Category Archives: Spend Analysis

Source-to-Pay+ Part 8: Analytics / Control Center

In Part 1 we noted that Risk Management went much beyond Supplier Risk, and the primitive Supplier “Risk” Management application that is bundled in many S2P suites. Then, in Part 2, we noted that there are risks in every supply chain entity; with the people and materials used; and with the locales they operate in. In Part 3 we moved onto an overview of Corporate Risk, in Part 4 we took on Third Party Risk (in Part 4A and Part 4B), in Part 5 we laid the foundation for Supply Chain Risk (Generic), in Part 6 we addressed the first major supply chain risk: in-transport, followed by the second major supply chain risk: lack of multi-tier visibility in Part 7.

In almost every article to date, we’ve highlighted that a key aspect of every risk management system is good analytics, and, in particular, a good control centre to manage the data, the analytics, and the insights gained from the analytics (as well as the plans created around those insights).

Capability Description
Graph (Analytics) Support Standard analytics based on numeric data is not enough. As we have illustrated through this series, risk is more than numbers, roll ups of numbers, and trends on numbers. Risk is relationships, risk is connections, risk is propagation, risk is feedback. You have to be able to track the impacts across chains that span entities, geography, and time.

The risk application must natively support graphs, graph algorithms, and graph analytics. It must be able to count the number of impacted nodes up and down a BoM, multiple BoMs, a chain, and multiple chains. From this, it must be able to calculate an impact of a delay, a shortage, and a catastrophic failure based on BoM requirements, production times, costs, and margins.
Multi-level Metrics and Trend Analysis Even though graph analytics is key for supply chain risk analysis, good old fashioned metrics and KPIs are still key for analyzing risk potential at a point in time, and over time based on changes (and comparison to past trends that have led to risk and failure). For example, an increase in delivery times in every shipment, decreasing raw material supplies going into a source supplier that provides a refined version of that raw material, increasing failure in key components, etc. all indicate increased risk.

The application must support the definition of metrics based on arbitrary formulas, roll ups, and drill downs. It should also support basic trend analysis, allowing for comparison between time periods, similar trends, and historical trends of interest. it should also be capable of projecting the trend for an arbitrary time period in the future based upon the current trend progression and the most likely continuation based upon correlation with similar and historical trends.
Real-time Data Monitoring & Automation The application needs to integrate with third party data feeds, get (near) real-time updates, update all of the metrics the data relates to, monitor the changes against alerts, update the trends, and determine if any updates indicate trends of interest, significance, or concern. This all needs to happen automatically.

The application must support an open API, support standard data formats, be aware of standard data records used in direct supply chain, integrate with third party data feeds for all types of supply chain (risk) data out of the box, and be able to normalize all of this data into a standard data store (warehouse, lake, lakehouse, etc.). It must support rules-based alerts, integrations, monitors, and workflows to allow for appropriate automation support.
Mitigation Plans The platform must support the definition of mitigation plans, with individual actions, objectives, and impacts. Mitigation plans should support multiple stages, actions should support detailed definitions and expected outcomes, objectives should support a metric-based definition, and impacts should support detailed cost definitions.

It should be easy to instantiate an instance of a plan when a risk event is detected or defined by a user, track updates in real time as new data comes in or users define new data, track the impact of a recovery action (if it decreases the time to recovery, etc.), and auto-generate progress reports on a regular basis, as well as roll up all of the impacts, and recoveries, for users who need it. It should also support the creation of what-if scenarios to calculate the potential impacts of a potential action (in a given timeframe), and allow for cost vs impact vs margin/profit improvement calculations to help an organization determine if the action could be worth it, especially if the associated chance of success is limited.
Surveys The platform also needs to support the creation of surveys that can be distributed to multiple parties up and down the chain to collect data for analysis purposes.

The surveys must be capable of collecting numeric, type-valued, and open-valued data, as required.

