Spend Analysis 101:

Welcome to the world of spend analysis, where every dollar holds untapped potential! In this guide, we will walk you through the secrets of successful spend analysis process and reveal why spend data is the ultimate game-changer for businesses of all sizes.

Spend analysis isn't just turning data into dollars, its about empowerment. It's about gaining visibility and insights needed to make bold, strategic decisions that pave way for your future success. By looking into spend patterns, you'll discover opportunities to streamline operations, cut costs, and build stronger supplier relationships.

Why keep reading? Spend data is not just a procurement buzzword - it's the cornerstone of your organization's financial landscape. In fact, it typically accounts for 60-80% of your turnover! That's why a savvy business leader knows that mastering the art of spend analysis provides keys to success in fast-paced, ever-evolving marketplaces.

Are you ready to unlock the potential of your spend data? Let's dive in and set you on the path to greatness!

Introduction to Spend Analysis

Spend analysis is the process of evaluating an organization's expenditure data to understand spending patterns, identify cost-saving opportunities, improve efficiency, and optimize procurement strategies. Spend analysis aims to answer questions:

• What are we buying?
• How much have we paid?
• How much have we bought?
• Who are we buying from?
• Who is buying?
• On what terms?

By analyzing products, prices, quantities, suppliers, business units, and payment terms, spend analysis provides a holistic understanding of spending patterns and supplier performance.

Key terms and definitions relating to Spend Analysis

Here are some basic definitions and key concepts to get started.

Spend data (also known as procurement spend data) is information dealing with a company’s expenditures on goods and services purchased from external suppliers.

Spend data management is the process of collecting, sorting, and managing that spend data.

Spend analysis is the process of analyzing spend data to find patterns, identify cost-saving opportunities, improve performance, and optimize procurement strategies. It involves collecting, cleansing, classifying, and analyzing spend data from various sources to provide insights. The primary goal is to gain visibility into spending to make more informed procurement decisions and improve financial efficiency.

Spend Analytics, on the other hand, refers to the broader application of advanced data analytics techniques to expenditure data. While it includes the basic elements of spend analysis, spend analytics goes further by leveraging tools like artificial intelligence (AI), machine learning, and predictive modeling. This allows organizations to not only understand historical spending patterns but also to predict future spending trends, assess supplier risks, and uncover deeper insights that can drive strategic procurement decisions.

Importance of Spend Analysis

Spend analysis is a key component of effective financial management and procurement strategy building. This process helps Procurement identify areas of improvement and uncover potential savings by consolidating suppliers, negotiating better terms, and eliminating unnecessary expenses. By leveraging spend analysis, business leaders can make data-driven decisions that contribute to overall business performance and financial health.

Additionally, spend analysis enhances transparency and accountability, ensuring that all expenditures align with the company's strategic objectives and compliance requirements. By leveraging spend analysis, organizations can make data-driven decisions, optimize their procurement strategies, and achieve significant cost reductions, ultimately improving their bottom line and business performance.

Spend analysis benefits

Spend analysis offers procurement organizations several key benefits.

Here's an overview of some of the top benefits of spend analysis:

Cost reduction

Spend analysis helps you meet your cost reduction goals and also follow up on incremental savings initiatives. Uncover inefficiencies and eliminate unnecessary expenses to achieve substantial cost savings. Improved visibility helps identify cost-saving opportunities. You can benchmark your suppliers, manage your tail spend, identify maverick buying behaviour, and ensure contract compliance.

Enhanced visibility

Spend analysis provides better visibility and actionable intelligence. Gain a comprehensive understanding of spending patterns, leading to better financial planning and control. It gives you a comprehensive view of the metrics that drive improved cost savings, process efficiency, and supply-chain performance. 

