In the first three parts of this series, we introduced you to SpendHQ, a spin-off of Insight Sourcing Group (ISG), one of the strongest, but yet most overlooked, players in the spend visibility and analysis space from a software and services solution viewpoint. Introduced is the operative word here as we only reviewed the features of the product at a high level — each tab of each module has many more features, options, and capabilities than we reviewed, as our goal in this initial series was just to outline the capabilities of a solution that has been under development for close to a decade. Unlike most spend analysis solutions that were designed and built by sourcing solution providers, SpendHQ was designed by sourcing and spend experts and implemented by a development team experienced in the implementation, and integration, of sourcing and spend analysis solutions.

The solution, which so far consists of a spend visibility and category management module, soon to be accompanied by a contract (metadata) management module that will allow an organization to track contracts, associated prices, and expiry dates (and associate them with managed spend categories), as any expert in spend visibility and analysis knows, is only as good as the data it contains.

Fortunately, SpendHQ manages the entire process and has a good handle on the matter at hand. From consolidation through normalization, categorization, cleansing, and enrichment to cube building and release, the SpendHQ team is experienced at the end-to-end lifecycle.

And, moreover, they recognize that this process can take time. Even though a spend expert with analytics expertise can map 90%+ of spend by hand with the right tool in a week for even the largest fortune 500, most companies don’t have this spend expertise in a single person, don’t have all of the data available in a single merged instance, and don’t content themselves with 90% of spend when many providers promise 98%+ (even though this increased level of accuracy doesn’t make a difference during an initial spend analysis effort and initial project selection, as an organization always goes after the biggest cost savings opportunities first, which can always be identified with 90%+ mapping accuracy). As a result, while some spend analysis providers will promise to have you up and running in a week (and work their Indian data mapping team to the bone 24/7 in an effort to meet this goal), SpendHQ makes a more reasonable promise of six weeks from initial consultation to final deployment. The SpendHQ team knows it will take time to get data, create merge rules, cleanse, classify, review with the customer, create new rules, re-classify, enrich, get executive sign-off, and roll-out. Sometimes the process only takes a couple of weeks (with a smaller company that’s really on the ball), but, as a consulting firm, they know better than to make promises that are unrealistic (and it’s always better to beat a deadline than to miss it). Considering that they can get to full-deployment for even the largest multi-billion dollar companies with 60+ file formats and 20+ currencies in this timeframe, you don’t have to worry that they won’t be able to turn-around data and mappings as fast as you can get them the data and review the mappings.

ISG has been doing spend analysis engagements since it was founded in 2002 and started working on it’s own spend analysis toolset shortly thereafter (with the first commercialization of its spend analysis product in 2007) and, as a result, ISG and SpendHQ are quite familiar with the fragile data supply chain. Poor data input discipline leading to 200 different supplier names for FedEx in your system? Multiple AP Systems that fragment spend data across the enterprise in different file formats? Accounting oriented categorizations useless for spend analysis? Maverick spend gone wild? They’ve seen it all and can deal with it all. And before the cleansed and categorized data is presented to the customer, it is reviewed by North America and European Union based sourcing professionals — not by a low-cost data-entry tech in an outsourced Indian development shop.

And, as per recent posts, the SpendHQ product is extremely useable — one of the best UIs SI has seen yet for a vendor-managed spend analysis product that is designed to be comprehensible by even the most technology-inept. (SpendHQ believes their UI to be their competitive advantage, and SI agrees.) It’s a great entry point to spend analysis and a quick way to identify your top savings opportunities and get sourcing projects to address them underway. (And then, a few years down the road when you’re ready for do-it-yourself advanced spend analysis, it’s a perfect segway into a product like Opera’s BIQ — which supports multiple categorizations, multiple cubes, and the ability to re-define your own rules hierarchy on the fly — when you’re ready to dive deeper into tougher opportunities.)

In the first two parts of this series, we introduced you to SpendHQ, one of the strongest, but yet most overlooked, players in the spend visibility and analysis space from a software and services solution viewpoint. As noted, the SpendHQ solution, which currently consists of a spend visibility and category management module that will soon be accompanied by a contract (metadata) management module, is a good starting point for a company which needs to get up and running with spend visibility quickly.

The category management product has five main components: dashboard, details, order analytics, pricing, and savings.

