Daily Archives: August 2, 2009

Today’s Spend Management Priorities ARE Today’s Spend Management Priorities

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This spring, Ariba conducted a survey across 225 Procurement and Finacne executives across a variety of regions, industries, and company sizes to determine the spend management strategies and approaches that companies are adopting to cope with the global economic recession. What they found, as chronicled in their white-paper on The Return to Profitability, shouldn’t be surprising:

  • Identifying savings opportunities faster is the #1 focus for most companies
    Companies are looking for a quick ROI and immediate savings to demonstrate the value of spend management before seeking executive support and funding for a wider roll-out.
  • Increasing spend under management is a key initiative for most companies
    Companies are recognizing the advantages of more spend under management.
  • Automating procurement processes is becoming a top priority for many companies
    Almost two thirds of respondents listed the need for automation across the entire source-to-settle process in their top five priorities as they are feeling the pain of depending on paper and people-intensive processes.
  • Mitigating risk and managing supplier performance is critical
    Concerns range from meeting customer demand if critical suppliers are interrupted to reduced supplier innovation to deteriorating quality and service.

Ariba, which has adopted their own variation of the best-in-class, leaders, and laggards classification of Aberdeen with their pioneers, survivors, and stragglers classification, found that pioneers had over 75% of spend under management, made moderate to extensive use of technology, and had over 50% of suppliers under a formal management program while stragglers had less than 25% of spend under management, made low to no use of technology, and had less than 10% of suppliers under a formal management program.

As a result they made the usual recommendations that organizations should:

  • improve spend visibility NOW to help identify savings opportunities faster
  • make procurement automation a top priority to maximize savings and compliance
  • not be afraid to get outside help to capitalize on current market conditions

So what does this mean?

It means that you need to take action now to avoid falling further from the path of profitability and recovery. Because when software companies are spending tens of thousands of their own money to verify analyst results, which have been cross-verified by multiple analyst firms, it means the results are right and that you have to take action now.