Five forces speeding up spend management adoption
Why is spend management rising so fast up the boardroom agenda of successful organizations? 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 organizations 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 organization's buying trends, opens up new opportunities for greater savings and efficiency - and it's breath-taking.
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 analyzing, predicting and making decisions for us based on real-time data, trends and other factors.
#3: Cloud and mobility
Today's enterprises are agile and flexible, 24/7 operations. With cloud and mobility embraced everywhere today, buyers can place orders from anywhere, managers can approve purchases on-the-go, and suppliers can interact, change their profiles and check payment status with ease.
But the latest purchasing tools are not a 'flat' experience based on a traditional catalog approach. Expect new players, like major web stores, to enter the B2B space, broadening choice and ramping up competition dramatically. That means better deals...available on in the cloud.
#4: Rapid expansion of global markets
Organizations are now dealing with increasingly diverse suppliers and partners, from local companies through to global IT enterprises. Multiple languages, currencies and tax regimes come into play, requiring solutions that can cope with any kind of transaction, anywhere - and be able to track their every move, across a connected world.
#5: Greater compliance and regulation
Spend management can help with a raft of key issues by providing the necessary insight from tackling fraud prevention, through to avoiding maverick spending and waste, and then onto ensuring best value from every contract. With today's tools, there's a clear and transparent audit trail and many vital policies can be enforced automatically.
Right place, right time
You could say the visionaries behind spend management could see exactly where the business world has been heading for years - and put the right building blocks in place. Alternatively, you might argue that spend management just happens to be in the right place at the right time in economic history. Either way, it's time to adjust your strategy, fine tune your operations and take advantage.
Eliminate wasted time, money and talent to become a faster, leaner and smarter organization and thrive in the new digital economy.
But we may be only scratching the surface of what's possible. Some industry free-thinkers reckon that Spend Management could morph into something far greater - transactional platforms from which enterprises conduct all manner of commercial activities.