Spend visibility goes beyond tracking spending, as it gives both a detailed and holistic picture of how money is moving through your company. Having spend visibility allows for analyzing past spend which can be utilized for planning future direction.

time saving

By centralizing and organizing spend data, spend analysis minimizes the administrative workload associated with tracking and managing spend. There will be a significant reduction in cycle time for creating reports and ad-hoc analyses, reducing labor costs and freeing up time for more strategic work. By systematically analyzing spend data, organizations can quickly identify spend and sourcing opportunities. This rapid identification allows procurement teams to act fast, rather than spending extensive time manually combing through data to uncover these opportunities.

Risk mitigation

Spend analysis allows you to identify potential risks and ensure compliance with procurement policies and regulations. Analysis allows you to track and identify non-contracted spend and vendors. When your spend data is enriched with suppliers’ credit scores and ESG information, you can better assess your organization's overall supply chain failure risk.

Improved supplier performance 

By analyzing spend data, organizations can evaluate supplier performance based on factors such as delivery times, quality of goods or services, and compliance with contract terms. This comprehensive evaluation helps identify top-performing suppliers and those that may require improvement. By benchmarking supplier performance against industry standards or other suppliers you set clear performance expectations and foster a culture of continuous improvement.

Data-driven sourcing & category management

Spend analytics enables sourcing professionals to identify trends, market changes, performance issues, consolidation opportunities, and sourcing potential. It can be used to identify new sourcing categories, segment suppliers, and narrow down key suppliers for development programs. Companies can consolidate purchases with high-performing suppliers, negotiate better terms, and reduce reliance on underperforming ones.

Improved decision-making

Spend analysis allows you to leverage data-driven insights to make strategic decisions that align with your organization's goals and procurement strategy. Benchmark your performance internally across business units, locations, and categories to identify synergies and potential. Without timely data and holistic view of your supply chain performance, it's impossible to make decisions that result in the best outcome for your business.

How to do Spend Analysis

While spend analysis projects vary in shape and size, they typically include six key steps from spend identification to analysis.

1. Identify Data Sources

The first step is to get an overview of what spend will be covered. Doing this allows you to restrict those purchases to just a few key sources.

You can segment your spend into different groups and, from there, determine all the spend data sources available from your departments, plants, and business units. Start by identifying the areas of your business that make significant purchases, such as procurement, finance, and marketing.

Here are some of the most common sources of procurement spend data.

• enterprise resource planning (ERP) tools

• general ledger information (i.e., an organization’s financial data) 

• purchase orders

• data shared by suppliers

• risk reviews

• credit ratings

• transaction data

• other internal systems and external sources

2. Data Extraction

Once you have narrowed the scope down, you can capture your spend data and consolidate it into one central database. Data is usually in different formats, languages, and currencies, so collecting it into one source might be challenging. 

3. Data Cleansing 

Cleansing spend data detects inaccuracies and removes corrupt records and redundancies. This includes finding and eliminating errors and discrepancies in descriptions and transactions to ensure accuracy. Data cleansing lets you identify which contacts in your database are incomplete or irrelevant. Typos are removed, and missing codes are validated and corrected for up-to-date information.

4. Data Enrichment

Data enrichment refers to the process of enhancing, refining, and improving raw spend data. It also includes standardizing the spend data for easy viewing. Enriching the spend data makes sure that all the header and line-level names and details are accurate and to a specific naming standard. 

5. Classification

Classification typically involves grouping several suppliers of the same parent company or organization. Unifying heterogeneous spend data into clearly defined categories makes spend easier to address and manage across the whole organization. Classification is about harmonizing all purchasing transactions to a single taxonomy, enabling procurement to gain visibility of the global spending to make better sourcing decisions.

Both direct and indirect procurement spend can be grouped into categories, enabling analysis and management of similar goods or services.

A spend category is the logical grouping of similar expenditure items or services that have been clearly defined on an organizational level. For example, “information technology” may be considered a spend category covering both IT software and hardware.

The spend taxonomy is the way a procurement organization classifies spend into hierarchies. One way to view spend categories is like a tree with many branches for different levels or sub-categories of spend.

The number of levels in a spend taxonomy depends on the procurement organization’s needs, ranging from three to six levels of categories and sub-categories.

