Twenty years ago we wrote a post on how to get the most from your spend analysis system, and the reality is that not much has changed. In fact, AI has only cemented the need for the foundations.

Twenty years ago, we essentially told you the keys were to:

• streamline the tactical
• focus on strategic analysis that always delivers

And those haven’t changed. Because:

1. With AI overloading you, you need to verify, or dismiss as fast as possible, which means tactical should be quick, easy, and effective.
2. With AI vendors claiming they can replace you, it’s critical to start with analyses that deliver results to prove the power of manual analysis.

We’ll review the tactical capabilities that are still super relevant and the strategic capabilities you should always keep in mind.

Your tactical skills with respect to the following should be best-in-class with leading peers:

• (sub) cube creation off of the primary cube (using inheritance)
• re-classification, derived dimension creation, and view modification
• baseline and compound view-based report creation
• direct integration with the contract repository, supplier management system, and external data feeds
• automated maverick spend and override approvals

Your strategic skills with respect to the following should be second nature:

• overspend calculation on “best price” agreements against market prices offered by the vendor through other channels
• purchase order vs invoice vs payment analysis for overpayment recapture
• outlier analysis tuned to (potential) fraud identification (both internal and external)
• loss prevention (repair vs. replace analysis, keep vs. return analysis, price reduction vs. charity donation for write off analysis, etc.)
• compliance analysis (right products/services being used, payment terms being adhered to, etc.)

But, most importantly, your perception skills need to be top notch. When the AI spits out an opportunity, you need to:

• identify precisely not only what the AI thinks the opportunity is, but how you would verify it, and if the opportunity is real, capture it; but if not, disprove it quickly
• when the opportunity turns out to be false, identify the direction the AI was heading, what the AI got wrong, how to identify such errors instantaneously in the future, and what direction to give to the AI handlers to stop wasting your time with obvious garbage
• how to identify the gaps in what the AI analyzes to find opportunities even faster than the cognitive atrophied team driving the AI

While the AI can kick off the tactical, and support some of the strategic, it should be clear that it falls short in all three categories, and doesn’t even scratch the surface where real perception is required.