SourcingShark Wants to Give You Sourcing Insights That Take a Bite Out of Your Sourced Spending

Sourcing Insights was co-founded in 2017 by a CPO who knew the importance of spend-based insights for Sourcing Success and a technologist who spent over two decades developing P2P analytics and audit software who both saw the need for deeper insights into organizational spend for strategic sourcing, especially in direct material industries (as most of the [leading] spend analysis solutions on the market was focussed on indirect spend or analysis at the category level). Together they built a hybrid company that offers a leading spend analytics solution as well as expert services that can get you started and make sure you get the value out of the solution that you expect.

In other words, while Sourcing Insights appears to be just another spend analysis company, it’s not just another spend analysis company. The reason being is that it supports spend by commodity and/or part based spend analysis of the box, tracks price movement at the part/commodity level out of the box, and the definition of commodity or part-based plans out of the box. But first, let’s cover the basics.

The entry point to SourcingShark is either:

  • a customizable spend overview dashboard that not only summarizes spend by various dimensions (commodity, month, PO, supplier [group], etc.),
  • a commodity dashboard that summarizes the commodity codes / parts in the system, associated contracts, purchase order, (potentially) duplicate invoices, and other spend metrics of interest to the organization,
  • or a merged dashboard that combines all of this information into one dashboard and allows for filtering by commodity or organization (and soon to be organization/division groups)

From the supplier widget[s], you can dive into the vendor summary dashboard which can be configured to display the same information, but just on the vendor, or other vendor-specific information that we’ll discuss a bit later.

Before we dive into some of the more unique (out-of-the-box) capabilities of SourcingShark, we will note that they cover all of the basic out-of-the box reporting requirements that one would expect from a modern spend analysis application (for direct materials). This includes deep, customizeable dashboards for

  • invoice spend (vendor type, vendor, cost center, GL, creator, company [if you have a multi-level organization]),
  • PO spend (vendor, cost center, GL, company, part/commodity category, part/commodity, creator, etc.),
  • Invoice Analysis, and
  • PO Analysis.

However, the more/most unique capabilities revolve around (direct) vendor deep dives, part/commodity analysis (& price movement), and strategy insights.

When it comes to vendor deep dives, they have the following out of the box:

  • Deep Vendor Management where you can track deep (SIM level) vendor details if you want to, map vendors to all of the commodities/parts they supply, associate them with contracts, quickly see spend-based summaries by part/commodity, by GL, or Company (if you are a multi-level organization).
  • Vendor Score Dashboard which allows you to overview vendor performance as the platform can track on-time delivery, quality scores (based on disruptions, PPM, SCARs, etc.), commercial scores (based on supply agreements, cost improvements, financial ratings), and risk scores (if you have access to third party feeds to collect the appropriate data and define your risk model), and provide you with widgets to drill down into all of this data, which can also include metric-based summaries of all system data fields
  • After-The-Fact Vendor Summary which presents a detailed summary of after-the-fact purchases

When it comes to part deep dives, they have the following out of the box:

  • Spend Summary that summarizes the spend by part by vendor, invoice, amount, month, etc.
  • PO Spend Summary that summarizes the spend by part by vendor, invoice, amount, month, etc.
  • Price Movements that shows the price movement for (a category of) related parts over a time frame, with the ability to drill down by vendor, and see the potential savings if all parts were bought at the lowest price
  • PO Price Accuracy Analysis that shows the percentage of vendors, POs, and invoices which were accurate (to the PO or Contract)
  • Part / Commodity Deep Dive where you get just the part related spend and metrics, can define your part/commodity strategy, and track the success to that over time
  • Exportable PO-Based Purchase Price Variance Analysis where, for each part/SKU in the system, you can get the PPV for the time-frame of your choice using actual PO data

As alluded to above, they also support contract metadata management which allows a user to define all of the relevant data for contract, and spend, analysis; associate those contracts with vendors and parts; and define contract summary / analysis dashboards and reports as needed.

