In the recent webinar, Correcting Your Spend Vision with Visibility, Mickey North Rizza, research director with AMR Research, discussed implementing spend visibility tools to bring more spend under management, gaining competitive advantage through analytics.

During the webinar, we received three really great questions from our audience, and wanted to share Mickey’s responses covering maverick spend, data cleansing, and influencing C-level executives regarding ERP-based spend solutions.

Q: Can you further explain how spend visibility reduces maverick spend?

A: Once you have identified the spend with the analytics solution and drill into it, maverick spend will show up within each category and by supplier. Once this is identified you can review the buy, supplier and also why the decision was made. It is then that you can understand the behavior and take the appropriate action internally to address it.

Q: Where do we start data cleansing for a procurement organization that has been existing for decades but is now looking at spend analysis as a greenfield area?

A: For buyers investigating potential applications, we recommend the following:

• Understand the business problem that needs to be solved.
• Know your short and long range term goals.
• Collaborate with IT on the systems and strategies for implementation and ongoing use.
• Consult with your analyst advisory team on best practices and vendors.
• Ask each vendor for references.
• Prototype several applications before selection.

Q: Influencing CFO’s/CIO/CPO’s that an ERP-based Spend database is really not procurement Spend Analysis is one of the biggest hurdles. What do you see as the primary differences between the two?

A: First, you need to articulate the difference between a database of data vs. an organized approach of information that was data and has now been classified, cleansed and enriched. This is the key differentiator!

Second, this ‘clean’ data is now your foundation for all strategic sourcing activities. It provides an opportunity to assess each category, suppliers, contracts, terms, etc and set up your strategic sourcing plans.

Lastly, the sourcing plans are utilized within sourcing and with the various stakeholders to find even more opportunity using demand management and lean techniques, and working with suppliers for better relationships and efficiencies. 87

If you missed the event, you can view the replay here. For Q&A responses from other speakers, including James Mortimer, group supply chain manager at Rexam, visit the spend visibility blog on the Ariba Exchange.

Caroline Robinson has been in the spend management industry for four years and currently manages Ariba’s external webinar programs, focusing on thought-leadership and best practices.