According to Gartner, nearly 40% of company software purchases happen outside formal procurement channels, leading to uncontrolled costs and fragmented vendor visibility. The impact? Finance and IT leaders lose sight of how much is being spent, where it’s going, and whether those tools deliver real value.

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Admit it. We’ve all been there at some point, making a quick purchase to unlock that premium HubSpot or Adobe feature we needed right away. These quick fixes may solve an immediate problem but create a larger one for every procurement team: decentralized buying. The only real solution is a standardized procurement process that promotes transparency, cost control, and accountability across teams. That’s where metrics like Spend Under Management come into play, offering the visibility and structure modern organizations need to bring every dollar under control.

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What is Spend Under Management?

Spend Under Management (SUM) is the portion of an organization’s total spend actively managed by the procurement team through approved systems and policies. It measures how much spend is visible, controlled, and optimized helping finance and procurement leaders reduce maverick buying and improve cost efficiency.

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Why is Spend Under Management important?

It is vital to keep track of all expenses within your SUM, which translates to significant benefits for the organization such as:  

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Cost Savings and Optimization:  By managing a larger portion of spending, procurement professionals can leverage their knowledge and expertise in negotiating better deals and sourcing strategies. This leads to streamlined purchasing processes, and eliminates maverick spending.

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Improved Visibility and Control:  Tracking SUM provides greater transparency into overall spending patterns. Finance teams get a clear understanding of expenses across the organization that allows them to budget and forecast spend.

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Data-Driven Decision Making:  Monitoring all SUM facilitates the collection of valuable data on spending patterns, supplier performance, and market trends. Procurement teams use this data to leverage better sourcing strategies, contract negotiations, and resource allocation. 

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How Is Spend Under Management Calculated?

Spend Under Management (SUM) measures the percentage of company spending overseen by procurement through approved systems and policies. The formula is:

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SUM = (Managed Spend ÷ Total Organizational Spend) × 100.

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For instance, if procurement controls $6 million of a $15 million total spend, SUM = (6 ÷ 15) × 100 = 40%.

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Data sources typically include ERP and finance systems, SaaS and vendor management platforms, and purchase order records. Tracking SUM regularly helps identify unmanaged spend, improve budgeting accuracy, and measure procurement efficiency over time.

How to Increase Spend Under Management Effectively

Raising your organization’s Spend Under Management (SUM) isn’t about chasing numbers, it's about creating structure and visibility that drive measurable results. Procurement teams can increase spend under management and improve spend control by focusing on four core areas:

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1. Standardize Procurement Processes

Establish a unified intake-to-procure workflow across departments. Standardization ensures every purchase follows approved policies, eliminating maverick buying and manual work. Platforms like Spendflo automate requests, approvals, and renewals keeping all transactions traceable and compliant.

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2. Strengthen Supplier Relationship Management

Centralize vendor data and contracts to gain a single source of truth. By evaluating supplier performance, pricing benchmarks, and renewal terms, finance and procurement leaders can negotiate smarter and build long-term partnerships. Better supplier relationship management also reduces risk and unlocks cost efficiencies across the vendor portfolio.

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3. Embrace Technology and Automation

Adopting modern procurement software gives teams real-time visibility into SaaS usage, budgets, and savings opportunities. AI-driven dashboards, such as Spendflo’s SaaS Intelligence, identify duplicate licenses, automate renewals, and generate data-backed insights helping you improve spend control and forecasting accuracy.

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4. Align Teams Around Shared Goals

Finance, IT, and Procurement should operate on shared KPIs and transparency. When leadership aligns around spend visibility, compliance, and savings targets, procurement process improvement becomes continuous rather than reactive. Collaboration ensures every department contributes to bringing more spend under centralized management.

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Key Spend Under Management KPIs to Track

Tracking the right spend under management KPIs helps procurement teams measure control, visibility, and overall efficiency. These metrics reveal how effectively spend is being managed, highlight gaps in governance, and guide data-backed improvements.

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1. Spend Under Management (SUM)

This is the cornerstone metric that reflects the percentage of total organizational spend actively managed through approved procurement processes. A higher SUM indicates better spend visibility, stronger policy adherence, and more centralized oversight across departments.

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2. Maverick Spend Metric

Maverick measures purchases made outside approved channels or contracts. High maverick spending signals weak compliance and fragmented processes. Monitoring this KPI helps identify where teams bypass procurement workflows, allowing leaders to implement corrective policies and improve cost control.

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3. Spend Under Contract

This metric shows the portion of total spend covered by valid supplier contracts. Tracking spend under contract ensures that negotiated terms, pricing, and service levels are honored, reducing risk and improving consistency in supplier relationships.

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4. Procurement Cycle Time

Cycle time measures how long it takes from purchase request to order fulfillment. Shorter cycles mean higher operational efficiency, especially when aided by automated tools like Spendflo’s AI-driven workflow engine. This KPI is key to assessing procurement agility and responsiveness.

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5. Savings Realized vs. Savings Identified

This KPI compares projected savings opportunities against actual savings achieved through optimization and negotiation. It’s a clear indicator of procurement performance and the tangible value created from spend management initiatives.

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Deep Dive Into Spend Under Management With Spendflo

Understanding SaaS spends

The key to Managing Spend effectively is to first get an understanding of your organization’s SaaS spends. 

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Do you know how much your company spends on software? 

To give a rough idea, Gartner estimates that SaaS spending will grow to over $232 billion in 2025. Every business ranging from SMEs to enterprises rely on a multitude of SaaS applications to carry out daily operations from internal communication to project management. The ease of use and endless possibilities of SaaS tools are the driving forces of Saas spends of companies.  

