Description
Analysis is the process of breaking a complex topic or substance into smaller parts to gain a better understanding of it. The technique has been applied in the study of mathematics and logic since before Aristotle (384–322 B.C.), though analysis as a formal concept is a relatively recent development
Next-Generation Spend Analysis: Beyond Commodity
Classifications
May 2009
Next-Generation Spend Analysis: Beyond Commodity Classifications
Table of Contents
3 4 5 7 Executive Summary: Procurement Superheroes The Limitations of Traditional Spend Analysis The Critical Need for Improved Supplier Insight Market Visibility: The Window to Savings
7 8 8 Price Indices Sourcing Market Dynamics Peer Spend Profiles
9
Conclusion
2
Copyright © 2009 Ariba, Inc. All rights reserved.
Next-Generation Spend Analysis: Beyond Commodity Classifications
Executive Summary: Procurement Superheroes
In today’s economy, CPOs are feeling the pressure to act as heroes for bottom-line results. With revenues decreasing over the recessionary period, organizations have looked to procurement to save the day through increased savings targets to be achieved with fewer resources. Capes and tights are optional. To reach these ever-increasing (and increasingly important) savings goals, many in the procurement function have looked to technology in order to improve efficiency and effectiveness. eSourcing solutions offer tools that allow companies to source more effectively, manage more spend strategically, and build more optimal relationships with suppliers. But, how do you decide what to source? This is the role of spend analysis programs. Through data aggregation and enrichment, the expectation is that new savings opportunities will be identified more quickly and efficiently. In the recent report, ‘Spend Analysis: Pulling Back the Cover on Savings’, October 2008, the Aberdeen Group cited an impressive business case for companies who leverage spend analysis solutions. Their research found that those leveraging spend analysis experience 67 percent higher savings on their spend while driving 25 percent more spend under management and 11 percent higher contract compliance. Why then hasn’t everyone implemented a spend analysis program? The reasons vary, including a lack of necessary resources and data limitations. However, the most common source of hesitation is the concern that spend analysis will not deliver the promised return. This objection is not without merit. Gaining accurate and timely visibility into your spend data is a start. And conducting structured analyses on this data based on standardized category or commodity classifications is certainly an advantage. But spend analysis alone is not a silver bullet. Analyses of classified data can help direct your strategies in the best case scenario. However, this information does not provide a complete picture into which opportunities to attack first or what types of returns you can expect from your efforts. By focusing solely on spend classification and analysis, the market has considered only a partial solution regarding what is needed for true strategic decision making. And this has led to concern and even prompted some companies to shelve their spend analysis initiatives. The objective of this white paper is to address the limitations of traditional spend analysis and point out the components of a comprehensive, next-generation solution that delivers on its promise of return—making spend analysis the go-to tool in your procurement superhero utility belt.
Copyright © 2009 Ariba, Inc. All rights reserved.
3
Next-Generation Spend Analysis: Beyond Commodity Classifications
The Limitations of Traditional Spend Analysis
If you were to poll procurement professionals on what they expect as an output of a spend analysis project, there is little doubt that nine out of 10 would respond, “commodity classifications” or “to get a better understanding of what I’m buying”. This is not surprising since most organizations have spend data in disparate purchasing and payables systems with little to no insight into the granular commodities the spend represents. For some, having this information aggregated and available via a normalized taxonomy represents a quantum leap forward. Even for this subset, however, limitations in the return from traditional spend analysis programs often exist. Listed here are some of those that are most common. 1) The inability of the provider to return granular and/or accurate classifications for spend transactions with no or limited supporting detail. While the percentage of coverage by transaction or total spend vary, the reality is that virtually all organizations have a subset of their spend data that does not contain rich supporting details such as meaningful invoice or PO descriptions. The fact that this subset often represents the spend the company is actually trying to get visibility into is clearly a catch 22. 2) An internal view of purchasing activity and trends does not take external factors such as market dynamics, recently sourced commodities or best-in-class benchmarks into account. It’s great to know that we are spending 20 percent less in a particular category. However, if the market has shown an even-sharper decrease of 35 percent, an additional sourcing opportunity may exist that would have otherwise been missed. 3) What now? Or what next? Automated tools can only take savings opportunity identification so far. Pre-packaged or custom reports can be very useful for indicating likely opportunities, but to confirm if the opportunities are real usually requires additional analysis and investigation of the data, existing contracts and the market. Furthermore, realizing the savings opportunity may require change management (for example, implementing a true strategic sourcing process that leverages spend analysis to identify, quantify and prioritize opportunities). 4) A lack of adoption caused primarily by the internal-only focus leading to “paralysis by analysis” with users getting bogged down by a small minority of transactions that are classified inaccurately or not at all while the improvements in visibility that the program provides—and the potential for return that it represents—often go unnoticed. The net of these issues is that while traditional spend analysis provides valuable insight into organizational spend, it is, in fact, only a partial picture. We will now discuss the next-generational components that you should take into account when considering deploying, or re-deploying, a spend analysis program and why each are critical to adoption and success. This needle-moving change represents a transition from a single-dimensional or internal view of spend into three distinct dimensions, making spend analysis the one-stop-shop for strategic sourcing prioritization and decision making.
