In the current climate, however, actionable data is needed immediately, rather than having to wait for it to be included in a report. This is where Artificial Intelligence (AI) can come into play. It can interpret the sourcing or purchasing situation and what the most likely outcomes will look like, leading to more time saved, more compliance and less risk.
Outmoded management tools lack the breadth and depth of next-generation spend management platforms, which is why both procurement managers and senior executives at businesses around the world are moving beyond cost reduction and transforming procurement into a strategic tool for building real, lasting value. Gary Simon, BSc, FCA, FBCS, CITP, Chief Executive of FSN & Leader of the Modern Finance Forum on LinkedIn, for example, has stated: "Procurement data (amounts, deliveries, sources and substitutes) needs to be planned in line with sales forecasts, sometimes over very long periods depending on industry sector. Shortages and delays can have a profound impact on profitability and strategic decision making. Increasingly, integrated business planning (IBP), i.e. the fusion of operational data from, say, procurement and sales order systems with financial plans, is crucial to assessing the robustness of both short-term forecasts and longer-term planning scenarios."
It is often difficult to achieve, as spend management project teams will often encounter a series of major data barriers that need to be overcome, including:
- Disparate data: Spending data is typically found in multiple systems that may not be connected, from Accounts Payable spreadsheets and finance management systems, through to ERP tools, corporate purchasing systems and p-cards.
- Inaccuracy: Spending data is often inconsistent because of mistakes, duplications, chasms in records or a large amount of data classified as “other”. It may also be old or present several competing versions of the truth.
- Inconsistent product information: Names and codes for suppliers, products and services may be recorded incorrectly, adding to the fog and limiting negotiation leverage with suppliers.
- Limited analysis: Analyzing current spending patterns by multiple dimensions is a challenge as general-purpose business intelligence tools can’t help.