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What is your primary way to determine which categories to source? - More polls Source categories with expiring contracts (24%) Leverage a spend analysis solution to identify and prioritize opportunities (57%) Leverage spreadsheets or other offline tools to identify and priortize opportunities (16%) Hire external consultants (0%) Other (please add comments) (3%) Votes 37

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Spend Visibility Interview @ Ariba LIVE 2010

Recent Activity

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JustinFogarty JustinFogarty modified KPI discussion with your peers tomorrow

"Tomorrow, I am moderating the monthly member call for the LinkedIn Strategic Sourcing & Procurement group. This month's topic is KPIs ."

in Spend Analysis - 0 comments - 0 bookmarks
2 days ago
Chris.Glover Chris.Glover asked Procurement reference data (Commodity Codes)

"Does anyone want to share their companies strategy and approaches to procurement reference data (Commodity Codes)?"

in Spend Analysis - 0 bookmarks
6 days ago
jaclynprince jaclynprince started the discussion Share & Learn: Opportunity to discuss use of Ariba (CD release customers only)

"Hello!   HP Direct Procurement (DP) is looking to benchmark utilization of Ariba modules with current CD customers of Ariba.  To aide ou"

in Spend Analysis - 0 bookmarks
2 weeks ago
rsammel rsammel replied to Tier 2, Pass Through or 'On Behalf Of' Spend

"Hi Gavin,   I have seen several approaches, and can say I haven't seen a concrete right/wrong answer.  Mostly it depends on how the data i"

in Spend Analysis - 6 replies
2 weeks ago
gwpratt gwpratt replied to Tier 2, Pass Through or 'On Behalf Of' Spend

"Keith - you are not alone.   Ryan - We are in the middle of implementing Spend Visibility currently.  Can you explain at a conceptual leve"

in Spend Analysis - 6 replies
2 weeks ago
gwpratt gwpratt replied to In your company, how do you handle Spend Vis user access?

"Kyle,   Just checking back in now - had read your response before, but by now had forgotten I had posted this question.  When I quickly r"

in Spend Analysis - 3 replies
2 weeks ago
gwpratt gwpratt voted on What is your primary way to determine which categories to source?

37 total votes   currently ahead: Leverage a spend analysis solution to identify and prioritize opportunities

in Spend Analysis - 0 comments
2 weeks ago
ctatum ctatum voted on What is your biggest spend analysis challenge?

37 total votes   currently ahead: Data enrichment quality

in Spend Analysis - 0 comments
3 weeks ago

Spend Analysis Videos

Recent Blog Posts

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JustinFogarty
0

Tomorrow, I am moderating the monthly member call for the LinkedIn Strategic Sourcing & Procurement group. This month's topic is KPIs. So please join us if you have KPI questions or insights, or if you'd just like to hear your peers engaged in a lively discussion of the subject.  The details:

 

Tuesday, August 31st

9am Pacific Daylight Time

 

No registration for the call is required, but dial in details are only provided here to Group members. If you are not already a member, you can request to join here.

319 Views 0 Comments Permalink Tags: procurement, sourcing, metrics, kpi, linkedin
kmiklos
0

If you are currently considering a spend analysis program, ask yourself...what are your goals?  Hopefully, they look something like this:

  • Increasing our spend under management
  • Optimizing our savings per category
  • Rationalizing our supply base
  • Driving improved compliance with approved contracts/suppliers

 

Those who respond to this question stating, "I want x% of my spend classified" are going down the wrong path.  Spend classification is absolutely a key objective of any spend analysis initiative, and one that should be supported by clear and firm service levels when working with a third party provider.  However, a stated goal of getting 80%, 90%, or 99% of spend classified, too often results in a misguided focus that clouds the real task at hand - improved visibility for increased savings.  Organizations with a stated goal of classified spend often find themselves tied up in an academic exercise that doesn't deliver any real value.  Instead of spend classified, spend time planning how you will leverage the classified/enriched data once available.  Spend classification is the means to an end...not the end game.

688 Views 0 Comments Permalink Tags: spend_analysis, spend_classification, objectives
kmiklos
0

How Secure Is FTP? in Spend Analysis

Posted by kmiklos Mar 29, 2010
A  necessary step in any spend analysis initiative with a third party is the  physical transfer of spend data.  There are  various possible approaches, from obviously insecure ones such as physically  mailing media to seemingly secure approaches such as FTP and secure https encrypted  websites (what we use in Ariba Spend Visibility).  Which is really the most  secure?

Interestingly, FTP  is not as secure as many would think. As a recent article on TechNewsWorld  (www.technewsworld.com) points out, FTP's biggest shortcoming is that even  encypted FTP sessions are not fully secure once the data stops moving and is at  rest since it sits on the FTP or SFTP server in plain text.  If that server is  connected to the internet, the data is at risk of being shared.  Hence, FTP actually violates WebTrust for security  reasons.  Something to think about. 