4
Copyright © 2009 Ariba, Inc. All rights reserved.
Next-Generation Spend Analysis: Beyond Commodity Classifications
The Critical Need for Improved Supplier Insight
The first of these additional dimensions to be considered is improved insight into the organization’s supply base. In this section, we’ll outline six important supplier enrichment components that should be considered for inclusion in spend analysis and why each is critical in optimal strategic decision making. 1) Supplier Parent-Child Relationships – Accurate supplier parentage information is critical in optimizing supplier leverage in negotiations and should always be a part of a spend analysis enrichment program. A real-world example of a quick-hit opportunity that resulted from accurate parent-child relationships came from a regional retail organization that was able to renegotiate usage rates with their energy provider when realizing that several of their utility providers actually rolled up to the same corporate entity putting them in a higher usage bracket. 2) Industry Codes – Many third party sources exist that will provide supplier-level industry code information usually in either the NAICS or SIC taxonomy structure. This information is helpful in expanding existing relationships with preferred suppliers, but has another use. When embedded in the commodity classification process, industry code information provides an excellent source of information when limited quality supporting data exists as discussed in the previous section. While the granularity of the classifications may not be as deep, these industry codes are often the only clue available and when coupled with the spend profile of the company in question, can often result in useful commodity classifications. For this reason, when evaluating spend analysis providers, insist on understanding whether supplier industry details are truly a part of the classification process or simply a data element passed on from a third party. NAICS are also a required component for supplier diversity reporting (#5). 3) Financial Information – A number of attributes including revenues, employee counts, bankruptcy indicators, liens counts, suits counts and credit scores are often useful in supplier assessment exercises. To the extent that this information is available in spend analysis, it can be a useful tool in assuring the viability of the supplier in the awarding of new business. 4) Risk Assessments – Taking the financial information elements discussed in the previous section to the next level, risk scores assess the financial viability of suppliers and their relative risk of failure. Financial information is backward looking whereas risk scores are predictive. This information can be invaluable to a sourcing and procurement organization since the failure of a single or small number of suppliers can often apply significant pressure on the ability of the supply chain to function or, in a worse case, come to a grinding halt. Critical information in any economy, but particularly in a recessionary economy, is critical for success. Any spend analysis program that does not take supplier risk assessment information into account is passing on a tremendous opportunity to mitigate supply chain risk.
Copyright © 2009 Ariba, Inc. All rights reserved.
5
Next-Generation Spend Analysis: Beyond Commodity Classifications
5) Supplier Diversity – If your organization has a supplier diversity program in place, it is only logical that you would want to have this information available in a spend analysis program. To the extent that your spend analysis provider has the ability to extend your identification on which suppliers are certified as diverse, your diversity program can only benefit. And the program often has organizational revenue implications as the use case becoming more common is the request of customers to understand the percentage of your suppliers who are diverse. More coverage in this instance can lead directly to increased revenues—an excellent basis for ensuring accuracy of supplier diversity statuses. 6) Green Status – With environmental concerns clearly on the increase, if you have not already begun to track green suppliers, it is very likely that you will need to do so at some point in the not-so-distant future. There is even the chance that governmental regulations may at some point require the segmentation of green suppliers. While the identification and tracking of green suppliers is in its relative infancy, ask your spend analysis provider for their plans in this area so that you are assured that your future needs will be addressed.
6
Copyright © 2009 Ariba, Inc. All rights reserved.