When designing a taxonomy it needs to be thoroughly communicated and aligned internally with key stakeholders such as Finance and local/global Category Managers. A clear definition and understanding of each subcategory in the taxonomy helps in classifying your data accurately.

There are also standard taxonomies such as the UNSPSC (United Nations Standard Products and Services Code), a common coding system describing goods and services. It may be used to categorize procurement spend, but these are often not ideal for strategic sourcing.

6. Analysis of Data

The last step is to identify opportunities for savings and other procurement improvements. Analysis can answer business problems like "What are the best contract deals per supplier?" or "Are buyers purchasing from preferred suppliers?"

You can identify opportunities for reducing the number of suppliers per category and negotiating better rates. 

If you've come this far, it is beneficial to consider how external data assets can provide deeper and more strategic enrichment to your analysis. By connecting 3rd party data to your spend, you can make more strategic decisions powered by data. 

This is especially relevant in sustainable procurement. connecting Carbon emission data to your spend can help reduce your Scope 3 emissions. Supplier sustainability scores can also form a part of your category analysis.

Spend Analysis KPIs and metrics

Procurement data can be sliced and diced based on a number of key performance indicators (KPIs). Key Performance Indicators for spend analysis are essential metrics that help organizations measure the effectiveness of their procurement activities and identify areas for improvement.

Here are some crucial spend analysis KPIs to follow:

1. Spend Under Management: This KPI measures the percentage of total spend that is actively managed by the procurement team. High levels of spend under management indicate effective procurement practices and better control over expenditures.

2. Spend Visibility: This KPI assesses the extent to which an organization has a clear and comprehensive view of its spending data. High spend visibility enables better decision-making and spend management.

3. Cost Savings: This KPI tracks the total amount of money saved through cost reduction initiatives, such as supplier negotiations, strategic sourcing, and spend consolidation. It helps quantify the financial benefits of spend analysis.

4. Savings as a Percentage of Spend: This KPI measures the cost savings achieved as a proportion of total spend. It provides a clear indication of the efficiency and effectiveness of procurement strategies.

5. Spend by Category: This KPI breaks down spending into various categories, such as direct and indirect spend, to provide insights into where money is being allocated. It helps identify high-spend areas that may require closer scrutiny or optimization.

6. Supplier Consolidation: This KPI monitors the number of active suppliers and the concentration of spend among them. Effective supplier consolidation can lead to better pricing, stronger relationships, and simplified procurement management.

7. Supplier Performance: Metrics under this KPI include on-time delivery rates, order accuracy, and quality of goods or services. Monitoring supplier performance helps ensure that suppliers meet the organization's standards and contractual obligations.

8. Payment Terms Compliance: This KPI monitors adherence to agreed payment terms with suppliers. Timely payments help maintain good supplier relationships and can also leverage early payment discounts, contributing to overall cost savings.

9. Contract Compliance Rate: This KPI measures the percentage of spend that falls under negotiated contracts versus off-contract or maverick spend. High compliance or contract utilization rate indicate better procurement governance and cost management.

10. Procurement Cycle Time: This KPI tracks the average time taken to complete the procurement process from requisition to purchase order. Shorter cycle times reflect efficient procurement processes and quicker response to business needs.

Spend analytics solutions allow you to track KPIs in real-time through intuitive dashboards and custom reporting.

Spend Analysis Examples

There are countless opportunities and insights to discover in your spend data. Here are 6 of the most fundamental procurement analytics exercises you can use.

Spend Cube

Tail spend is defined as the amount of money that an organization spends on purchases that make up majority of transactions but only a friction of total spend volume. In ABC analysis these fall into the category C.

Tail spend is generally considered low-value purchasing, as it makes up only a small portion of spend (usually 10% of each spend category). Tail spend is easy to ignore but it's often the area where organizations may be leaving money on the table and utilizing their resources inefficiently.

The figure above illustrates the simplest approach to analyzing a company’s tail spend: calculating the spend ratios to suppliers at various points along the purchasing range. Here, the Y-Axis represents spend per supplier ("Total Spend by Supplier"), and the X-Axis represents the total supplier base ("Supplier"). Suppliers are ranked in descending order.

