Are You Paying for More Spend Analysis Than You Need?

Digging through historical spend data is often a tall order. Brian Seipel kicks off this week's episode of the Source One Podcast by describing a particularly taxing initiative. "By the end," he remarks, "we analyzed roughly one million transactions from dozens of disparate systems."

The hard work payed off. Now, the client is poised to act on cost reduction opportunities that could potentially lead to millions in savings. Not all heavy lifting, however, is warranted. In "an age where analytics reign supreme," Seipel suggests that organizations often find themselves conducting (and paying for) far more analysis than they actually need. What do they get for their troubles? Stalled initiatives and a heap of data points they'll never actually interact with.

How can Procurement tell which spend analysis efforts are worth their time and effort? Seipel identifies four questions that should help organizations make this decision.

1. What Impact are We Trying to Make?
"If you can look at a report," Seipel says, "and not know what specific challenge it helps solve, odds are good the answer is none." He advises Procurement professionals to check-in with end users to confirm that their reports are actually providing the value they're intended to.

2. How Much of an Impact Can We Expect?
Some spend simply doesn't warrant a lot of attention. While sometimes challenging to estimate value before digging into the numbers, Seipel cautions organizations against moving forward without at least some number in mind.

3. How Much Buy-In Can We Expect?
"I've seen plenty of projects die on the vine because of hesitation or outright hostility on the part of key stakeholders." Before investing in analytics, he encourages Procurement to ensure it has secured the enthusiasm of all relevant parties.

4. How Deep Does our Dive Need to Be? 
Seipel uses office supplies purchasing to illustrate the value of this consideration. He suggests the category is the perfect example of an area where ultra-granular detail is not necessary. He asks, "Will knowing how many black ballpoints versus blue felt tips make project identification easier?" Certainly not.

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