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Spend Analysis is what you do to the data

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.

DataProcessTo create your set of spend data you need to collect your raw data set from various sources such as:

  • 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 services.

There are bits of key information that don’t necessarily sit in any of your finance systems. Information about your vendors such as:

  • 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

"We have been very pleased at take up under the new Spikes Cavell contract. Selecting a vendor for spend analysis normally takes Higher Ed institutions a lot of time and effort so it is great that the contract is already proving valuable to members."

Jennifer Nisbet - E&I’s Portfolio Support Executive