Tail-end spend management has been growing in recognition and increasing importance within procurement. Tail spend analysis can yield potential savings, reduce costs, improve key supplier relationships, and increase spend under management.

There are usually many low-value transactions with multiple vendors across business units. To combat this, you can identify contract leakages and maverick spending. The aim of tail spend management is reducing number of suppliers and consolidation of spend to preferred or key suppliers.

Category Spend Analysis

Category spend analysis allows you to explore spend in a defined spend category hierarchy. This is useful in identifying spend leakage issues.

The first step in doing a category spend analysis is understanding the scope and breadth of the category. Are you buying similar goods and services from too many different vendors? This analysis is built on hierarchies, and the spend transactions are categorized into the most appropriate category.

Allocating spend consistently into categories makes the data easier to navigate, interpret, and understand. When organizations can focus on prioritizing their top spend categories, it helps them identify and forecast savings opportunities.

Prioritization will allow better negotiations for key spend categories to ensure more favorable contracts and pricing. By drilling into their spend data, procurement professionals are also gaining a deeper understanding of their spend categories.

When you have a high-level overview of spend by category, it is easier to identify categories that help deliver savings and realize which projects bring strategic importance to the organization. With this, you can easily figure out which action to take based on what has the most impact on staff or operations and what the risks associated are. 

Item Spend Analysis

Item spend analysis refers to analyzing expenditure at an item/ SKU level. It focuses on individual purchases by classifying each one of them to identify what department it was for and what supplier was used.

This analysis gives the ability to know whether a specific item is being purchased from various suppliers or in several locations and at different item prices. It can highlight the different opportunities for purchasing in the business. You may also identify spend leakage issues, such as purchasing from non-preferred vendors and maverick spend. 

Payment Term Spend Analysis

Payment term spend analysis provides excellent insights for companies to analyze payment practices and terms within their purchase-to-pay (P2P) processes. It explores the opportunities of leveraging all possible discounts or interest from the invoice payment process while increasing working capital.

Payment term spend analysis gives a comprehensive view that enables you to identify unrealized payment term discounts, late payment interests, or opportunities to negotiate better payment terms.

It also covers the review of payment patterns to identify practices and activities that are not done properly.

Contract Spend Analysis

Finally, contract spend analysis tells companies if they are complying with their existing negotiated contract terms.

It analyzes spending with vendors by contract to identify leakage through non-compliant contracts. It ensures that the best contract deals per supplier have been negotiated and that all buyers purchase from preferred suppliers.

Spend Data Visualization

Now that we have covered the spend analysis basics, it's time to look at the spend visualizations. Different data visualization types can help make complex spend analysis data more understandable and actionable, enabling organizations to identify trends, outliers, and opportunities for optimization more effectively.

Spend dashboard with bar chart, stacked bar chart, pie chart and line chart.

Here are most common procurement data visualization types and their use cases:

Bar Charts

Bar charts are versatile and effective for comparing values across different categories.
They are commonly used to visualize spend by category, supplier, or business unit.

Stacked bar charts show the total value broken down into sub-categories, making them useful for comparing the composition of spending across different categories or suppliers.

Pie Charts

Pie charts represent parts of a whole and are useful for showing the distribution of spend across different categories or suppliers.
They provide a clear visual representation of the proportion of spending in each category.

Line Charts

Line charts show trends over time and are useful for visualizing changes in spending patterns or supplier performance. They can help identify seasonal fluctuations or long-term trends in spending.

Heat Maps

Heat maps use color gradients to represent data values and are effective for highlighting areas of high or low spending. They can be used to visualize spend by geography, department, or other categorical variables.

Bubble Charts

Bubble charts represent data points as bubbles, with the size of the bubble indicating the value of the data point. They can be used to visualize spend by supplier, with larger bubbles representing higher spending.