The dashboard summarizes the spend from spend visibility, the managed spend, the core list compliance, and the pricing accuracy as well as metrics related to company, supplier, item, buyer, location, and budget center, among other identifiers. If the user selects pricing tier, she will see the average order size, total orders, and wholesale spend for the relevant pricing tier. From the dashboard, the user can quickly drill into the top level categories. In addition to the total spend trend graph for the default time period, the user can also see the maverick spend by supplier, ordered by the suppliers who receive the most maverick spend. Or, the user can drill into the metrics.

The details section is designed to allow a user to quickly drill into a category and get the relevant subcategory and item, buyer, or location information related to that category. On the item screen, for example, the buyer can quickly see the total spend, the total unit, the most recent price, the price trend, MSRP (if known), and the date of last purchase.

The order analytics section is designed to allow a user to drill into the order patterns for a category or subcategory and see the average order size and how it changes over time. A user can drill into the components of an average order or into the detail of all orders in the time period.

The pricing section is designed to allow a user to analyze the price paid for an item, or set of items, over time, relative to the price that should be paid. The user can see the total overcharges and undercharges for the time period in question, the net result, and the overall pricing accuracy. This allows a buyer to not only figure out where overcharges are rampant, but where it makes sense to go after them. If the item, or category, also had a significant number of undercharges (because the retail price went down during the time period and the supplier charged retail instead of contract throughout the time period) and the net result is that the net amount lost was small, it might not be a good idea to go after the supplier on those items as they will insist the undercharges be recognized (and be applied against a category where they rampantly overcharged you).

The savings section shows the user how the organization fared on a category, subcategory, or item over time relative to a (set of) baseline price(s) for the category from the comparative time period (before the current prices were put in place).

The details component is broken down into overview, item detail, buyer detail, and location detail subcomponents, allowing a user to see, for the category or categories of interest, the relative spends and then dive in by item, buyer, or location. In the item detail, the buyer can drill down into full purchase history by buyer if she desires.

All-in-all, the SpendHQ solution gives the user great visibility into their category spend, and the drivers of that spend (be it a department, location, or rogue set of buyers) and helps the organization manage that spend.

Yesterday we introduced you to SpendHQ, one of the strongest players in the spend visibility and analysis space from a software and services solution viewpoint. Unlike most spend analysis solutions that were designed and built by sourcing solution providers, SpendHQ was designed by sourcing and spend experts and implemented by a development team experienced in the implementation, and integration, of sourcing solutions.

In today’s post we are going to dive into the visibility module. The goal of the visibility module is to help the sourcing team, and the C-suite, get a handle on what the organization is spending over time (by quarter, month, or year — depending on the amount, and granularity, of the data available). The SpendHQ solution does this by pre-constructing a spend cube tailored to organizational needs and providing an interface that can drill into any level of detail, on the dimensions of relevance, and filter out any data items of interest, or non-interest, along any dimension. The solution then presents the data in a very easy to understand graphical display that is designed to be focussed on the most relevant items of interest, and only the most relevant items of interest. In the SpendHQ solution, no screen has more than three graphs. The designers, which have experience with a number of sourcing and spend products and associated dashboards, have found that any more than three graphs on a screen not only clutters the UI, but often distracts the decision makers from the most relevant data (which leads to more time spent analyzing the wrong data and less time focussed on what really matters from a savings perspective). This does not limit the usefulness of the product in any way as another key feature is that every screen tells you exactly where you are in a drill down as well as what filters have been applied. Furthermore, a user can always jump back up to any level or down to the bottom (using a pre-defined saved filter) and every piece of data is selectable and filterable dynamically. (So, even though the user only gets one cube, the user can extract any subset of that cube and view it along the dimensions of the user’s choice.) Plus, the current view, and all of the data behind it, can always be extracted to an Excel spreadsheet at any time (which makes it easy for the user to build reports, verify analysis, and load it into the supply management software of their choice for subsequent event execution and tracking).

The visibility product has six main components: home (the spend-trend dashboard), details, compare, compliance, reports, and tools.

The spend-trend home dashboard displays a spend trend graph for the default (but changeable) date range by month, broken down by category, the total spend, and the total number of vendors who contributed to that spend. From here, a user can drill into the relevant categories. Selecting a category brings up a screen with the spend for the category, broken into sub-categories.

The details section breaks the spending down by category and vendor, allowing the user to see trends by selected categories and subcategories, and, if desired, restrict that view to a select group of vendors.

