This expert article was written in 2018, and its messaging and content may no longer be as relevant as it once was. Please see our expert articles page for the most recent discussions.
Five forces speeding up spend management adoption
Why is spend management rising so fast up the boardroom agenda of successful organisations? Look closely and you'll see five critical factors all coming together at the same time.
By now, any forward-looking Finance or Procurement executive will either be very aware of spend management, or feverishly trying to find out more. Independent industry statistics suggest the return from well-implemented spend management initiatives can exceed 10 times the investment. What's more, you don't need to wait for years - the benefits can start to come through within months.
But why is 'now' the time to adopt spend management at a strategic level if you haven't done so before? What's convinced so many organisations to take this path? And why are things different to a few years ago?
Among the shadows
Traditionally, spend management has been seen as a back-office activity - a way to squeeze out cost from the price of goods and services required to support business operations, and the processes of paying for them.
Some purchasing and payment activities were so inefficient that 'point-based' solutions were used to target this low-hanging fruit - to deliver immediate savings. But the benefits were extremely limited and solutions failed to move into grey areas, bridge technical and information chasms and transform the behaviours of buyers and suppliers. And that's where spend management remained...in the shadows.
However, five critical factors have catapulted spend management to the point where it now often takes center stage in any strategic debate about efficiency.
Let's examine these powerful forces at work:
#1: New tools
Spend management isn't merely about technology. Best practice expertise and processes are essential. But the tools available to managers, buyers and suppliers have evolved massively in terms of power and simplicity. These tools also embody an 'integration without frontiers' ethos - that means spend management can go wider and deeper than ever before, connecting systems and decision-making in new ways.
These tools make people's lives easier, which is always popular - and this speeds up user adoption, which has been a sticking point traditionally. Meanwhile, the visibility and depth of detail into an organisation's buying trends, opens up new opportunities for greater savings and efficiency - and it's breath-taking.
#2: Automation
This particular aspect of technology should not be underestimated. Vast swathes of manual, mundane, often-repeated and error-prone activities can be replaced easily. This removes operational waste and frees up time, money and talent - almost instantly. The impact goes straight to the bottom-line. Staff can switch to more value-added activities which is great for morale too.
But there's something else to watch closely...fast-developing intelligence. Never mind simply processing and reporting on purchases, new technologies will be automatically analysing, predicting and making decisions for us based on real-time data, trends and other factors.