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Spend analysis software reviews past purchases in order to find ways to save in the future. Sometimes referred to as spend management solutions, the software looks at the three fundamental parts of spending:
Then, the spend analytics show how your business can improve. In short, your collected spend data can reveal savings opportunities.
Spend analysis has some overlap with procurement software, though they have different functions.
The right software can improve other areas of the company like budgeting, product development, and the management of inventory, suppliers, and contracts.
There are many great benefits to utilizing a spend analysis software. Learn a few of them right now:
One of the first benefits of using spend analysis software is the ability to generate spend cubes. As the name suggests, spend cubes are three-dimensional graphics for measuring spending habits. This is one of the most effective visualizations available for reviewing three factors:
The cube uses the collected data from these to show the overall price and volume of items purchased. By utilizing such a visual manner, you can instantly see opportunities for savings. Even better, you can then showcase these savings in presentations in an easy-to-follow format for management and other C-suite executives.
There’s more to supplier management than just keeping track of contact information. Where you buy is just as important as what you buy. And you need to know who can offer the best deals. Spend analysis software has tools to help you review supplier relationships or contracts and see which ones aren’t beneficial to you.
The first step is to figure out your company’s ideal budget by reviewing historical spending patterns. By knowing what your company can afford, you can start to establish better supplier relationships. You’ll have better negotiating leverage with your current supplier since you can begin looking for new suppliers who will offer lower rates. Your suppliers would rather keep your company as a client by offering an adjusted price than risk losing you to someone else.
The procurement process doesn’t pay off until you have completely finished a customer request, whether it’s an order for new products or a service request. Spend analysis software shows where your company could improve in order to obtain a higher ROI. Cycle time reduction is just one way your company can change. How? Real-time and historical data analytics can help you see where there are delays along the supply chain.
For example, you may realize one of your suppliers is charging you at a higher rate which means you have to wait to reorder stock. This results in a slower procurement process. By finding these issues with spend analysis software, you can focus on changing these factors to then reduce your overall cycle time. Your procurement team can even test multiple solutions to find the one that offers the most cost savings benefits to your company.
Of course, the biggest benefit of spend analysis software is finding ways to improve your company ROI. Before you make any important procurement decisions, review your choices with spend analysis software. You can make more informed, actionable decisions when you have all the data laid out before you.
Additionally, spend analysis software includes savings measurement tools. After making changes to your procurement process and reducing your cycle time, you can measure the actual savings you accomplished. When it’s time to report on company earnings, you can demonstrate your exact savings to C-suite executives and board members.
Spend analysis systems are most often used by chief procurement officers (CPOs) and chief financial officers (CFOs). However, the software is also beneficial to smaller companies who do not have dedicated C-suite officers. Company presidents, managers, accountants, and anyone in charge of decision making can benefit from spend analysis systems.
When paired with an accounting software, SaaS or on-premise spend analysis solutions can overhaul how your company manages its finances completely. Spend visibility tools make it easier than ever to showcase what’s working and what isn’t.