Treemaps

Treemaps use nested rectangles to represent hierarchical data structures, making them useful for visualizing hierarchical relationships in spending data. They can be used to show spend by category, with larger rectangles representing higher spending categories.

Scatter Plots

Scatter plots visualize the relationship between two variables and are useful for identifying correlations or patterns in spending data. They can be used to visualize the relationship between spend and performance metrics such as supplier quality or delivery times.

Pareto Charts

Pareto charts combine both bar and line graphs to represent categorical data and their cumulative totals.
They are useful for identifying the most significant categories or suppliers contributing to total spend, highlighting the "80/20 rule" where a significant portion of spend comes from a small number of categories or suppliers.

Sankey Diagrams

Sankey diagrams visualize flow between nodes in a network, representing the magnitude of flow using the width of the lines.
They are useful for visualizing the flow of spending between different categories, suppliers, or business units, providing insights into how spending is distributed and transferred.

Waterfall Charts

Waterfall charts illustrate the cumulative effect of sequential positive and negative values, showing how an initial value is affected by subsequent changes.
They are useful for visualizing changes in spending over time, such as the impact of cost-saving initiatives or changes in supplier contracts, by showing the net effect on total spend.

Spend Analytics Dashboards

A spend analytics dashboard is a dashboard that visualizes sets of spend data into charts for the purpose of analysis. Datasets are selected based on predefined parameters, business targets, or KPIs.

The benefit of a dashboard is an instant high-level view of spending. In this chapter, we will cover some basic spend analysis dashboards used in Sievo. 

Spend overview dashboard 

A Spend Overview Dashboard provides an overview of your spend performance by comparing data of one selected period to the previous one. In the example, the view is filtered by year-to-date and presents the data by three four aspects: category, organization, supplier, and supplier count.

With a dashboard like this, you can track the top suppliers by region, spend changes by category, purchase process developments, as well as supplier count developments.

A proper spend analytics dashboard should be interactive, meaning you can select and filter data directly on the charts. Depending on what your responsibilities are, you can use a spend analytics dashboard to gain insights to questions or goals in mind with just one click.

Supplier Performance Dashboard

A Supplier Performance Dashboard visualizes key data for a specified supplier, offering a 360-degree perspective. It highlights analytics on the top supplier by spend ranking, providing transparency into purchases and payment terms across business units.

This overview allows you to compare suppliers, identify performance opportunities, and strategize meetings for renegotiating or ensuring compliance with better payment terms.

Category Performance Dashboard

The Category Performance Dashboard visualizes key data for a selected category, showing spend distribution, purchase order development, material price trends, and supplier sources. It offers valuable category management insights, helping to identify price opportunities, single-supplier risks, and track purchase order compliance. You can also drill down to assess purchase price developments at the lowest category level.

Supplier Base Performance Dashboard

A Supplier Base Performance Dashboard lets you analyze your entire supplier base, track top and tail-spend suppliers, and identify consolidation opportunities to mitigate risks and create savings.

It is ideal for tail spend analysis and internal benchmarking, showing how fragmented or consolidated your supplier base is across different business units in a single category.

Sourcing Performance Dashboard 

A Sourcing Performance Dashboard shows from which regions your business units are sourcing and whether materials are sourced internationally or domestically. It helps assess regional risks and anticipate the impact of trade or geopolitical issues.

This dashboard is useful for managing regional risks and identifying savings in logistics by switching to geographically closer suppliers.

Process Performance Dashboard

A Process Performance Dashboard highlights improvement areas for small POs/invoices, revealing potential savings by identifying suppliers with small value transactions. It shows category differences in invoice/PO quantities and amounts, helping to spot discrepancies between business units or suppliers for process optimization.

This dashboard is useful for analyzing invoice and PO counts, benchmarking average values, and streamlining the purchase process.

Price Performance Dashboard

A Price Performance Dashboard analyzes price differences among suppliers, helping identify opportunities for negotiation or finding cheaper options. It provides global and regional insights into price ranges within specified categories, aiding in price discovery and supplier selection. This dashboard is useful when you want to discover the price range of your specified category.

