Despite my somewhat strident tone in the last two articles that focused on The State of Spend Analysis in 2012 (article 1 and article 2), I continue to be impressed by the many strides taken forward each year by the collective profession and by individual leaders. For, it was just last week that we saw a Chief Procurement Officer appointed (or “rising,” as we like to say) to a new leadership role as the head of a global division (This now former-CPO, Barbara Lavernos had visibility into L’Oreal’s more than 9 billion euros in spend with the help of BravoSolution’s Spend Analysis solution).
And, within our CPO Rising 2011 research effort, there are some positives in the world of procurement as it relates to spend analysis and visibility, in general. This, despite the fact, that a large majority (71%) of procurement departments lack full visibility into their spend. Despite that rather stark and depressing number, many procurement teams are able to use spend data to enhance or improve results. Specifically, 52% of procurement departments are able to use their spend data to identify sourcing opportunities, proving that when it comes to spend visibility in the market, the glass is half full, literally. In the spectrum of value and savings opportunities that spend visibility can yield, identifying the top sourcing opportunities within a business cycle is at the top of the list.
While spend analysis solutions are not always used directly to measure and track savings, it is certainly easier when a spend analysis solution with strong analytics and reporting is in place. Here the glass is also about half full: 55% of all enterprises have visibility into their identified (or negotiated) savings.
Finally, although savings is the top business pressure for global CPOs, savings has its limitations as a procurement performance metric. We prefer that organizations focus first on “spend under management” as a performance metric and as a management objective – as in increasing it (if interested, read “The Gold Standard” which summarizes our view on it). Here again the glass is, well, almost half full, with 46% of procurement departments able to fully view and track spend under management.
Over the past few years, there have been many exciting innovations that have emerged within the different spend analysis solutions available in the market. Having seen and worked with many of the spend analysis solution providers, I expect to see many more innovations over the next 12 months. Half the market will be ready for them.