And, with their new release this month, they now support Part/SKU Strategies where an organization can capture their current and future sourcing strategies along multiple key dimensions, including:

  • target # of suppliers
  • suppliers under contract (not necessarily the same, you may want a spot-buy supplier just in case)
  • supplier reach (local, regional, national, international, etc.)
  • primary supplier award / supplier split percentage
  • desired volume incentive rebates
  • PPP Trend expectations
  • target savings

as well as track the project status, the communication status (with potential suppliers), the primary type of commodity sourcing strategy (contract renegotiation, multi-round RFX, etc.), and the primary price (commodity) driver, typically associated with a market index of the primary material (or material with the highest variability). It looks pretty basic when you first see it, but it’s incredibly powerful and useful and will likely evolve over time, especially when they add in full Bill of Material Support / (Sub) Assembly Support, slated for their next release (target 2024 Q1).

Finally, the team has the experience and the services to support your spend analysis efforts. They can handle all of your data refreshes, design your custom dashboards, and walk you through proper spend analysis methodologies, or even do the first pass for you, to make sure you achieve your organizational goals and have the knowledge you need to do spend analysis right going forward. Sourcing Insights might not be as old as the grandparent spend analysis vendors of the space, but they are already one of the best platforms out there for direct spend analysis.

Simfoni – Ascending the Scales in Spend Analysis

Simfoni has matured and progressed quite a bit since we last covered them on Sourcing Innovation back in 2017 (in our article that discussed when a quartet’s not enough), and has even progressed since the doctor last co-covered them on Spend Matters in early 2022 (although the site revamp has conveniently erased his author credit from many of the series he co-authored) in their most recent 3-part vendor analysis (Part I, Part II, and Part III). (Note that a Spend Matters ContentHub subscription will be required to view this three-part series.)

Since the early days, when Simfoni was essentially a spend analytics solution built on Microsoft Power BI with some roll-your own customized spend analytics capabilities embedded with spend analytics process expertise, they have added quite a lot of capability on top, including both out-of-the-box and some DiY (do it yourself) analyses as well as:

  • Extensive out-of-the-box opportunity assessments
  • Impact assessments regarding GHG, ESG, and CSR elements
  • Self-serve classification and taxonomy management
  • Advanced dashboards and custom data analysis
  • Sourcing pipeline management
  • S2C (Source-to-Contract) capability accelerated through its EC Sourcing Group acquisition, including the following:
    • Self-Source/Full e-RFX (RFI, RFP, RFQ, etc.)
    • Supplier Management
    • Contract Management
  • Workflow Routing & Enablement
  • Catalog Management & Creation
  • BuyDesk & Global Sourcing Support
  • Invoice Management
  • Performance Management & Savings Tracking

In this update, we’re going to focus on Simfoni Spend Analytics. We’ll cover their S2C capability (which we last covered in 2016 in our post on how EC Sourcing was getting ready to take the mid-market by storm, and the doctor last co-covered on Spend Matters in 2021 on their 3-part vendor analysis: Part I, Part II, and Part III), in a later update. Note that we will not be covering their Global BuyDesk, their back-office GPO / Procurement-as-a-Service offering, or their Tail Spend Management Services as we focus on technology products only in this blog. But if you’re short on Procurement People Power or Category Competence, we do suggest checking these offerings out. After all, there are advantages to using the same provider for software and services, especially considering the breadth of their platform which provides a complete history and additional advantages once you’re ready to take over self-sourcing and make procurement personal.

The first screen you see in Simfoni Analytics is the “Terminal” which is the cross-application dashboard that front-ends the analytics solution providing a jumping point into key metrics and insights from each module of the full Simfoni platform, including analytics, sourcing, supplier management, and contracts. The Terminal is configurable, with several pre-built out-of-the-box widgets to choose from, which can even include currency trends / heat maps, quick links into key parts of the platform, and even (third party) content feeds.

