Enhance cost control & decision-making with insightful spend analysis. Discover tools to optimize expenses & drive efficiency.
Spend analysis is the practice of analyzing and optimizing procurement spend that maximizes value for the organization’s dollar. It decreases costs by identifying long-term saving opportunities, increases efficiency and improves supplier relationships.
It’s an aspect of spend management that has a significant effect on the supply chain. It assesses the who, what, why, when, how and where of an organization’s spending.
Spend analysis seeks to answer three questions:
Gartner says that enterprise IT spending on public cloud computing will overtake spending on traditional IT in 2025. When it is not uncommon for companies to spend 5 million on SaaS licenses, analyzing SaaS spend is essential.
In this guide, you will learn:
APQC’s Open Standards Benchmarking in Procurement reveals that organizations with spend analysis programs have better procurement operations, supplier relationships, process efficiency, cycle time, cost effectiveness and staff productivity.
Thus, spend analysis helps to:
Spend analytics and spend analysis are used interchangeably, but they have different meanings.
While spend analytics involves collecting, cleansing, classifying and analyzing data using dedicated software, spend analysis involves analyzing spend data to reduce costs, increase efficiency and improve supplier relationships.
Spend analytics begins with the collection and cleansing of data to ensure it is accurate and reliable. Next, it is classified and consolidated to organize it into meaningful groups and comprehensible categories. This data is then combined with external sources, it is ready for spend analysis.
In spend analysis, procurement teams study specific segments of the spend data to enhance visibility into corporate expenditure, drive performance improvement, ensure contract compliance and save costs. When SaaS companies perform a similar exercise to analyze usage of SaaS tools and rightsize spending, it is known as SaaS spend analysis.
Procurement spending analysis establishes a benchmark against which progress can be measured, enabling organizations to gauge improvements and make informed decisions regarding strategies aimed at achieving short- and long-term savings.
There are six general steps in spend analysis:
Begin by identifying all sources of spend data within the organization, including accounts payable, e-procurement, global mass payments, tail spend and the ERP system. Ensure that spend data from all business units is captured even if it resides in siloed systems. This data should flow into the general ledger for accounting purposes.
Cleanse the spend data by standardizing formats, eliminating errors and addressing any blank fields. Given the diverse sources of spend data, standard formatting may not be consistently applied.
Store all the cleansed spend data in a centralized database so that it can be accessed for meaningful analysis.
Use spend software to automate the analysis of spend data, which increases visibility into suppliers, spending patterns and cost-saving opportunities. It also reduces errors, enhances spend control and streamlines vendor management.
Base your decision-making on the visibility, reports and recommendations provided by the analysis. Apply a cost-benefit analysis filter when considering potential changes to purchasing processes or procurement practices aimed at cost savings.
For instance, consider implementing a software-based tail spend management e-procurement system for low-cost repetitive purchases like office supplies. This can help control maverick spending while allowing employees to use company-approved payment methods.
Once the spending analysis is complete, implement the decisions made based on the analysis. Make impactful changes to save money, improve procurement processes and enhance controls.
Spending analysis is a repeatable process that should be continuously carried out to drive ongoing improvements.
Here are some of the benefits of conducting a spending analysis:
High-growth companies have hundreds of SaaS tools in their arsenal. Due to the decentralized buying process, there are duplications or unused subscriptions leading to waste of money.
Spending analysis software is a powerful tool designed to streamline spend data and automate analysis. It provides comprehensive visibility into spending patterns, supplier performance, and potential cost-saving opportunities. By leveraging advanced analytics and data visualization capabilities, spending analysis software empowers procurement professionals to make informed decisions and optimize their procurement strategies.
When selecting spend analysis software, here are the features you should consider:
Why choose Spendflo as your spend analysis software?
Spendflo is a SaaS buying and optimization platform that can help you save up to 30% on your SaaS stack. It helps you gain visibility over your vendors, automate procurement and spend less on every SaaS tool you use.
Some specific features are:
Granular spend attribution: Allows spend attribution based on teams, users and categories. This helps observe spending patterns across different departments. This helps streamline budget allocation across various departments and identify potential saving opportunities.
Monitoring usage: Unlocks usage patterns and drives higher ROI from your SaaS toolkit. You can optimize SaaS spending by understanding the requirements of your team and the value driven from each transaction.
Consolidated data: Consolidates all your SaaS spending data in one platform. Spendflo empowers you to make informed decisions with increased transparency and advanced data integration across various channels such as Slack, Netsuite and G Suite.
Tech stack evaluation: Helps align your tech stack with your organizational requirements. Helps analyze new tools, check compatibility with existing tech stack and provides alerts for new products.
Contract management: Allows you to manage all your SaaS and non-SaaS contracts from one window. Gain greater visibility to manage upgrades, downgrades and renewal with greater ease.
You can save thousands by using a spend analysis software to automate an integral part of the procurement cycle. With robust reporting, consolidated data access and simplified renewal process, you can stay on top of the procurement functions.
Want to know more? Get a free savings analysis today!
Our free savings analysis tells you how much you’re guaranteed to save with Spendflo. Learn more about cleaning up and automating your tech stack from our experts.