Insights & Ideas

What really is automated spend analytics?

Recently, I read a shocking statistic in a piece of research by the Hackett Group. According to the study of procurement professionals, only 19% of companies have a highly automated spend analytics process today. When we consider the business benefits of automation, and the propaganda promoted by vendors, it makes me wonder why there is such a huge disconnect between buyer and seller. I only assume that the buyer is never wrong – that vendors have been selling automated spend analytics - but, in fact, this isn’t the case. 

Last year, we did our own digging around which revealed that 57% of CPOs need five employees to conduct spend analysis. It’s clear from market research that technology hasn’t delivered on its promise of automation – and vendors, both services firms and software providers, have been twisting the definition of “automated spend analysis.”

Everybody seeks automation but they are uncertain as to what it involves. Automation is not about replacing human thinking as this is and will always be required of people. What we should be referring to is business process improvement – making employees more productive, which allows teams to analyze more data, faster than using traditional (manual) spend analysis processes. Given the high percentage of manual spend analysis, it is not surprising that the actual benefits of spend analysis software projects often fall short of expectations, including business outcomes.

The traditional method of analytics is complex, involving a number of manual processes such as data extraction, transformation, loading, analysis, classification and enrichment without placing the business user needs first.

As you can see from the image below, the journey from implementation to spend visibility is a long and winding road which results in the business user spending too much time performing technical duties, which should not be in their remit.

Advances in technology means that business users become more efficient in their ability to analyze data faster. 

Now, the question is what do we mean by automation?  This is important because automation means different things to different folks.

At Rosslyn Analytics, automation means automating the combined processes of extraction, transformation and loading of data into a spend schema for immediate visualization.  It’s here that the business user is able to utilize and make the most of the data.

So, if you are looking to replace your manual spend analysis with automated spend analytics, here are some questions you may want to consider before you engage a vendor…

  • Do you know where your team spends most of its time in the process of collecting, preparing and analyzing data?
  • How much of your current spend analysis process do you feel is automated?
  • Are there areas in the process that you would like to improve or make more efficient?
  • Do you have multiple, disparate spend analytics processes or one fully integrated process?

Based on your answers, do you find yourself in need of a fully automated spend analytics process due to your team's skills, capabilities and resources? When you evaluate automated spend analytics tools or solutions, it is vital that you know what you are buying because you don’t want to be stuck with a purchase that is more manual than you had originally intended.

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