Next-Generation Spend Analysis: Beyond Commodity Classifications
Market Visibility: The Window to Savings
Imagine attempting to drive your car while looking only at your dashboard. You would have some good visibility into some key information—how fast you are going, how much gas you have, whether or not your vehicle requires servicing and possibly even a limited view of where you are going (if you are fortunate enough to have GPS). But, I’m sure we would all agree that your ability to successfully navigate the car would be severely impeded without looking through the windshield to what is ahead. The traditional approach to spend analysis is not all that different. Objectives vary somewhat, but most companies engage in spend analysis solutions in order to identify new and different categories that represent potential savings opportunities. To date, the expectation has been to achieve this objective by reviewing historical spending activities and trends while ignoring market and supplier dynamics. This approach is not all that different from driving your car while focused on the speedometer. An internal view is critical, but simply not sufficient to have success. The good news is that these are now problems of the past. Next-generational spend analysis programs offer the window to savings through a variety of indices and benchmarking programs, permitting users to compare their spend information with external market factors to drive actionable analysis. We’ll discuss some of the ways that Ariba is now providing this market visibility component as a part of Ariba Spend Visibility in this section. Regardless of your provider, consider these concepts in developing your plans and strategies in strategic sourcing.
Price Indices
There are many public price indices available, both general and very specific in nature. An example of a commonly referred to public index is the Consumer Price Index (CPI), which is a measure of the average price of consumer goods and services purchased by households. Most indices, including the CPI, provide a price trending view by commodity. When viewed in isolation, these indices provide interesting insights into the dynamics amongst related and unrelated commodities and markets. When leveraged against actual spend data however, the value of the indices is magnified and sharpened. Trends in organizational spend data can be compared to price indices to identify opportunities for savings where the price delta is considerably less than the index. And this can be accomplished in a single report. In the past, such comparisons had to be made offline in multi-step manipulations and calculations if at all.
Copyright © 2009 Ariba, Inc. All rights reserved.
7
Next-Generation Spend Analysis: Beyond Commodity Classifications
Sourcing Market Dynamics
While many price indices are available publicly, the data sources measuring the relative level of a buyer’s versus a seller’s market—in other words, do I want to source commodity ‘x’ right now—are much more limited and costly to attain. Ariba has a particular strategic advantage in this area given the fact that we source globally for our customers on a daily basis. Now, we’ve made this proprietary information comprised of the savings realized by commodity by region available to Ariba Spend Visibility customers. This information is invaluable in prioritizing which potential sourcing activities to undertake as well as where. What commodities make sense to send to low-cost country regions? Which regions? Which should we source domestically? Meanwhile, the benchmarks provide the added value of comparing your realized savings to Ariba’s. Where could you have saved more and where might you have pushed too far creating an unhealthy supplier relationship?
Peer Spend Profiles
Peer spend profiles take benchmarking to the next level, permitting you to compare your spend profile to others in your industry. At a high level, what is your spend as a percent of revenue compared to others in your industry? What about direct versus indirect spend ratio? Taking a more granular view, how much are we spending relatively on IT versus our competitors? On temp labor? In MRO categories? This can indicate a strategic decision (ex. One airline that chooses to minimize amenities and not offer food to all passengers to be the low-cost provider versus another that provided free food on all flights, focusing on a higher level of service), or it can indicate areas of overspending. The possible use cases for quick-hit and sourcing opportunities are almost endless.
8
Copyright © 2009 Ariba, Inc. All rights reserved.
Next-Generation Spend Analysis: Beyond Commodity Classifications
Conclusion
This discussion is not intended to minimize the importance of traditional spend analysis components—data aggregation and commodity classifications. These elements are clearly necessary and represent the foundation of the improved visibility required to take your strategic decision making to the next level. Based on the benefits outlined and the real-world experiences of many organizations however, it is clear that for truly actionable analysis, internal visibility is not enough. To underscore this value, it is important to understand that one of the primary advantages of including the external data is the fact that it highlights areas of savings opportunity. This is no small task. One of the basic challenges of users analyzing data in traditional solutions with internal-only visibility is the lack of understanding of what to do next. Where to go to find opportunities? While we shouldn’t consider this challenge completely “solved”, the inclusion of supplier and market information drives users where to go next which, in turn, maximizes savings and the return of the spend analysis exercise. Ariba is serious about the success of our Ariba Spend Visibility customers as our continued innovation suggests. We would welcome the opportunity to further discuss your spend management objectives and challenges and help make you into your organization’s superhero. If you have thoughts, questions, or concerns regarding spend management in general or this white paper in particular, please contact Ken Miklos at [email protected] or 412.297.7413. Or, if you would like to discuss how Ariba Spend Visibility can help you overcome your spend analysis challenges, go to http://www.ariba.com/solutions/spendvisibility.cfm or call 866.772.7422.
Copyright © 2009 Ariba, Inc. All rights reserved.