The compliance section allows the user to quickly determine how much spend is being managed relative to the total organizational spend and how much of that managed spend is compliant. This allows the organization to not only determine the compliance rate, but the impact rate — which is the amount of compliant total addressable spend. This section is broken down into an overview section, a managed spend section, an unmanaged spend section, and a Rogue’s Gallery (^TM) that summarizes the top unmanaged categories and the top non-compliant subcategories so that a spend manager can quickly zero-in on the biggest offenders with respect to compliance, and generate a list of the top locations, departments, and buyers.

The reports section allows the buyer to quickly access standard and pre-defined reports and the tools section allows the buyer to define their configuration options.

One of the unique features of the application is the Power Filter that allows a user to quickly select the spend range, dimensions of interest, and the relevant items as well as filter out the sub-dimensions and even line items of non-interest. With this tool, even the most novice of users can quickly slice and dice out just the data of interest to them. The user can save any and all filters of interest and (re) apply them at any time.

It’s not only a powerful spend visibility solution, but a very useable one. If your company is a mid-market company without a (useable) spend analysis or visibility solution that needs to get one up and running quickly, accurately, and usefully, take a very close look at SpendHQ. It’s a great starting point on your spend visibility and analysis journey.

As SI outlines in its upcoming white paper on the Top Ten Transitions To Tackle in 2014 to Tame the Tolls, hyper-inflation is just around the corner, logistics capacity is on the rise (just like the cost of transportation), and working capital management is still lagging. If you put it all together, costs could rise out of control while millions of dollars sit tied up unnecessarily. The only way to avert this impending disaster is to take proactive action and get your spend, and spend management, under control.

In order to do this, you need good spend visibility — and, if you are not an expert in spend visibility or spend analysis, you need visibility that you can use and that is graphical, categorized, and relevant to your spend management needs. Furthermore, if you do not have technical skills (in house), you need services that can help you normalize, integrate, categorize, and cleanse your data. And if you don’t know where to start once you have the data categorized, normalized, and cubed for analysis, you need category expertise and consulting services.

If you are in one of these groups, up until recently there were essentially no solution options for you to choose from and even now, there aren’t that many. Furthermore, most of the solutions on the market that are available to you today, with only a handful of notable exceptions that you can count on your fingers (without your thumbs), fall into either the category of solution or service, but not both. However, for those of you that need an option that provides a full-service solution that includes data integration and category expert consulting, an often overlooked solution (that has been under continuous development for almost a decade) is about to make a big splash in the Spend Analysis and Visibility space.

That solution is SpendHQ. What started out as an internally developed tool to help Insight Sourcing Group (ISG) achieve the visibility they needed to help them drive savings for their clients, was transformed into a basic commercial software solution in 2007 for a select group of marquis clients to help those clients track spend and associated savings. Since then, ISG has spun off the product into an independent business unit which recently added new team members with commercial product development expertise from leading sourcing and spend analysis solution companies. This new business unit has been dedicated to improving and extending the tool for the last three years in quarterly product releases.

The solution has grown from a simple spend reporting tool into a fully featured spend visibility tool that tracks all of your spend over time — by category, department, and user; a category management tool that lets you dive into category spend and filter down to the items of interest, see managed vs unmanaged spend, and track compliance; and, as of the next release later this quarter, track contract meta data and do basic contract lifecycle management. In addition, the services component has matured and the organization can quickly import, merge, classify, and cleanse all of the relevant data from whatever ERP, AP, or Procurement systems you happen to be using and refresh this data for you as often as every week, although SpendHQ recommends monthly refreshes (even though, for larger clients, quarterly refreshes often suffice). (Their largest client, with 50 Billion in revenue, chooses to only refresh their data quarterly as real-time isn’t all that relevant where spend analysis is concerned.) Plus, SpendHQ can also integrate supplier data feeds for verification and enrichment and currently integrates with a number of office supplies vendors out-of-the-box.

While not the most powerful (ad-hoc) spend analysis solution on the market, it’s a really great solution for a mid-market company without a (useable) spend analysis or visibility solution that needs to get one up and running quickly, accurately, and usefully (as the solution has more power and capabilities than the average company needs to get great results). Within 4-6 weeks, a company with no spend analysis capability can be up and running 100% and be making useful, informed decisions. In the next two parts, we will dive into the visibility and analysis capabilities of SpendHQ as well as the category management capabilities.