Currency Performance Dashboard

A Currency Performance Dashboard provides an overview of spend distribution in various currencies, highlighting categories or suppliers purchased using different currencies. It enhances transparency regarding risks, such as foreign exchange fluctuations. Filtering by category or supplier allows identification of materials or suppliers vulnerable to currency strengthening, aiding in proactive risk management.

Custom Dashboards

The ready-made charts in the Sievo dashboards can give you a great overview with only one click. But what if you cannot find one matching your goal in mind?

What you will need is a Custom Dashboard, where you can mix and match any dimension, measure, and chart type for any report you need and slice and dice with any data point you want. This is especially useful for your presentations. The image below shows how Sievo's Self Service Craftboard allows you to build reports to meet your specific needs.  

Example of Sievo’s Self Service Dashboard

Spend Analysis Tools

There are many tools available for analyzing procurement spend ranging from simple Excel Spreadsheets to advanced analytics software.

Here you can find the pros and cons of each alternative.

Spend Analysis in Excel

Microsoft Excel, though it’s been on the market for over 30 years, is still an excellent tool for making powerful dashboards that can provide analysis and deliver insights in a timely manner.

A lot of people use Excel to analyze spend data but fail to do so in the most effective and efficient way. The spend data that is categorized by the supplier or by name is usually found as raw data.

When this data is in an Excel spreadsheet, it provides a company with an overview of its spend structure and helps it understand which part of supply chain needs to be prioritized.

While doing spend analysis on Excel is doable, most organizations will still encounter issues. For example, Excel is not scalable for spend data in the hundreds and thousands of rows.

Challenges like over-generalized classification, data inconsistencies and data formatting issues, same supplier different names, and regional settings causing inconsistency will cause a normal analyst to do more data cleaning work than actual data analysis.

Even if you’ve been able to do all this properly, it can take hours or even days of work, and you will then need to update and classify new data each month, which will not be scalable. There are solutions in the market that have developed technology for just this and provide their service as a cloud solution.

Spend analysis processes run on Excel and Access-based tools don’t benefit from the repeatable process that spend analysis automation enables. Manual processes lack timeliness and speed of data updates and refreshes, as well as present the risk of limited reporting and analysis capabilities.

Without the ‘slice-and-dice’ ability of many spend analysis systems (the ability to cut spend data in a myriad of ways for efficient analysis), the reporting process of the spend analysis function is limited.

Pros and Cons of using Excel in Spend Analysis

Spend Analysis with BI Tools

Business Intelligence (BI) tools are a type of application software used to collect, structure, and visualize large amounts of data. While BI is broadly used for many business purposes, they are a little less flexible than analytics software. 

Using business intelligence (BI) tools for spend analysis enables companies to have a better understanding of their costs, which makes it easier to align expenditures with revenue.

Let's look at three good choices for BI tools: Microsoft Power BI, Tableau, and QlikView.

Microsoft Power BI

Power BI is a suite of business analytics tools used to analyze data and share insights. It is a cloud-based data analysis platform that can be used for reporting and data analysis from a wide range of data sources.

Power BI dashboards provide a 360-degree view for business users providing them the ability to see all of the most important metrics in real-time, and usually on different kinds of devices. Users can examine the data behind the dashboards with just one click. The intuitive tools help make finding answers easier. The pre-built dashboards and hundreds of connections to known business applications make doing analysis simple and quick.

Power BI, with all its portals and applications, can unify all of your organization’s data. With better data management and access, companies can get the visibility and insight they need to improve procurement performance.

These are some areas of spend that can be addressed:

• Materials (volumes and prices included) that the procurement organization purchased during this period and if there are any changes within a specific period of time

• The number of vendors whom the company has purchased from during a particular year and the amount of money spent per vendor in a given time

• The number of transactions done in several stages of the procurement cycle

• The number of requisitions, contracts, and purchase orders processed across the organization by the buyer and the average value of each transaction

Image source: doc.Microsoft.com

Tableau

Tableau is an industry-leading business intelligence tool that focuses on data visualization, dashboards, and data discovery. As a leader in the Gartner Magic Quadrant for the past 11 years, it is an interactive tool that provides a side-by-side analysis of spend data with tons of visualization possibilities.