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On the flipside, managing these expenses can be a challenge. It is difficult to track expenses without a Spend Management Software as the allure of buying SaaS tools can pave the way to maverick spending. SaaS spend is no more simply tracking subscription fees. It involves analyzing usage patterns, identifying unused licenses, and pinpointing areas for saas cost optimization.

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By gaining a clear picture of their SaaS spend, businesses can uncover hidden costs, negotiate better deals with vendors, and ensure they're getting the most value out of their subscriptions. This empowers them to make informed decisions, streamline SaaS usage, and ultimately, maximize their ROI.

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How Spendflo calculates Spend Under Management

At Spendflo, the primary goal is to maximize savings and value-add while ensuring access to top-notch SaaS products for the customer. So how does Spendflo calculate Spend Under Management with respect to the total SaaS spend of the customer organization?

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Spend Under Management = Awarded to Spendflo + Offline spends 

It is calculated as the sum of the spend Awarded to Spendflo and the spend managed offline which could mean spends not given to Spendflo to oversee or spends that the customer company decides to manage by themselves. Usually the SUM metric can consist of both saas and non-SaaS spends. However at Spendflo we consider the sum of contract value for all SaaS contracts uploaded on to the platform as Spend Under Management.

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Spend awarded to Spendflo (ATS) 

Once the company’s overall SaaS contracts are uploaded, unified and visible under a central repository - Spendflo platform, the amount of spend handed over to Spendflo to directly manage can be gauged. This procurement metric is termed as ‘Awarded to Spendflo’ and can be obtained from the contract signed by the customer with Spendflo.

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ATS is the sum of two other metrics called Spendflo fulfilled and Spendflo pipeline. 

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Fulfilled by Spendflo - Computed as the sum of contract value for all SaaS contracts procured by Spendflo. It is the amount of spends that Spendflo has actively worked on for the customer during the contracted term right from negotiations, procurement, renewals to savings. The savings can either be direct cost reductions or the monetary value of other benefits such as extra months of service, free user licenses etc. 

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Spendflo Pipeline - On the other hand, the amount of spends that are ‘to be’ procured in the current contract year falls under Spendflo pipeline. This KPI for procurement is computed as the sum of contract value for all SaaS contracts to be procured by Spendflo in the current contract year. If a customer is contracted with Spendflo for one year, any renewals that fall within that contract period are marked as “Spendflo Pipeline”. By default, when spends are uploaded on the platform during onboarding, all their spends are marked as in pipeline. 

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Understanding SaaS ROI

Once the customer invests in SaaS Spend Management, it is crucial to identify and deliver value and yield maximum ROI. SaaS ROI is calculated as the percentage of savings delivered with respect to the contract value. Once the root causes plaguing a procurement team like the lack of visibility, duplicate tools, overspending are identified and fixed, businesses are enabled to unleash their full financial potential. Gaining insights from these problem fixes provide improved visibility into unused tools and licenses allowing the customer to plug the spend leaks and achieve maximum ROI by saving on Saas. 

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Before the customer signs a contract with Spendflo, the solutions team performs a savings analysis and provides two savings metrics to the customer on how they can bring value to the deal. They are:

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• Potential Savings Estimate 
• Minimum Savings Guarantee 

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Potential Savings Estimate or PSE is a metric that Spendflo provides after analysing the customer’s existing SaaS spends and deriving an estimate of the maximum savings that they can help the customer achieve. It is an upper limit of saas savings that Spendflo can provide to the customer.

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Minimum Savings Guarantee or MSG is a procurement metric that represents the minimum savings assurance guaranteed to the customer at the time of contract signing. It assures a specific percentage of savings on your SaaS spend after implementing the recommended optimization strategies. 

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Get ROI You Can See from Day One

When vendor pricing is opaque and renewals slip through the cracks, it’s easy to lose control over software spend. That’s what happened to a fast-growing SaaS firm before adopting Spendflo. Our procurement experts helped them save $375K and achieve 3× ROI within months. With AI-led insights and human negotiation power, Spendflo acts as your virtual procurement team to bring every dollar under management and guarantee savings on all your SaaS contracts. 

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Book a demo today and start buying software with confidence.

FAQs

1. What is the difference between Spend Under Management and Addressable Spend?

Spend Under Management (SUM) refers to the portion of total organizational spend that is actively managed through approved procurement systems and policies. Addressable Spend, on the other hand, is the segment of total spend that could be influenced or controlled by procurement but isn’t necessarily managed yet. In short, addressable spend defines the opportunity, while spend under management reflects the portion already under procurement’s control.

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2. How can organizations increase their Spend Under Management?

To increase Spend Under Management, companies must standardize procurement processes, centralize supplier data, and adopt automation tools that give visibility into all purchases. Aligning Finance, IT, and Procurement on shared KPIs helps reduce maverick buying, while using platforms like Spendflo enables better contract management, automated approvals, and data-backed negotiation key steps toward improving spend control.

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3. Why is Spend Under Management important for procurement success?

Spend Under Management is a core indicator of procurement efficiency and governance. It shows how much of an organization’s total spend is visible, controlled, and optimized. A higher SUM percentage leads to better compliance, stronger supplier relationships, and measurable cost savings. For finance leaders, it also signals operational maturity turning procurement into a strategic driver of business value rather than a transactional function.

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4. What types of spend are typically included or excluded from Spend Under Management calculations?

Included spends generally cover direct and indirect categories such as software, SaaS subscriptions, IT services, marketing tools, and other vendor contracts managed through formal procurement workflows. Excluded spends often involve one-off expenses, non-discretionary government fees, utilities, payroll, or ad-hoc purchases made outside approved systems. Clearly defining these boundaries ensures accurate Spend Under Management calculations and consistent performance tracking.

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