Insights & Ideas

How Spend Analytics Can Help You Get More Value From Your SAP Investment

Like most multinationals, your company has probably invested millions in implementing and maintaining SAP systems around the world. It’s a necessary investment because without the core ERP infrastructure you wouldn’t be able to run business critical business applications such as payroll.

However, if you’re the CFO or CIO that signed the original check/contract for SAP, the question is now how can you deliver more return on investment? The answer rests with “Spend Analytics”, the process of identifying savings from the efficient management of spending with (and sourcing goods and services from) suppliers.

Yet, the level of success in creating savings from spend analytics is reliant on the underlying data used for analysis by finance, procurement and supply chain teams.

Unfortunately, far too many organizations are not doing enough to obtain and improve the quality of their spend data.

How to Create $32 Million Savings from Spend Visibility
Rosslyn Analytics will soon publish research on the return on spend visibility. Here’s a sneak peek.

We estimate that an organization with an annual turnover of $1 billion can generate in excess of $32 million by obtaining spend visibility at purchase order line item level.

Sadly, based on conversations with hundreds of organizations, it’s our calculation that 60% of organizations have obtained spend visibility at levels one and two. Only 40% are exploiting line item data from invoices or purchase orders. This is a huge lost savings opportunity!

Our projected savings is possible if your organization moves down each of the spend visibility levels; and each step down creates an additional percentage of saving by accessing new insights from untapped data previously not obtainable.

 

How to Generate more ROI from your existing SAP Investments
Creating business value including more return on investment from your existing SAP investments is pretty straight forward. You just need to have good, old fashioned complete data – of the highest quality...wouldn’t that be nice!

Here are steps on how spend analytics can support your savings targets:

  • Integrate your data. Combine all of your spend data, from disparate sources, together into a single view. This isn’t easy and many companies have tried and failed here. The key deliverable at this stage is a true appreciation of the opportunity and accurate scoping of the immediate and potential ROI from this exercise.
  • Cleanse your data. Now that you have a single version of the truth, the data can be cleansed to eliminate the bad data. One major area that often needs to be addressed is the Vendor Master File.
  • Enrich your data. Cleansed data can then be associated with further data sources that will allow for data augmentation. This process ensures that the data’s link to data points is multiplied exponentially. This linkage and association to such information such as Cleansed Name, Ultimate Parent, Status, Legal Form, Credit Score and many others ensures that the integrated data from step one delivers additional opportunities as the full scale of the ROI projects becomes clear.
  • Analyze your data. The data is now ready for deep analysis and in-house classification. The in-house experts, who best understand the descriptive information at the invoice and PO level, can get to work adding the necessary dynamic rules to enhance the quality / accuracy of the overall data. This is critical to ensure that the data being used across the firm is trusted and is validated by respected internal resources.
  • Visualize your data. The users are now looking at a single version of the truth that has not only been cleansed, enriched and internally validated but now offers the data in highly graphical and visually pleasing format. The speed with which non-technical users can establish patterns within their data is maximized when provided with complete, intuitive and responsible graphical dashboards.

 

 

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