From the Terminal, the most common jumping point will be Analytics, which has its own landing page that provides the entry point for all of the built-in dashboards which include:

  • Insights: spend summary for the current month vs the prior month, and the same month one year ago (in terms of spend, transactions, suppliers, and other key data points)
  • Spend: classic spend summary (total suppliers, transactions, POs, categories, suppliers, business units, trends, etc.)
  • Geo Mapping: spend breakdowns by regions / countries (and visual bubble map overlays)
  • Trend Analysis: insight into spend trends by supplier, category, region, etc.
  • Category Console: spend breakdowns by category and segmentation by value bracket
  • Spend Distribution: taxonometric breakdowns
  • Commonality Analysis: supplier by count of entity analysis and associated spend
  • Supplier Normalization: suppliers by duplicate count / familying opportunity and impacted spend
  • Supplier Spend Profiles: spend analysis dashboard restricted to a single supplier, possibly augmented with risk, impact, or other customized insight
  • Tail Spend: a spend dashboard limited to, and customized on, tail spend including breakdowns by invoice groupings, vendor groupings, and transaction groupings for insights into spend type (contract/non contract, direct/indirect), variance, and transaction cost

and may also include:

  • Supplier Risk: a risk dashboard based upon integrated third-party risk data feeds (from Darkbeam, out-of-the-box with subscription, or bring your own subscriptions like BVD or Ecovadis)
  • Spend Impact: the impact of your organizational spend from an environmental or social perspective, provided you have the appropriate data feeds for the necessary calculations;
  • M&A Analysis: a specialized dashboard that allows you to compare spend between two entities and do an opportunity analysis
  • Custom Insights: a dashboard custom built for very specific needs unique to your organization

In addition to these analytical dashboards that provide deep insights out of the box, the platform also has some optimizer dashboards that include:

  • Opportunity Assessment where they use the results of all their analysis above to indicate top opportunities across supplier consolidation, one-time vendor elimination, supplier normalization, production commonality, catalogue buying (vs off-catalog purchases), PPV (purchase price variance), payment terms, and other actions (based upon a custom analysis they build for you upon implementation)
  • Supplier Consolidation opportunities by bottom level category as well as projected savings (and savings range) from consolidation to the lowest cost product
  • Purchase Price Variance by product along with savings potential by item
  • P-Card centric tail spend dashboards with spend, transaction, category, supplier, user, facility, etc. breakdowns for deep insight so that what happens on the P-Card doesn’t stay on the P-Card
  • Payment Terms analysis and impact from payment term alterations

And, since the early days, they have added a lot of self-serve data management capabilities including:

  • Category Management where you can define your categories (in a taxonomy)
  • Material Description Management where you can define standard material descriptions
  • GL Description Management where you define GL codes
  • Supplier Management where you manage supplier groupings (families)
  • Transaction Management where you can drill down to the transaction level and get full details and perform transaction-level mappings
  • Taxonomy Suggestions where new classification or change requests are tracked
  • Manual Classification where you can classify by supplier, description, material, and/or GL Description and where you can see the % of currently classified transactions, suppliers, and spend

Simfoni’s Spend Analytics capabilities are quite extensive, informative, and best of all, easy-to-use. If you’re looking for a best-of-breed spend analytics solution from a mini-suite vendor that also has strong procurement services, Simfoni is a vendor you should definitely check out.

There are NO Perils of Big Data in Procurement!

First of all, no organization has enough data, and those that come close don’t have big data.

Secondly, the more data you have, the better.

Third, if you think you have too much data, you’re not getting it!

So where’s this rant coming from? The rant-inducing headline du jour. The CIO Review recently published an article on The Perils of Big Data in Procurement which is complete non-sense, as there are no perils to having more data (because there’s never enough), unless it’s bad data (but the assumption in the article was that all the data was correct), just perils in terms of how that data is presented and accessed.

The perils in terms of how that data is presented and accessed can be significant, but that’s not due to having big data, that is due to poor system design — and that’s a different issue!

According to the article, buyers and procurement managers … have available a huge and unprecedented amount of data … [and] start to measure everything in order to manage it and that with this approach, several data lakes are created, feeding various dashboards, scorecards, reports, and metrics as procurement professionals try to understand spend analysis, price trends, market fluctuations, volume, cost savings, negotiation performance, and other essential factors. And this is true.

