Aberdeen Group today released its latest benchmark into spend analysis performance, which you can find here.
Aberdeen claim to have evaluated over 700 businesses in the last couple of months and the result of such a large scale survey is that there are some interesting findings here, although as anyone involved in this space might expect, the headlines are all too familiar:
» 60% of organisations still rely on manual tools to collect and analyse spend data, resulting in limited spend visibility and the inability to improve cost savings.
» One third of businesses have no formal processes in place at all to manage spend analysis
» 38% of organisations believe that leveraging technology for spend analysis is a top strategy
The correlation Aberdeen draws between poor visibility of spend data and poor purchasing performance is pretty stark, demonstrating that companies without formalised, automated, and repeatable procedures for spend data collection, classification, and analysis have less spend under management, yield significantly lower returns from their strategic sourcing programs, and have lower compliance rates.
Equally, once organisations have managed to get control over spend visibility, “it is incumbent upon the procurement team to develop an effective plan of action to prioritise and then source the categories that will provide the greatest savings impact”.
It is encouraging to note a very real trend that we have seen develop in the last few years given voice in the report, namely that “CEOs and FDs are seeking out as many avenues as possible to positively impact the bottom line, and are looking to their procurement departments to contribute more to this end. The profile of procurement has therefore been elevated and the function is valued as significantly more strategic”.
This point made in passing is one of the more significant in my opinion – over the past couple of years particularly there has been a marked shift in attitude towards the importance of (indirect) purchasing within many large organisations. Some might even say that purchasing is finally being accorded the importance it is due!
More on the Aberdeen report in days to come.
