In Part 8 we briefly reviewed the major modules in Source-to-Pay in an attempt to identify which module to work on after e-Procurement, and concluded that you select Spend Analysis, and start using it (even without integration) as soon as possible because. Spend Analysis not only helps your organization identify its best opportunities, but also what module should come next (in terms of implementation and integration).
Then, in Part 9 we elaborated on our comment that spend analysis can help you identify the most important Source-to-Pay modules for your organization based upon the types of opportunities that are identified. We identified situations in which Supplier Management, Contract Management, Risk Management, Source-to-Pay, and even I2P is relevant to capture opportunities. We did this to illustrate the criticality of getting going on spend analysis as soon as possible.
The next step is to identify what you need in a spend analysis solution. But before we can do that, we need to review the basic spend analysis process:
- Extract
- you need to extract the relevant data from the relevant applications
- Load
- you need to load the data into the spend analysis solution (and map it a starting taxonomy)
- Structure
- you need to structure the data for the various types of analyses you want to perform
- Analyse
- you need to perform the analyses and get insight
- Act
- you need to take action, which involves initiating processes, tracking progress, and getting results
Looking at this process, you need whatever functionality is required to
- Load,
- Structure and
- Analyze the data
Most older platforms don’t support modern API hooks or data transfer standards, so the reality is that you will need to export the data from those platforms, and there will be limited “extraction” in the spend analysis platform beyond support for requesting data through an API in the standard format the spend analysis tool supports and the API calls the spend analysis tool supports. As a result, the “extraction” part of the process is mostly outside the scope of the spend analysis tool.
Similarly, most organizations will have, or want, to use other tools to create projects, assign actions, track progress, and so on. As a result, the “act”ion part of the process is often mostly outside the spend analysis tool with, of course, the ability to push the results out in a standard format through a supported API.
Thus, in order to define a solid spend analysis baseline, we need to define all of the functionality to
- Load,
- Structure and
- Analyze the data
and, most importantly, do it in a manner that
- supports efficiency.
In other words, the last thing you want to do is have to repeat the entire process every time data is updated or re-classified in the source system. In our next installment, Part 11, we will review the core functionality required for each of these four core requirements.