It goes on to say it is very easy for a person to be lost in the sea of numbers and details and miss the big picture entirely because you don’t know what is the crucial data that would give you critical insights. And if that wasn’t enough, it goes on to say it is the same as someone that enters the hospital with a broken leg but has everything else checked. WTF?

This is so dumb it makes you angry!

  1. If a person gets lost in the sea of details and numbers it’s because they don’t know what they should be looking for and how they should be looking for it, not because there’s too much data.
  2. If they don’t know what is crucial, it’s because they don’t know enough about the project they are doing to identify what’s critical and what’s not.
  3. What health practitioner is going to be so stupid as to not see a broken leg on a triage? Come on now! And what Procurement practitioner would check all but one dashboard randomly and then not check the last remaining dashboard? (And that’s what the article is implying with its ridiculous statement.)

In other words, the headline, and claim, is bullcr@p. Don’t blame a mountain of data for a lack of capability in your people, poor vendor technology choices (that bury you in useless dashboards), and your unwillingness to train your talent in modern technology and best practices so they can do their job properly.

And while the author is completely right in that you need to

  • understand what matters
  • start with a top-down view
  • have people who are good at interpreting the data

It still misses the point in that you need to, for any application you buy and any project you wish to undertake

  • define what’s relevant up front
  • find a solution that is configured/configurable to show that up front
  • make sure the data is easy to interpret, is accompanied with written guidance, and that your talent is trained on how to properly interpret the data and
  • if the goal is opportunity finding, the solution needs to identify and present the top opportunities across all of the analysis done, with deep supporting dashboards buried under the high level summary dashboard

More data is always better, especially if you want to use machine learning. In other words, it’s not the data, it’s the application, or the people, so don’t blame the data for your organization’s shortcomings.

Prices too High? Take a Leaf from the Green Cabbage!

Green Cabbage, formerly known as PAAS Advisors (which stood for Product Analysis and Strategy), is an interesting spend analytics offering as it is both a product and a service advisory practice. The platform provides unequalled insights into the indirect technology, contingent workforce, and clinical categories; deep invoice analytics down to the line item; market intelligence theses (MITs) on very specific indirect technology, contingent workforce, or clinical sub (sub) categories that are far deeper and fresher than any peers; and a third party negotiation (support) service (where they will negotiate at the Senior Executive/C-Suite level) to help you get the best contracts possible on key high-value contracts. That’s a lot to digest, but we’ll tackle each point in this write up.

Let’s break down the “practice and platform” part first, starting with their pricing model. Their pricing model is a variation of standard percentage of savings model — it’s a subscription model with a savings target and a guaranteed savings of at least 3X, which is better than just a straight cut of savings for you. If they don’t help you hit the savings target they promise, you will get a discount, or an extension to your subscription, but if you blow way, way, past the target (like many of their clients do), instead of paying more than 3X what you would have otherwise have paid through pre-negotiating a fixed fee for unlimited use of the platform, you pay the pre-negotiated subscription fee.

It’s important to understand their pricing model, as it drives the unique approach they take in their practice, which is designed to deliver savings to the clients that engage them for software and services as fast as possible. Most spend analysis companies start by attempting to load, cleanse, classify, and enrich all of an organization’s spend data before attempting to do any analysis or identify any savings opportunities. This can take weeks or months, which means its weeks or months before the first opportunity is identified. To allow them to start pursuing, and capturing, opportunities in just a few weeks, Green Cabbage starts by loading all of an organization’s contracts, starting with the Indirect Technology Human Capital, and Clinical Supply contracts, because the most immediate opportunities are where contracts are needed ASAP (because the organization allowed them to expire) or in the short term (as they are coming up for renewal), and in those categories where Green Cabbage are experts in finding cost reductions quickly.

