Ardent Partners’ recent research report, Sourcing and Procurement: The 2016-2017 Technology and Innovation Outlook Report, chronicles the evolution of sourcing and procurement technologies over the last two decades to where they are today and poised to go tomorrow. This report, which is chock full of great insights on many advanced, distinct sourcing and procurement technologies, has spawned a series here on CPO Rising that looks in depth at each of the innovative solutions coming onto the market today and in the near future. Today’s installment: performance or savings management.
Wouldn’t it be great if you could track the savings or performance of each and every one of your team’s sourcing and procurement initiatives in one place – like in a consolidated scorecard for all of the projects and events under procurement’s stewardship? Well, that is roughly what performance or savings management technologies are. They tap into spend analysis data, centralize it within a dashboard, and track a sourcing or procurement event’s savings (or losses) over the length of the event. They can also compare identified/negotiated savings with realized and implemented savings and connect the performance to the enterprise bottom line.
As a result, these technologies can be useful for populating P&L reports and periodic financial releases, as well as providing justification for certain procurement activities and relationships. Perhaps sourcing Norwegian salmon is more cost effective than Chilean salmon in the long run, even though Norwegian salmon might present higher upfront costs. Performance / savings management technologies can help Chief Procurement Officers (CPOs), Chief Financial Officers (CFOs), and other business leaders quickly understand the impact to the bottom line and from multiple angles.
“The best of the best” of these tools leverage process automation to move the data from point to point and track it over its lifecycle. Other technologies allow for manual manipulation and interpretation inside of traditional databases. But the real innovation here lies within process automation, master data management, and advanced analytics that take the “man” out of the “loop” and provide strategic value from tactical processes and clustered data. The value is just within the outputs – it is also within the efficiency gains that automated performance / savings management technologies deliver to business leaders.
Final Thoughts
Financial performance dashboards, portfolio performance assessments, and histograms are useful in our private lives – why wouldn’t they help us monitor and track enterprise savings and performance, too? These technologies are making it easier for CPOs, CFOs, and other business leaders to understand the long-term impact of their sourcing and procurement behaviors and communicate them to stakeholders inside and outside of the enterprise. Without them, end users have to manually connect the dots and analyze the results; but with them, they can recapitalize time and deliver fresh insights in an efficient and impactful manner.
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