These
days,
every
vendor
and
his
dog
is
offering
“spend
analysis”
solutions
to
the
market,
but,
as
one
can
easily
guess,
not
all
“solutions”
are
appropriate
in
all
situations,
or
even
capable
of
producing
a
true
picture
of
spend
for
an
average
organization.
Therefore,
in
order
to
select
an
appropriate
solution,
one
has
to
know
what
to
look
for.
The
right
answer
is
often
elusive,
because
there
is
a
fundamental
lack
of
understanding
in
the
market
of
what
a
“spend
analysis”
solution
actually
is,
and
what
it
should
be
expected
to
do.
Depending
on
who
is
asked,
the
definition
of
analysis
will
vary
from
the
process
of
building
predictive
models
using
historical
data,
to
deciding
whether
past
events
or
transactions
are
statistically
significant,
to
sorting
through
haystacks
of
data
to
find
meaningful
needles
that
will
suggest
patterns.
Each
is
a
valid
definition,
but
it
is
not
necessarily
useful
to
an
organization
that
just
needs
a
better
understanding
of
what
it
is
spending,
where,
with
whom,
by
whom,
and,
more
importantly,
why.
From
a
practical
perspective,
spend
analysis
boils
down
to
“finding
stuff
in
your
data”
that
the
organization
was
not
aware
of,
or
was
not
sufficiently
aware
of.
Spend
analysis,
therefore,
is
the
process
of
deriving
insight
from
spend
data.
So how do you derive insight? You apply a well understood process to multiple data sets. Emphasis on “you” and emphasis on “multiple”. If the process can only be accomplished by a team of programmers in a back room, it is not useful from a business perspective. You have to be able to use the system to do the analysis you need to do. And if the system can only build one cube on one data set, then it is not a useful analysis system. Depending on your organization, there could be savings in the AP data, the invoice data, the HR data, or the ERP data. You don’t know until you look at all the data sources and build and analyze all the cubes.
So what does this mean from a system perspective? Find out in our article on What to Look For in a Spend Analysis System over on the new Next Level Supply site. True spend analysis is a fundamental requirement of a next generation supply management organization.