From just the contracts, using their deep community intelligence provider benchmarks and market knowledge, they can identify the best opportunities to go after immediately in indirect technology, contingent workforce, and clinical supply categories. They can even negotiate on behalf of the client and often get savings better than their client would on their own due to their deep domain knowledge and years of experience analyzing and negotiating in these categories, usually with senior executives in the supplier organizations.

Once the contracts are loaded, only then will Green Cabbage begin to load and classify all of the organization’s spend data into their One Workspace Spend Analysis platform, which can be provided to them as flat file exports or loaded through an API. The organization can define their own categories and Green Cabbage will map the organizational spend to those categories. Once the spend has been loaded into One Workspace, the organization can build some basic spend reports to do some basic spend analysis on their own, export the clean categorized data to Excel files for local spend analysis, or use the customized workspaces with deep pre-built custom dashboards for Indirect Tech, Human Capital and Clinicals.

The Indirect Tech module is designed to help a buyer identify the current and upcoming projects based upon expired and expiring contracts that need to be renewed to support their organization. The main dashboard shows the buyer the YTD savings, the upcoming renewals by contract, the top suppliers by spend, key category metrics, and the primary actions that can be taken (such as upload a contract or request a MIT). From here, the buyer can click into the suppliers dashboard or straight to an indirect technology supplier dashboard that summarizes key metrics (last year of spend, lifetime spend, estimated spend this year, next key [contract] date, relationship length, agreement gaps, etc.), contracts, and visual timelines. From there, the buyer can click into a contract and see associated details or kick off a project.

In addition to the supplier dashboards, there are also spend analysis, renewal, project, and MIT dashboards. The spend analysis dashboard allows the buyer to create custom reports to slice the data by different dimensions. The renewals dashboard in the Indirect Tech Module summarizes the status of contracts coming up for renewal (queued, in review, out for sourcing, terminating, etc.) as well as the category breakdowns, spend by stage, and timeline summaries. The projects dashboard allows contract renewal projects to be created, assigned, and tracked while providing a summary view of all current projects. It also supports savings tracking by agreement. From a project, the buyer can click into the renewal details and access the current (draft) version of the contract for review, the reviewers, see any notes or documents they uploaded, and the activity log.

Finally, the MIT — Market Intelligence Thesis — dashboard allows the buyer to quickly access the completed MITs, month-over-month and year-over-year savings from projects based on the MITs, and key MIT metrics (in process, completed, estimated savings available, % discount from baseline, etc.). The Green Cabbage Market Intelligence Thesis is much more than just a benchmark, it’s a detailed sub-category analysis on a specific product or service of 1 to 2 pages done in near-real time by expert advisors that augments the benchmark data with deep vendor insights into the SKUs being purchased, market conditions, and negotiation strategy. The MIT is offered at three different levels:

  • lightweight: basic MIT as described above
  • comprehensive: lightweight MIT as well as a detailed analysis of standard/available terms & conditions
  • competitive: competitive MIT as well as a detailed analysis of top 3 competitors across similar SKUs and similar terms and conditions, with appropriate negotiation strategies and expected savings under different conditions

Unlike some providers which simply do this every quarter (Denali, SpendHQ, etc.) and provide this as a reporting service, or others that do fully automated real-time augmented benchmark production based on current data, trends, and standard practices based on the trends and current market conditions, Green Cabbage does a custom, semi-manual, MIT upon request within three (3) business days, and usually within one (1) business day, on every request to make sure the client always has the most up-to-date information appropriate to that client’s situation. They can do this because their platform automates the benchmark computations and their advisors are experts in the indirect technology and human capital categories and are analyzing and negotiating in the categories on a daily basis. As such, their analysts can turn around a custom analysis specific to a client’s situation in an hour or two.

However, as per our intro, Indirect Tech is not the only area they go deep. They also go deep in contingent workforce/staffing agency in their Human Capital module that more-or-less mirrors the Indirect Tech module with a main dashboard and dashboards on contingent workforce suppliers, human capital spend analysis, renewals, projects, and MITs. The main dashboard summarizes savings to date, percentage from baseline, forecasted spend (vs. actual for historical), top agency relationships, expiring contracts, and key metrics. The other dashboards are similar in purpose to Indirect Tech, but customized to Human Capital.

