Spend Analytics in Education: Joint Q&A With E&I Consulting
It’s true! Spend analysis can help you identify and realize hidden cost savings, optimize your supply base, and reduce risk. But how do you know your organization is ready and able to leverage this technology to its fullest?
Brett Cornell, VP of Value Consulting for JAGGAER, and Vince Patriarco, Executive Director of E&I Consulting Group, hosted a webinar to discuss why spend analysis is so relevant in education and what to expect when implementing a spend analysis solution. Below, the speakers respond to a few lasting questions from the event.
I already have an ERP system: Why would I want or need spend analysis?
Vince Patriarco, E&I Consulting: True spend analytics looks at all spend aspects not just the ERP. Most schools have spending transactions residing in multiple systems. You need to get at this data toget a complete picture of what your money is being spent on, who you are spending it with, and how it is being channeled and managed. Spend analysis can do that extremely well.
Brett Cornell, JAGGAER: ERP systems aren’t designed for the specific needs of a procurement team and tend to have more Finance, HR and/or Manufacturing related views. Very often, they are not designed with the level of flexibility or ease of adaptability required for today’s dynamic, fast-changing business needs. And finally, making changes within an ERP system can be very difficult for a variety of reasons.
Spend analytic solutions allow Procurement Teams to focus using data that meets their needs in formats for their perspectives. Dashboards and “out of the box” reports allow teams to focus on more strategic activities because the data is actionable – versus spending time tactically compiling, cleansing and categorizing the information.
What is the Return-On-Investment for a Spend Analysis solution?
VP: The ability to attain visibility of all spend in a category allows for real savings potential by understanding the possibilities of your spend. Tracking and managing your payables, finding more commodities to source, and understanding maverick spend outside and in conflict with your existing contracts are all additional ways value can be found using Spend Analytics.
BC: Organizations vary in both the items they accept in their ROI assessment and in whether they credit the spend analysis solution or other areas with the savings (ex: sourcing). Additionally, your ROI may be impacted by your organization’s willingness to accept efficiency savings or not. Often, a spend analysis solution enables teams to focus on more strategic activities which may or may not get credited to the solution, even when the solution is an enabler for this change.
How can Spend Analytics help me understand the impact of my institution’s spend?
VP: Most schools are significant economic drivers both within the individual locations, and beyond. Being able to capture and define what, where, and how much is a powerful asset in helping others understand the economic value being delivered. Reporting on the economic value of specific areas or demographics is a valuable tool in helping understand an organization’s value.
What are the approximate costs to implement a spend analysis solution?
VP: I think focusing on costs is very often the wrong way to look at this. A spend analysis service is really an investment rather than a cost. Sure, there are costs associated with performing the service, but the derivation of benefits can be measured tangibly in the ROI, which is often multiple times the initial investment.
BC: Costs vary (typically) depending on the size of the organization (i.e., how much spend must be classified), how often the data requires a refresh, and in some cases, the number of users. Today’s solutions are generally quite affordable and provide a significant return-on-investment due to the long and short term benefits an organization derives.