Spend 360 Summary
- 1. SPEND ANALYSIS Spend Analysis Challenges The current economic environment has put unprecedented pressure on organisations to obtain detailed, actionable information about their costs. With revenues likely to stay flat or possibly decline the only way to maintain (or even grow) profit is to focus on direct and indirect costs. Due to the gearing of most organisations small percentage reductions in costs can have dramatic impacts on cash generation and profit. Spend Analysis looks at an organisations’ spend with its suppliers. Good Spend Analysis should encompass ALL spend, with ALL suppliers. 90% of organisations have neither complete nor repeatable Spend Analysis. This means that not all spend is “under management”. According to the Chartered Institute of Purchasing and Supply anything up to 60% of costs in a business may not be “under management” – meaning they are not proactively managed – after all, how many suppliers can 1 person manage? 91% of purchasing professionals agree they require more data in order to better meet targets to optimise spend with suppliers. Capturing then correctly classifying spend enables more spend to be brought “under management” releasing stored financial benefit in many organisations. The challenges to getting it and it hitting the bottom line are typically: • No easy access to spend data sources (on average greater than 9 in any organisation and some case hundreds). • Dissimilarities in, and poor quality of, spend data. • Inability to enrich data by classification, normalisation, aggregation, transformation etc. • Lack of time and unavailability of Procurement and IT resources to understand, build and maintain a comprehensive, dynamic and usable solution. Spend Analysis Benefits The benefits of better Spend Analysis accrue to Finance as well as Procurement. With more accurate information about your suppliers and what they supply organisations can release stored financial benefit and target cost reduction activities better. This amplifies the opportunity for efficiencies and savings to deliver fiscal benefits to the bottom line. Whether you consider yourself to be average or “best-in-class” there is always opportunity to continue improvement. As examples, more accurate spend data underpins: • Bringing more spend “under management” – saving 15-20% per category • Reductions in “maverick” spend • ROI on downstream activities such as auctions • ROI on downstream sourcing activities and CatMan processes • Inventory and Supplier Relationship/Risk Management programmes • The preservation or generation of Cash • Impacts on key financial measurements such Profit, Working Capital, Return on Capital Employed and EPS A selection of Spend360 outputs - the main dashboard, spend by supplier, spend by category, Visibility of detailed, comprehensive spend data ensures positive financial impacts are maximised. a sample category tree, approved and non-approved supplier, and supplier parent/child relationship Spend360 Limited Suite 4, 54 Epsom Road, Guildford, Surrey, GU1 3LF WWW.DU360.Com
- 2. The Spend360 Solution Spend360 addresses the challenges outlined above. By breaking down the barriers to collecting spend data, enriching and classifying it, users can use the complete spend profile to drive savings to the bottom line. Using a unique artificial intelligence approach delivers the following: • Completeness – Spend360 takes the complete profile, normalises, enriches and classifies it – effectively reducing the need for costly, inefficient and time consuming rules-based integration and transformation of raw data. • Accuracy – enriching your data, driving up the quality, and accurately classifying your spend to your own hierarchy and/or UNSPSC ensures data represents spend profiles as you want them, maximising benefits for users, departments, divisions and complete enterprises. • Granularity – taking the complete spend record, enriching and classifying it ensures that wherever supporting detail is required to capture a savings opportunity or address a process error it is available in no more than 2 clicks • Timeliness – without an ERP-sized investment, turnaround from collection to enrichment and usability is measure in days or weeks and not months. • Usability - In addition to providing 27out-of-the-box reports, Spend360 provides powerful customisation for power-users to create their own reports, as well as the ability to create email, PDF and Powerpoint output to share and present to other parts of the organisation. The standard reports provide Procurement and Finance perspectives on the spend data. Spend360 Architecture The design and architecture of Spend360 means that preliminary categorisation of spend can be done in a matter of days, replacing what currently takes months, is inaccurate, not detailed enough, or not done at all. This fact alone means that opportunities to make savings through optimisation of downstream activities such as auctions, supplier consolidation etc can be brought forward by months, increasing savings by, on average, 28%. Flexibility as to how source data is captured and a virtually zero footprint also reduces barriers to adoption and usage. • Push or Pull – there are two models for populating the Spend360 application. Data can be “pushed”. This is low-tech, low cost, low impact and more do-able for many organisations. Alternatively data can be “pulled” from source systems. This is higher-tech, higher cost but ultimately automates the entire process making it part of the fabric of your enterprise. Spend360 contains logic and expertise, to provide for different industry and category requirements, that automates many of the traditional task associated with answering seemingly simple questions about spend. This technology A selection of Spend360 outputs – invoices by category manager, suppliers with multiple payment therefore means that outputs are more accurate, more detailed and more quickly available than traditional, in-house terms, credit notes by department, duplicate invoices, invoice detail by category, spend by currency, approaches. spending trends over time and period by period growth comparison. Spend360 Limited Suite 4, 54 Epsom Road, Guildford, Surrey, GU1 3LF WWW.DU360.Com
- 3. Spend360 Usability Spend360 provides a desktop environment where ALL of the data required to understand and manage a category is provided. Since Spend360 captures ALL transaction data almost everything is selectable and searchable without having to leave the user environment. A few examples of key features are shown here. Top level report navigation panel Selecting and deselecting located on all screens components, either in the panels or via the resources tabs, Resources tabs and select or dynamically changes the display deselect options to include or and any associated totals. Here exclude elements. This allows you can see several elements of macro analysis in many spend have been deselected for permutations. spend by department,changing the spend by currency shown at Dynamic, selectable components level 2. The grey/brushed out in most panels allows for element shows the proportion of immediate drill down into selected component to the its supporting detail. Here selecting total. Clicking on the grey area, a node in your category tree or making a new selection immediately shows the spend for returns you to your totals or to a that category but also other new selection. Right clicking category elements and the ability brings up appropriate micro level to look at the micro level at detail to source record level. transaction detail Spend360 Limited Suite 4, 54 Epsom Road, Guildford, Surrey, GU1 3LF WWW.DU360.Com