Spend Analysis is what you do to the
Exporting data from an accounts payable system expecting it to
deliver immediate, meaningful, business intelligence is quite
unrealistic. Spend Analysis is what you do to your data to
make it fit for purpose and useful for Spend Management.
To create your set of spend data you need to
collect your raw data set from various sources
- Accounts Payable Systems
- pCard Transaction Systems
- Purchace Order / eProcurement Systems
together in one place so that you can Cleanse,
Classify and Enrich it.
The Cleansing process standardizes the data,
removes duplicates, identifies and fixes errors in preparation for
subsequent processing. Typically data sets can have the same
supplier multiples times with different spellings for example:
AT&T, AT and T, AT & T, ATT. The cleansing process merges
those duplicates into one usable supplier.
Every financial management system is broadly similar, but when
it comes to delivering meaningful visibility of spending on goods
and services there are significant differences between data sets
that mean that it is not possible to make meaningful like-for-like
comparisons (for example by department, cost centre or subjective
code). Classification is about the setting of
standard labeling rules across all of your data sources so that you
can accurately see how much is being spent on given goods or
There are bits of key information that don’t necessarily sit in
any of your finance systems. Information about your vendors such
- Number of Employees
- Business Size
- Annual Revenue
- Date of Incorporation (Birth Year)
- Geographic Location
The Enrichment process adds all of this
additional information about your vendors. This appended
information enables you to then perform additional reporting that
you could never perform using your own financial management
systems. The sorts of things you could find out are:
- The suppliers you pay using a purchase card.
- Who are the small and medium businesses and how much do you
spend with them.
- The amount you spend with newly created suppliers.
- The categories of goods and services do you spend relatively
more with local and/or small businesses.
- The amount you spend and in which categories do you spend
locally, countywide, in-state, regionally or nationally.
The result of all this work is a pool of spend information that
has been aggregated together and is ready for use for Spend
Management by the Procurement and Finance teams.
TAGS: spikes cavell, spend analysis, collect, cleanse, classify, enrich, data process, spend data