May 7, 2014

The Business
Case for
Spend Analysis

Outline
What is spend analysis?
What could you do with better spend
visibility?
Where does the data come from?
Why not do spend analysis yourself?
What have other organizations done?
Why you should consider Spikes
Cavell.

What is spend
analysis?
ct
ra
nt ord
Co ec
R

Purc
h
Card asing
Spen
d

Accounts
Payable
Spend

en
m
ure
c
o
t
ePr
ns
o
i
t
ac
s
n
Tra

What is spend
analysis?
Purc
h
Ca d asing
r Sp
endAccounts

Payable
Spend

nt
me s
e
r
o c u t io n
ePr nsac
Tra

Con
tra
Reco ct
rd

Class
ify
Enrich

Spend data
that you
trust and
that
contains as
much
detail as
possible

What is spend analysis?

What is spend analysis?

Takeaway 1: A spend
analysis project starts with
data that you trust and
tools you can use

What could you achieve?

Deliver savings and efficiencies by:
always getting the best rates;
using data in competitive processes and
negotiations;
using category analysis to drive down
costs;
identifying internal and external
collaborative opportunities; and
spending time using the data rather than
cleaning and classifying it.

What could you achieve?

Bring spend under management by:
providing a solid foundation for decision
making that includes all data sources;
identifying areas of spend that should be
targeted by professional procurement
teams;
identifying non-compliant spend;
profiling and managing suppliers
accordingly; and
benchmarking and measuring

What could you achieve?

Change buying behavior by:
providing key stakeholders with visibility;
creating departmental spend reports to
help budget holders better manage their
spend;
identifying non-compliant spend and using
data to have informed conversations;
monitoring processes to identify potential
efficiencies; and
engaging departments in collaborative

What could you achieve?

Maximize the impact of dollars spent:

with small businesses;

with local companies;
with minority owned businesses; and
assess the potential impact of
procurement decisions on these groups.

What could you achieve?

Calculating an ROI for spend analysis
can be difficult without actually seeing
the data so pragmatism is required:
Calculate percentage of overall spend you would
have to save to break even and assume you can
do much better.
(Spend analysis project cost/ annual goods and
services expenditure percentage of total spend
saved to break even
$13k/$20m = 0.065% of total spend would have to
be saved to break even.

What could you

achieve?
Another pragmatic approach to ROI
Calculate value of spend you would have to
bring under management to break even
Spend analysis project cost / (Annual
expenditure * Savings through bringing spend
under management) = percentage of spend to
bring under management to break even.
$13k / ($20m * 15%) = 0.43% of spend
brought under management to break even.

What could you achieve?

Takeaway 2: A spend
analysis project provides
the necessary basis for you
to deliver savings, bring
spend under
management, change
buying behavior and

Where does the data come

from?
Purchasing
Card Spend
(Some transaction detail
but < < 20% of spend)

Contract Record
(Software system,
Excel, or Manual)

Accounts Payable
Spend
(100% of spend, but not
necessarily 100% of the
Detail)

eProcurement
Transactions
(Usually orders, not
spend and < 20% of
spend comes through
eProcurement)

Where does the data come

from?
Hardware

Duplicates

Classifications

AT&T

Dell

ATT Mobility
AT& T
ATT Reston
ATTM
ATT Wirless
AT&T
AT and T
AT & T Wireless
ATTM Store
#2323

Computer
hardware
Classroom
Supplies
Software
Licenses
Other Supplies
Misc.
Contracted
Services
Capital Project

Where does the data come

from?
Takeaway 3: Raw data from
AP, pCard, eProcurement
and contract management
systems needs to be
aggregated, cleansed,
classified and enriched
in order to be made fit

Why not do it yourself?

We need good quality spend
data. Getting that data will
require us to extract the
data from multiple systems,
validate the extract,
consolidate it together, then
cleanse, de-duplicate,
classify and enrich that data
each and every time we
want to update our analysis.
It would be more cost
effective to have this done
for us rather than by us.

Accounts Payable
Spend

Why not do it yourself?

We need analysis tools we
can use. We dont have to
install or configure, can use
without a steep learning
curve, that were built for
business users, that multiple
people can use at the same
time, preferably with prebuilt reports so we arent
starting from scratch, and
which can support strategic
as well as tactical decision
making.

Why not do it yourself?

Takeaway 4: A spend
analysis project will allow
you to focus your time and
energy in developing your
procurement function,
monitoring compliance
and strategic sourcing

Recap of the
takeaways

A spend analysis project starts with data that you trust

and tools you can use
A spend analysis project provides the necessary basis for
you to deliver savings, bring spend under
management, change buying behavior and maximize
the public benefit of your expenditure.
Raw data from AP, pCard, eProcurement and contract
management systems needs to be aggregated,
cleansed, classified and enriched in order to be
made fit for analysis by the procurement team.
A spend analysis project will allow you to focus your time
and energy in developing your procurement
function, monitoring compliance and strategic
sourcing rather than data transformation and report
writing.

Why consider Spikes

We need good quality spend
Cavell?
data without having to do it
ourselves.
Transformation of the data is done
for you by an experienced team.
Data Fitness Checks are carried
out on your raw expenditure at
the beginning.
Collection, cleansing,
classification and enrichment are
low touch on your staff.
You want to know more about
your spend than is available in
your raw data today.
Join contract and expenditure

Why consider Spikes

Cavell?

We need analysis tools we can

use.
The analytical tools (the
Observatory) were built for
procurement and finance
business users
There are over 200 reports prebuilt and ready to use on day 1.
Compare and collate your
expenditure data with other
organizations.
Record and report your
achievements.

Why consider Spikes

Cavell?
We want to work with
a
company who:
has done spend analysis for
organizations like ours before;
are specialists in data
transformation and spend
analysis for public sector and
higher education organizations;
work with professional
associations that we know and
trust; and
have competitive pricing and
contracting options that will
work within our procurement

Why consider Spikes

Cavell?
Takeaway 5: Spikes Cavell
has worked with over 1,000
public sector
organizations like yours,
transformed over $550b
of spend, and can
provide the data and

For more information or to request a copy of the

business case in Word format, contact Spikes Cavell
by:
Phone: (571) 313 5257
Toll Free: (800) 990 0228
Online: Request a call back
E-mail: info@spikescavell.com