We’re releasing a series of articles to answer your questions about tail spend, starting with the basics so you understand what tail spend is and we’ll progress along the spectrum to help you manage it. To get up to speed, read our prologue and Chapter 1 on what this tail spend series will help you accomplish. In this chapter, we'll explore how to better communicate with stakeholders to get tail spend under control.
“Who purchased you and why?”
This is perhaps the most intriguing question and the right place to start when looking at tail spend. A spend analysis is often the first step in building a procurement capability, and if used on an ongoing basis, it can help to understand what spend consolidation efforts leave out. To accurately capture the full picture, analysis should pull in data from multiple sources, such as purchasing/payment systems, purchasing card data, travel and expense systems, and often multiple ERP systems, even petty cash if local branches still use it.
Fortunately, there are many helpful tools on the market that range from free-for-use apps to complex software platforms enabled with artificial intelligence (AI). Nearly all of these will help with generating what we call a “spend cube,” which is an analysis, at the line-item level, of global spend. This can include:
Amy Fong, Principal - Procurement and Purchase to Pay Advisory, The Hackett Group
Shirley is a Vice President on the Business Process Services team with Everest Group. In this role, she advises senior stakeholders of global services including enterprises, service providers and investors in their strategic mandates and initiatives. She shares her take on the digital transformation – what companies need to do to stay relevant and the trends she’s seeing in the market and the industry. Shirley will share her expertise on this topic at the Midwestern Regional SIGnature Eventin March and the Eastern Regional SIGnature Event in September.
Your presentation at the Midwestern Regional SIGnature Event is about buying digital services for your enterprise--why is this such an important topic?
Digital transformation is impacting entire business value chains. Companies that do not have a plan to migrate from traditional models to focus on digitally led solutions will become irrelevant and obsolete. How organizations approach the building of their digital capabilities can result in real market differentiation, and a large part of that strategy depends on how they partner with global service providers and vendors.
The swift evolution of the digital landscape means procurement and sourcing teams must understand the implications of buying digital services so they can support their business and functional customers in obtaining the best outcomes from their digital strategies.