It is very simple for non-technical people to easily create customized dashboards that provide insights that can be used for company strategies. With its easy user-friendly interface, drill-down capabilities, and intuitive way of working with data, it transforms the way people use data to solve problems. It also comes with real-time data analytics capabilities and cloud support.

Tableau provides information easily on relevant questions like who the most profitable customers are, what they buy, and how much is spent in different categories. You can look at sales by region, segment, category, and year with just a few clicks and hover over data to see the details instantly. Having easily understandable dashboards paves the way to more data-driven decisions. 

Also, Tableau Public offers free user-generated templates to visualize your data, like the one shown below.

Image Source: Pulic.Tableau.com 

QlikView

QlikView is a Business Intelligence (BI) tool that enables a user to create reports and dashboards for any use case. It is commonly used by business users who consider the power of modeling the data as well as data preparation before doing the analysis and visualizations/dashboards as a key differentiator.

On top of that, Qlik and its patented associative technology allow a user to unearth relationships within the various data sources. It also encapsulates the data into compressed memory for faster analytics vs. other providers who mainly rely on direct connections to data sources. 

Because it offers guided and collaborative analytics, even non-professional users without IT skills can build and deploy analytics apps easily and quickly. This results in a faster response to changing business requirements and driving more insights across the organization.

A flexible platform, the QlikView consolidates data from multiple sources to provide centralized data for high-level reporting. The intuitive click-through dashboards makes it easy for users to understand hidden trends and gather insights from them.

With QlikView, possibilities are endless for making ad hoc queries because it does not require tedious defined structures and hierarchies. Effective and accurate decisions are made faster with the right and easily accessible information available.

Image Source: Qlik.com  

Pros and Cons of BI Tools in Spend Analysis

Spend Analysis Software

Spend analysis software provides a consolidated view of procurement spend including data from invoices, purchase orders, and other business financial records.

Spend data may be collected from a number of different sources such as enterprise resource planning systems (ERPs), purchase-to-pay suites, or even shared Excel reports.

Compared to the other spend analysis tools mentioned (Excel and BI), spend analysis software is the most robust tool for performing this type of analysis. 

Sievo Spend Analytics ranked as a top business value enabler by SpendMatters!

Spend Analysis Software Types

Spend analysis software is either bought from a specialized software vendor or created specifically for the needs of a procurement organization.

• In-house solution – a custom software solution that is created for the procurement organization, either on top of an existing business intelligence solution or as a dedicated piece of software. Maintenance and upgrades are dependent on the organization’s information technology resources.

• Licensed software – Software that is sold as a commodity, where a single-use license allows for the installation of the software for a set amount of machines. Depending on the updated agreement, larger updates might require a new purchase of a license. Most of the time, licenses are sold as a lump-sum purchase.

• Software as a service (SaaS) – Software that is sold as a subscription and is delivered flexibly. Often the software is hosted in a separate location, allowing for centralized management by the provider. Updates are carried out as part of the software subscription agreement.

About Sievo

We are the procurement analytics solution for data-driven enterprises. 

We give procurement, finance, and leadership teams a single source of truth and radical transparency in all sourcing decisions. Our solution helps you choose the right suppliers, deliver savings and manage compliance with confidence. Not only that, we enable a sustainable, diverse, and resilient supply base.

We master the art of extracting, classifying, and enriching data across all ERPs, procurement systems, and external data sources, saving your valuable time.

Simply put, we’re pretty damn good at turning even the crappiest data into actionable insights!

We’ve pushed the boundaries of spend analytics for two decades – and we’re just getting started. We bridge the data-to-action gap and power agile procurement by combining AI with procurement expertise. 

Procurement organizations need an analytics partner they can trust. We’re large enough to deliver, small enough to care