The main difference is in the MITs, where a contract owner / project owner can benchmark as many positions as they want in a sub-category or category for a given provider (should they be looking to renegotiate) or a small set of providers (should they be looking for true market intelligence or looking to negotiate with multiple providers and trying to figure out how to best split demand). The benchmarks are similar, wth all the benchmark data (which shows the low/medium/high averages, the service locations, the expected savings at each level) auto-generated. The only exception is the additional market/negotiation notes at the position level that is manually generated on top of the basic thesis information. Note that there is a limit to the number of positions if you want the guaranteed turnaround time, but if they have a few extra days, they have done detailed benchmarks of over 1,500 positions in the past, and with their deep insights, expertise, and negotiation skills obtained savings percentages typically only seen by providers who offer deep multi-level decision optimization across multiple national and regional contingent workforce providers. (We’re talking 30% range in some cases.)

(When you have deep benchmark data and powerful spend analytics, you can quickly divide contingent workforce needs among the providers best suited to offer those positions at a lower cost, use this data for fact-based volume-based negotiation, and shave off almost as many points as the best optimization engines without any mathematical modelling whatsoever, and not have to worry about if the split between the providers is one you are comfortable with.)

Other key features of the platform include:

  • Clinicals: which is their clinical supplies spend analysis module that is similar to their Human Capital Module (except the SKUs are clinical suppliers and not contingent workforce positions)
  • GC Legal: which maintains a standard set of Terms and Conditions clauses that specify exactly what different Ts and Cs means to the client (and helps the analysts do custom MITs and negotiation projects)
  • SKU Search: that allows the client to search for particular SKUs across their suppliers and contracts
  • Outside Data: that allows them to import additional data to augment their spend from third party products, with out-of-the-box integration options for a number of indirect tech (SalesForce, etc.) and contingent workforce (ServiceNow, etc.) providers
  • Invari: their invoices platform
  • End-to-End Security: all MITs, which are often based on organizational contracts, are done through the platform, where data is fully encrypted both in transit and at rest, and not through e-mail, FTP, or other unsafe data transmission methods employed by some other service/advisory firms

Let’s talk about Invari now. This is an analytics backed invoice management platform that allows an organization to upload, manage, and analyze invoices in real time. While it can support any category and supplier, it is designed to support their technology, human capital, and clinical supply categories and benchmarking in particular. When purchased, they request at least 3 months of invoices for all of your providers, and will accept up to 3 years of history if available in order to get enough invoices to allow them to train a custom model for every single provider so that, when an invoice is uploaded, it can be automatically parsed at least 95% of the time for immediate availability. Because models are customized per supplier per client, their system detects any issues and when the invoice cannot be parsed or key information cannot be found. When this happens, the invoice processing system kicks the invoice out to a manual processor who will fill in the missing information in under 3 hours and then update/retrain the model to prevent the same error from happening again.

In addition to allowing invoices to be immediately available for management and analytics in the future, these detailed models also allow the system to build up invoice profiles by supplier and the system can detect when an expected invoice is missing (because you always get a monthly invoice for a service by a certain date in the month), duplicated (because the spend profile is doubled in a month, etc.), or suspect (because it doesn’t fit the pattern).

The main dashboard provides an overview of key invoice KPIs (pending submission, awaiting approval, total count, unresolved, missing), an overview of missing invoices (so immediate action can be taken), a summary by providers, and a summary of top variances.

The approvals dashboard shows all of the invoices that need to be approved, along with variances from the best “prior” invoice, colour-coded on the green to red spectrum (so you can quickly see if there is a likely price issue even before drilling in to the invoice). On this screen, you can quickly pop-up the six-month history for more details on the variance and trends and pop-up the invoice summary window that summarizes billing arrangements (from the contract), line items, and sub-charges.

