How to achieve the balancing act of spend management
Published 02/08/2019 by Jon Wrennall, Chief Technology Officer, Advanced
Digital transformation is increasingly becoming a key driver in the procurement department. Employees across the business are demanding their procurement teams source technologies from the Cloud right through to robotic process automation. After all, it’s these technologies that enable them to be more proactive in their day-to-day roles.
However, with procurement teams under pressure to focus more on strategy, keeping track of spend on new suppliers across the entire workforce is increasingly challenging.
The result? High levels of unknown spending that, for many organisations, is hard to track and control.
With organisations growing in size and complexity, it is difficult to see who is sourcing products from their own choice of suppliers and without the necessary checks. It means it is near on impossible for procurement teams to prevent rogue spending.
The problem is that employees want choice in the solutions they use to do their jobs. After all, every department has unique requirements. In fact, according to our Digital Business Report, 58% of senior decision makers in all size organisations across the UK say each department has different needs which cannot be met by a single software solution.
That’s all well and good but how can procurement teams achieve the perfect balance? In other words, how can they give staff flexibility in the products they use while benefiting from visibility, traceability and auditability needed to manage spend on these products?
If there is no balance, procurement teams will find themselves wasting valuable time and, unless they can get a handle on spending, create unnecessary business costs.
If the findings from our report is anything to go by, things really need to change. Only 16% of organisations use spend management software to manage their business operations, pointing to systems in use that fail to provide the visibility they need. Yet it’s this type of software that can improve their understanding of organisational spend.
When procurement teams can understand who is buying, what they are buying and from which suppliers, they can get real insight, gain control and drive better buying decisions. And, in turn, they can cut costs. It means teams can focus on developing supply channels at the lowest total cost, not just the lowest purchase price – making sourcing far more strategic.
That’s why Advanced, using its 17 years of experience working with procurement teams, has developed a suite of spend management solutions to transform the entire procurement process. The suite provides choice for employees – meeting their appetite for digital transformation – but within a controlled and, therefore cost effective, environment.
So what exactly should procurement teams be looking for when investing in modern spend management software? Here are a few key features to explore:
- A comprehensive marketplace that enables buyers and suppliers to trade accurately and efficiently in a seamless transactional procurement process. This allows organisations to control spend activity from one location
- Tender management functionality that gives clear visibility and high quality reporting of the sourcing process while supporting sustainable business initiatives too
- An easy to use and intuitive contract management solution that maximises the use of available procurement resources by managing contract deadlines, service-level agreements and contract usage levels
- Analytics capabilities that gives better control over procurement data, providing insight (in real time) into how procurement teams can make more informed choices and combat shrinking spend budgets
Ideally, a spend management solution should be Cloud-based as it gives organisations greater flexibility, scalability and mobility. What’s more, it should be designed to integrate with an organisations’ other solutions for a truly seamless process.
Otherwise, it’s this lack of integration between their multiple business software solutions that could be holding them back from achieving successful digital transformation.