9
doc_563430926.pdf
Analysis is the process of breaking a complex topic or substance into smaller parts to gain a better understanding of it. The technique has been applied in the study of mathematics and logic since before Aristotle (384–322 B.C.), though analysis as a formal concept is a relatively recent development
Next-Generation Spend Analysis: Beyond Commodity
Classifications
May 2009
Next-Generation Spend Analysis: Beyond Commodity Classifications
Table of Contents
3 4 5 7 Executive Summary: Procurement Superheroes The Limitations of Traditional Spend Analysis The Critical Need for Improved Supplier Insight Market Visibility: The Window to Savings
7 8 8 Price Indices Sourcing Market Dynamics Peer Spend Profiles
9
Conclusion
2
Copyright © 2009 Ariba, Inc. All rights reserved.
Next-Generation Spend Analysis: Beyond Commodity Classifications
Executive Summary: Procurement Superheroes
In today’s economy, CPOs are feeling the pressure to act as heroes for bottom-line results. With revenues decreasing over the recessionary period, organizations have looked to procurement to save the day through increased savings targets to be achieved with fewer resources. Capes and tights are optional. To reach these ever-increasing (and increasingly important) savings goals, many in the procurement function have looked to technology in order to improve efficiency and effectiveness. eSourcing solutions offer tools that allow companies to source more effectively, manage more spend strategically, and build more optimal relationships with suppliers. But, how do you decide what to source? This is the role of spend analysis programs. Through data aggregation and enrichment, the expectation is that new savings opportunities will be identified more quickly and efficiently. In the recent report, ‘Spend Analysis: Pulling Back the Cover on Savings’, October 2008, the Aberdeen Group cited an impressive business case for companies who leverage spend analysis solutions. Their research found that those leveraging spend analysis experience 67 percent higher savings on their spend while driving 25 percent more spend under management and 11 percent higher contract compliance. Why then hasn’t everyone implemented a spend analysis program? The reasons vary, including a lack of necessary resources and data limitations. However, the most common source of hesitation is the concern that spend analysis will not deliver the promised return. This objection is not without merit. Gaining accurate and timely visibility into your spend data is a start. And conducting structured analyses on this data based on standardized category or commodity classifications is certainly an advantage. But spend analysis alone is not a silver bullet. Analyses of classified data can help direct your strategies in the best case scenario. However, this information does not provide a complete picture into which opportunities to attack first or what types of returns you can expect from your efforts. By focusing solely on spend classification and analysis, the market has considered only a partial solution regarding what is needed for true strategic decision making. And this has led to concern and even prompted some companies to shelve their spend analysis initiatives. The objective of this white paper is to address the limitations of traditional spend analysis and point out the components of a comprehensive, next-generation solution that delivers on its promise of return—making spend analysis the go-to tool in your procurement superhero utility belt.
Copyright © 2009 Ariba, Inc. All rights reserved.
3
Next-Generation Spend Analysis: Beyond Commodity Classifications
The Limitations of Traditional Spend Analysis
If you were to poll procurement professionals on what they expect as an output of a spend analysis project, there is little doubt that nine out of 10 would respond, “commodity classifications” or “to get a better understanding of what I’m buying”. This is not surprising since most organizations have spend data in disparate purchasing and payables systems with little to no insight into the granular commodities the spend represents. For some, having this information aggregated and available via a normalized taxonomy represents a quantum leap forward. Even for this subset, however, limitations in the return from traditional spend analysis programs often exist. Listed here are some of those that are most common. 1) The inability of the provider to return granular and/or accurate classifications for spend transactions with no or limited supporting detail. While the percentage of coverage by transaction or total spend vary, the reality is that virtually all organizations have a subset of their spend data that does not contain rich supporting details such as meaningful invoice or PO descriptions. The fact that this subset often represents the spend the company is actually trying to get visibility into is clearly a catch 22. 2) An internal view of purchasing activity and trends does not take external factors such as market dynamics, recently sourced commodities or best-in-class benchmarks into account. It’s great to know that we are spending 20 percent less in a particular category. However, if the market has shown an even-sharper decrease of 35 percent, an additional sourcing opportunity may exist that would have otherwise been missed. 3) What now? Or what next? Automated tools can only take savings opportunity identification so far. Pre-packaged or custom reports can be very useful for indicating likely opportunities, but to confirm if the opportunities are real usually requires additional analysis and investigation of the data, existing contracts and the market. Furthermore, realizing the savings opportunity may require change management (for example, implementing a true strategic sourcing process that leverages spend analysis to identify, quantify and prioritize opportunities). 4) A lack of adoption caused primarily by the internal-only focus leading to “paralysis by analysis” with users getting bogged down by a small minority of transactions that are classified inaccurately or not at all while the improvements in visibility that the program provides—and the potential for return that it represents—often go unnoticed. The net of these issues is that while traditional spend analysis provides valuable insight into organizational spend, it is, in fact, only a partial picture. We will now discuss the next-generational components that you should take into account when considering deploying, or re-deploying, a spend analysis program and why each are critical to adoption and success. This needle-moving change represents a transition from a single-dimensional or internal view of spend into three distinct dimensions, making spend analysis the one-stop-shop for strategic sourcing prioritization and decision making.
