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    What is Spend Analysis?

    Spend Analytics

    What is Spend Analysis?

    Spend analysis is the process of identifying, gathering, cleansing, grouping, categorizing and analyzing your organization’s spend data. This is done with the goal of decreasing procurement costs and improving efficiencies by increasing visibility and transparency. Using real-time data and analytics gives you the insight you need to save money and gain efficiency.

    Spend analysis is just one piece of the much larger field of spend management. It is used to visualize all your data so you can make better sourcing and supplier decisions. Additionally, it can also help with improving contract compliance, reducing cycle times, and uncovering maverick spend.


    Already familiar with spend analysis and looking for tips to maximize your ROI? Check out our 10 tips to get the most out of your spend analytics solution!

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    What is the Spend Analysis Process?

    You want to cash in on these benefits, but how do you get started? With a bit of planning, you can build a versatile, self-sustaining analysis process and visualize your improvements over time.

    Spend trending upward

    There are three core areas of spend analysis – visibility, analysis, and process. When you leverage these three areas, you will be able to identify how much you are spending, with whom you are spending, and the ROI on that spend.

    1. Achieve Complete Visibility of Your Spend

    Conducting a proper, seven-step spend analysis will give you complete visibility into your spend. Whether it’s your first spend analysis or your twentieth, you want to make sure that it’s a success. How? By using key performance indicators (KPIs), you can quantify your success. We have compiled a list of KPIs in case you are unsure of where to start.

    A spend analysis is your organization’s single source of truth, it turns your data into a powerhouse of information and insight. Gaining visibility is critical to successful spend analysis. After all, you can’t save what you can’t see.

    2. Analyze Spend Data for Maximum Versatility

    Once your data is cleansed and organized into relevant categories, you’re ready to start analyzing. Look for trends and verify that you are leveraging supplier data to get competitive pricing. Use this pool of aggregated spend information to understand where your spend is going and who it’s with.

    This can help you strengthen relationships with suppliers you may not have realized were such a large part of your spend, and develop a better approach to supplier management.

    According to Spend Matters, supplier data is the least visible and least utilized data among most procurement teams, meaning that there is a massive opportunity to rise above the competition by taking advantage of it.

    Your purchasing and supplier data can be used by your CPO or CFO to gain insights and spot trends in your current spend. Other departments can also use this data to manage inventory, budget and plan, and set a strategic sourcing roadmap. Spend analysis data is versatile and can be applied in many business areas.

    Spend analytics data

    3. Improve Processes with Fact-Based Spend Analysis Data

    This is the step where you can begin to plan your process roadmap or implement course correction where necessary. In order to improve your processes, you need to start with the credible data you gathered in your spend analysis. This data enables you to transform your procurement process from technical to strategic sourcing. How?

    You can use that fact-based data to change behaviors and improve your decision-making process. For example, you can create a spend report by category with each round of spend analysis. Over time, you can begin to compare results and monitor how processes and behaviors have changed.

    What are the Benefits of Spend Analysis?

    1. One key benefit of a successful spend analysis process that can be difficult to measure objectively is your organization’s confidence in data. First and foremost, this lends authority to the procurement department with executives and can help gain that ever-elusive ‘seat at the table’. Formalized processes and intuitive reports make data easier to understand and trust so you can represent your team well and gain executive buy-in.
    2. Second, your team can better trust themselves. When you know that your information is reliable and well-founded, you can trust the numbers to guide you and help with faster decision-making. You can be confident that you’re always working off the most recent numbers. Allow your team to operate quickly and respond to new strategic challenges rather than getting held up by conflicting reports or data.
    3. Third, with this data you’ll be able to set performance benchmarks, make process improvements and further develop your procurement strategies to drive more savings.

    New Insights to Find Savings

    Whether your goal is to bring more spend under management, identify new revenue opportunities or strengthen your overall supply chain, conducting a spend analysis will help you get there. When you have fact-based data, it is easier to ensure compliance, improve decision-making, and expose areas of your business that may not have been targeted before. In short, you can reduce more spend in more places.

    JAGGAER’s Spend Analytics solution brings you full visibility into your organizational spend and increases both savings and efficiencies across the board. Generate an unmatched spend analysis by entering your data in any format from any source. Spend analysis helps you get the fact-based data you need to improve processes and deliver results.

    Ready to dive deeper into the world of spend analysis? Learn how to conduct your own with our easy, 7-step process.

    Additional Resources

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