Daily Archives: August 26, 2014

There’s More Than 50 Ways …

… to leave your lover. There’s more than 50 shades of grey (as there is infinite intensity to grey-scale). And there’s certainly more than 50 shades of pay

Over on Spend Matters, Pierre Mitchell is penning a series on 50 Shades of Pay: Spend Analysis’ Many Profitable Pleasures where he notes that spend analysis is not a quickie event and nothing could be closer to the truth. Spend Analysis is an on-going process that never ends. There’s always new spend, always new quotes, and always new ways to look at data. It’s wham, bam, spend cube and start all over again. And again. And again.

And it must be an evolving competency that is refined over and over again. There are many reasons for this, and, as Pierre pointed out,these include the facts that:

  • You can’t manage and improve what you cannot see
    and the more you see, the more you manage, and the more you’ll manage, the more you’ll see …
  • It’s a fundamental part of corporate strategy as the more you see and manage, the better you’ll be able to manage your resources and opportunities, which is what corporate strategy should be focussed on.
  • Managing your spending includes internal spending too even if you can’t control it, you still need to understand what it is, where it is going, who controls it, what could be done about it, and what the recommendations should be.
  • Spend analysis is a gift for your partners – not an IT project because it really is decision support for the organization.
  • Spend is the flip side of supply and it is about maximizing bang (supply value) for the spent buck (spend magnitude). It’s the other end of the source-to-settle process. And to optimize your Supply Management, you need to optimize your entire source-to-settle process.
  • Finance will get even more turned on by spend analysis than you if you do it right. They like shiny reports — and a good spend analysis solution can produce them en masse. (The reporting engine is actually the least useful part of a good spend analysis tool, but just like Sonny goes cuckoo for cocoa puffs, finance and the C-Suite love their reports.)
  • Spend analysis shines a bright light on the master data problems which can be cranked up to the point that it’s blinding. Some people may be embarrassed at the mess master data is in (because they spent millions on a broken ERP), but what’s more import, their pride or your bonus (which requires the company to be profitable)?
  • It’s incremental in nature – the Trojan rabbit of procurement transformation. Just like the rabbit of Caerbannog, it looks cute and sweet, but, in the right hand, spend analysis is a vicious killer of inefficiency and waste.

If Pierre manages to write 50 pieces, it will shape up to be a great series for those of you who have Plus membership. For those of you who don’t, I’ll remind you that SI co-wrote the book on Spend Visibility with Lexington Analytics 3 years ago, and this book, which has garnered over 10,000 downloads since its release, is still available for free. I’m sure Pierre will get to more advanced topics in the later part of his series then what we covered in the book, but it’s a great start. And maybe by then you can convince your boss to pay for the Plus membership to read Pierre’s posts.