4
Copyright © 2009 Ariba, Inc. All rights reserved.
Next-Generation Spend Analysis: Beyond Commodity Classifications
The Critical Need for Improved Supplier Insight
The first of these additional dimensions to be considered is improved insight into the organization’s supply base. In this section, we’ll outline six important supplier enrichment components that should be considered for inclusion in spend analysis and why each is critical in optimal strategic decision making. 1) Supplier Parent-Child Relationships – Accurate supplier parentage information is critical in optimizing supplier leverage in negotiations and should always be a part of a spend analysis enrichment program. A real-world example of a quick-hit opportunity that resulted from accurate parent-child relationships came from a regional retail organization that was able to renegotiate usage rates with their energy provider when realizing that several of their utility providers actually rolled up to the same corporate entity putting them in a higher usage bracket. 2) Industry Codes – Many third party sources exist that will provide supplier-level industry code information usually in either the NAICS or SIC taxonomy structure. This information is helpful in expanding existing relationships with preferred suppliers, but has another use. When embedded in the commodity classification process, industry code information provides an excellent source of information when limited quality supporting data exists as discussed in the previous section. While the granularity of the classifications may not be as deep, these industry codes are often the only clue available and when coupled with the spend profile of the company in question, can often result in useful commodity classifications. For this reason, when evaluating spend analysis providers, insist on understanding whether supplier industry details are truly a part of the classification process or simply a data element passed on from a third party. NAICS are also a required component for supplier diversity reporting (#5). 3) Financial Information – A number of attributes including revenues, employee counts, bankruptcy indicators, liens counts, suits counts and credit scores are often useful in supplier assessment exercises. To the extent that this information is available in spend analysis, it can be a useful tool in assuring the viability of the supplier in the awarding of new business. 4) Risk Assessments – Taking the financial information elements discussed in the previous section to the next level, risk scores assess the financial viability of suppliers and their relative risk of failure. Financial information is backward looking whereas risk scores are predictive. This information can be invaluable to a sourcing and procurement organization since the failure of a single or small number of suppliers can often apply significant pressure on the ability of the supply chain to function or, in a worse case, come to a grinding halt. Critical information in any economy, but particularly in a recessionary economy, is critical for success. Any spend analysis program that does not take supplier risk assessment information into account is passing on a tremendous opportunity to mitigate supply chain risk.
Copyright © 2009 Ariba, Inc. All rights reserved.
5
Next-Generation Spend Analysis: Beyond Commodity Classifications
5) Supplier Diversity – If your organization has a supplier diversity program in place, it is only logical that you would want to have this information available in a spend analysis program. To the extent that your spend analysis provider has the ability to extend your identification on which suppliers are certified as diverse, your diversity program can only benefit. And the program often has organizational revenue implications as the use case becoming more common is the request of customers to understand the percentage of your suppliers who are diverse. More coverage in this instance can lead directly to increased revenues—an excellent basis for ensuring accuracy of supplier diversity statuses. 6) Green Status – With environmental concerns clearly on the increase, if you have not already begun to track green suppliers, it is very likely that you will need to do so at some point in the not-so-distant future. There is even the chance that governmental regulations may at some point require the segmentation of green suppliers. While the identification and tracking of green suppliers is in its relative infancy, ask your spend analysis provider for their plans in this area so that you are assured that your future needs will be addressed.
6
Copyright © 2009 Ariba, Inc. All rights reserved.
