Aberdeen Group released its latest benchmark into spend analysis performance and approaches today. And, with more than 700 enterprises participating, it stands as the largest study of the subject on record. (At least to my knowledge.)

With that many participants, you’d expect to find some new kernels of knowledge. Indeed, several findings were new and inspiring. (We will cover those in the coming days.) Yet, the key takeaway from the study mostly reinforces what we already knew:

• Too few enterprises have efficient or effective spend analysis programs. According to the study, a full one-third of enterprises lack any formal spending analysis approaches.
• Even fewer utilize automation to make spend analysis an efficient and repeatable process. In fact, Aberdeen reports that nearly two-thirds of enterprises continue to collect, organize, and analyze spend data manually or with only rudimentary tools.
• Disparate data sources, poor data quality, and lack of standard procedures still chief barriers to spend analysis effectiveness. In fact, Aberdeen reports that nearly half of large enterprises have spend data tied up in six or more business applications and systems. And more than 70% of mid-size companies have spend data spread across two or more business systems.
• Enterprises under-performing in the area of spend analysis are at a significant competitive disadvantage. Aberdeen found that companies lacking formalized, automated, and repeatable procedures for spend data collection, classification, and analysis have less spend under management, yield significantly lower returns from their strategic sourcing programs, and have lower compliance rates.

One vice president of a large insurance company summed it up best: “If you take away spend analysis capability from a company, you might as well turn the lights out on the procurement department. Then all they’ve become is a transactional processing group that doesn’t add much value to the organization.”

Tomorrow we’ll examine what Aberdeen uncovered about the attributes of top spend analysis performers and the benefits they’ve achieved. In the interim, download a complimentary copy of the full Spend Analysis Benchmark report here.

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