Fore more details on costs and variances, you can dive into the invoice analytics dashboard that provides a variance report across suppliers over the past X months (on a green – red spectrum that represents decreases to increases) that also clearly identifies new charges (in yellow) so you can see where regular billings start or change. From here, you can dig into a supplier and see the same breakdown by line item / SKU, and then, in that breakdown, you can drill into a particular line item / SKU and see the same breakdown across the sub-charges. For example, at the top level, you see all your providers. When you drill into Your-BroadBand-Provider, you see High Speed Service, Mesh Network Rental, Taxes and Fees. When you Drill into High Speed Service, you see monthly service fee, modem rental, and fixed IP lease. And, of course, you can also search across contracts for specific SKUs and set up alerts when new variances are detected off of new invoices.

At this time it’s worth pointing out that in Indirect Tech, Green Cabbage does true micro-SKU benchmarking, unpacks all of the different offerings in a SKU offered by a tech provider who might include multiple modules in a SKU or a broadband provider who will pack in rentals with subscription fees, and can tell when a provider changes a SKU description or composition. This allows it to do price benchmarking (or at least price range benchmarking) across individual products and services and provide more finer grain details and guidance than the majority of its peers, even in the specialized SaaS market.

And while Green Cabbage might not be a common name in S2P, or one getting a lot of buzz from the analysts, they are bigger than you think. Serving eight (8) of the top ten (10) private equity firms in the US and four (4) of the top private equity firms in Europe, global consultancies like KPMG and BCG, along with other big name Fortune 1000 clients, they have over 500 Billion of spend under management (which is sizeable when you consider that Coupa, that claims to have the most, only has about 4 Trillion in global business spend data), over 1.25 Billion data points, and over 13,000 benchmarkable suppliers in their categories of expertise. That’s very significant, very powerful, and allows them to identify large cost reduction opportunities and negotiate them for you at contract renewal time. (And if you don’t have the volume on your own for significant savings, they also have a group purchasing offering called Receptio that you can look into. Note that since this blog covers technology, we won’t be covering Receptio in this write-up.)

The main weakness right now is that the API is only for getting data in. They are working on extending it to get data out, but there is no timeline for that yet. This is critical for a number of reasons:

  1. their contract management is limited to file uploads and metadata and it would be very useful if they could push rates, benchmarks, and standard Ts and Cs to a contract management/governance platform to support creation, negotiation, and ongoing management of contracts outside of renewal projects
  2. spend export is limited to Excel / flat file dumps; while their tool is good, it’s not BiC for generic spend analysis, especially outside their core categories, and neither is their categorization knowledge beyond their core categories — depending on the spend, it’s not guaranteed to be accurate beyond level 2 or 3 (of a 4 to 6 level UNSPSC or equivalent hierarchy), so if the organization has some very specific or detailed indirect or direct categories it needs deep categorization for, this will have to be done in an external tool (where you can classify to a lower level, do more detailed analytics, and then push the refined data back) and you need Green Cabbage to be the single source of truth (because it allows you to do invoice management and deep invoice analysis and keep your spend data up to date)
  3. you can mark a category or contract as in Sourcing, but there is no connection to an external sourcing tool

We will note that they have indicated they are working on expanding the API for pushing/pulling data out, and that their first priority is to push appropriate data to a contract management platform to allow for contract creation, negotiation management, and governance (as all the platform supports around contracts is file-based uploads and meta-data). Hopefully they finish this by the end of the year and can start extending the API for export of all data in the first half of next year as an organization needs a single source of spend truth and there are lots of great DiY spend analysis tools (like Spendata) that could connect to the Green Cabbage platform for one-off category analysis where Green Cabbage doesn’t provide detailed benchmarks (or support easy/refined classification).

In other words, if you are in an industry that makes heavy use of indirect technology (SaaS, Cloud, etc.), the contingent workforce, and/or clinical supplies and you want a service-based spend analysis offering that can help you find deep savings based on real-time competitive benchmarks and on-demand category analysis, and even use their manpower to capture those opportunities for you, you really should check out Green Cabbage. There’s really no one like them in their categories of expertise.