet, Director of Enterprise Spend Management at Alliant Tech Systems, who shared his company’s spend analysis strategies and experiences on the same webinar. To listen to a replay of the webinar, click here.