Next-Generation Spend Analysis: Beyond Commodity Classifications
Market Visibility: The Window to Savings
Imagine attempting to drive your car while looking only at your dashboard. You would have some good visibility into some key information—how fast you are going, how much gas you have, whether or not your vehicle requires servicing and possibly even a limited view of where you are going (if you are fortunate enough to have GPS). But, I’m sure we would all agree that your ability to successfully navigate the car would be severely impeded without looking through the windshield to what is ahead. The traditional approach to spend analysis is not all that different. Objectives vary somewhat, but most companies engage in spend analysis solutions in order to identify new and different categories that represent potential savings opportunities. To date, the expectation has been to achieve this objective by reviewing historical spending activities and trends while ignoring market and supplier dynamics. This approach is not all that different from driving your car while focused on the speedometer. An internal view is critical, but simply not sufficient to have success. The good news is that these are now problems of the past. Next-generational spend analysis programs offer the window to savings through a variety of indices and benchmarking programs, permitting users to compare their spend information with external market factors to drive actionable analysis. We’ll discuss some of the ways that Ariba is now providing this market visibility component as a part of Ariba Spend Visibility in this section. Regardless of your provider, consider these concepts in developing your plans and strategies in strategic sourcing.
Price Indices
There are many public price indices available, both general and very specific in nature. An example of a commonly referred to public index is the Consumer Price Index (CPI), which is a measure of the average price of consumer goods and services purchased by households. Most indices, including the CPI, provide a price trending view by commodity. When viewed in isolation, these indices provide interesting insights into the dynamics amongst related and unrelated commodities and markets. When leveraged against actual spend data however, the value of the indices is magnified and sharpened. Trends in organizational spend data can be compared to price indices to identify opportunities for savings where the price delta is considerably less than the index. And this can be accomplished in a single report. In the past, such comparisons had to be made offline in multi-step manipulations and calculations if at all.
Copyright © 2009 Ariba, Inc. All rights reserved.
7
Next-Generation Spend Analysis: Beyond Commodity Classifications
Sourcing Market Dynamics
While many price indices are available publicly, the data sources measuring the relative level of a buyer’s versus a seller’s market—in other words, do I want to source commodity ‘x’ right now—are much more limited and costly to attain. Ariba has a particular strategic advantage in this area given the fact that we source globally for our customers on a daily basis. Now, we’ve made this proprietary information comprised of the savings realized by commodity by region available to Ariba Spend Visibility customers. This information is invaluable in prioritizing which potential sourcing activities to undertake as well as where. What commodities make sense to send to low-cost country regions? Which regions? Which should we source domestically? Meanwhile, the benchmarks provide the added value of comparing your realized savings to Ariba’s. Where could you have saved more and where might you have pushed too far creating an unhealthy supplier relationship?
Peer Spend Profiles
Peer spend profiles take benchmarking to the next level, permitting you to compare your spend profile to others in your industry. At a high level, what is your spend as a percent of revenue compared to others in your industry? What about direct versus indirect spend ratio? Taking a more granular view, how much are we spending relatively on IT versus our competitors? On temp labor? In MRO categories? This can indicate a strategic decision (ex. One airline that chooses to minimize amenities and not offer food to all passengers to be the low-cost provider versus another that provided free food on all flights, focusing on a higher level of service), or it can indicate areas of overspending. The possible use cases for quick-hit and sourcing opportunities are almost endless.
8
Copyright © 2009 Ariba, Inc. All rights reserved.
Next-Generation Spend Analysis: Beyond Commodity Classifications
Conclusion
This discussion is not intended to minimize the importance of traditional spend analysis components—data aggregation and commodity classifications. These elements are clearly necessary and represent the foundation of the improved visibility required to take your strategic decision making to the next level. Based on the benefits outlined and the real-world experiences of many organizations however, it is clear that for truly actionable analysis, internal visibility is not enough. To underscore this value, it is important to understand that one of the primary advantages of including the external data is the fact that it highlights areas of savings opportunity. This is no small task. One of the basic challenges of users analyzing data in traditional solutions with internal-only visibility is the lack of understanding of what to do next. Where to go to find opportunities? While we shouldn’t consider this challenge completely “solved”, the inclusion of supplier and market information drives users where to go next which, in turn, maximizes savings and the return of the spend analysis exercise. Ariba is serious about the success of our Ariba Spend Visibility customers as our continued innovation suggests. We would welcome the opportunity to further discuss your spend management objectives and challenges and help make you into your organization’s superhero. If you have thoughts, questions, or concerns regarding spend management in general or this white paper in particular, please contact Ken Miklos at [email protected] or 412.297.7413. Or, if you would like to discuss how Ariba Spend Visibility can help you overcome your spend analysis challenges, go to http://www.ariba.com/solutions/spendvisibility.cfm or call 866.772.7422.
Copyright © 2009 Ariba, Inc. All rights reserved.
9
doc_563430926.pdf