777 Views 0 Comments Permalink Tags: spend_analysis, security
rsammel
0

User Adoption in Spend Analysis

Posted by rsammel Mar 25, 2010

It is important to remember that loading and enriching the data is just the first part of enabling a spend analysis tool.  In many cases this is a new platform for end users, and all of the work completed in the initial phases will be worth nothing if end-users do not take advantage of the tool.  While many users are able to run reports in the tool, they may be missing useful features and efficiencies of the tool without training. 

 

Below are steps taken by customers that I consider best-in-class from a user-adoption standpoint. 

  • Power-users should be assigned, ideally one per location. These users can then provide on-site training and support for the rest of the user base at that location.  They can also assist in designing and building useful reports and dashboards that are relevant to their location, all items that help new users quickly become comfortable with the tool.
  • Make the end-user training sessions more of a workshop instead of a demo.  Encourage the trainees, if possible, to have their computers at the training so they can follow along.  The more interactive the session, the more value users will get out of it.
  • Mandate that end-users attend a training of the tool.  I have seen many customers just hand out ID's with no training, which delay's the value proposition of the solution.
  • Facilitate follow-up review sessions that can be attended.  This is a good opportunity for questions to be addressed, and new features/uses to be demonstrated.  Ariba's Project Managers provide these on a quarterly basis to their customers.


If anyone has additional suggestions, please comment.

 

Thank you,

Ryan Sammel

875 Views 0 Comments Permalink
CRobinson
0

Webinar: Correcting Your Spend Vision with Visibility

Q&A Session Responses, March 4, 2010

Download replay


 

Q:  What do you mean by data enrichment?

 


A: While alternatives are possible, Spend Analysis or Spend Visibility solutions usually contain two components:
1) an analytics reporting engine that serves as the spend data warehouse and
2) data enrichment provided via technolgy, as a service, or through a combination of the two.  The term 'data enrichment' encompasses two basic areas including commodity classifications to provide better visibility into what you are buying, and supplier enrichment to gain improved visibility into from whom you are buying.


Answered by Ken Miklos, Ariba
kmiklos@ariba.com

 

_________________________________________________________________

 

Q: Influencing CFO's/CIO/CPO's that an ERP-based Spend database is really not procurement Spend Analysis is one of the biggest hurdles. What do you see as the primary differences between the two?

 



A: First, you need to articulate the difference between a database of data vs. an organized approach of information that was data and has now been classified, cleansed and enriched. This is the key differentiator!

Second, this ‘clean’ data is now your foundation for all strategic sourcing activities.   It provides an opportunity to assess each category, suppliers, contracts, terms, etc and set up your strategic sourcing plans. 
Lastly, the sourcing plans are utilized within sourcing and with the various stakeholders to find even more opportunity using demand management and lean techniques, and working with suppliers for better relationships and efficiencies.

Answered by Mickey North Rizza, AMR Research

 

_________________________________________________________________

 

 

Q: Can you further explain how spend visibility reduces maverick spend?

 


A: Once you have identified the spend with the analytics solution and drill into it, maverick spend will show up within each category and by supplier. Once this is identified you can review the buy, supplier and also why the decision was made. It is then that you can understand the behavior and take the appropriate action internally to address it.

 


Answered by Mickey North Rizza, AMR Research

 

_________________________________________________________________

 

 

Q: Where do we start data cleansing for a procurement organization that has been existing for decades but is now looking at spend analysis as a greenfield area?

 


A: For buyers investigating potential applications, we recommend the following:

- Understand the business problem that needs to be solved.

- Know your short and long range term goals.

- Collaborate with IT on the systems and strategies for implementation and ongoing use.

- Consult with your analyst advisory team on best practices and vendors.

- Ask each vendor for references.

- Prototype several applications before selection.


Answered by Mickey North Rizza, AMR Research

 

_________________________________________________________________

Q: James, how important was it to  have senior organisational support for the Spend Vis project and a mandate to  impact a wider scope of expenditure?  What was the balance between 'authority to  act' and relying on influencing senior  stakeholders?

 

A: It was important to  have buy-in from the senior stakeholders principally in Supply Chain and IT,  which we secured from the Councils comprising the senior leadership of each  function.  The program was more weighted towards influencing stakeholders at all  levels as that is the nature of our organizational culture (as opposed to  mandating).  For the newer areas that we wanted to impact, the purchasing teams  (category managers etc.) would still have to gain buy-in for their project, but  could do so armed with proper information for their category.  We found that in  several areas of indirect spend, having this data opened doors by providing  information that senior leadership in those functions previously did not have  access to (in a consolidated form).  In some organizations, however, a more  formal and structured approach might be more appropriate than it has been in  ours.

 

Answered by James Mortimer, Rexam PLC

_________________________________________________________________

 

Q: What % of your spend was  misclassified to an incorrect UNSPSC code and how did you clean that  data?

 

A: We did not measure this  exactly but I would estimate that we identified approximately 10% of  misclassified data.  The majority of this was from legacy ERP systems with poor  detail within the system, or where we had very specific direct material buy  categories that we wanted to classify differently to the UNSPSC that Ariba had  classified them.  We are still continuously reviewing and cleaning the data as  we move forwards.


Answered by James Mortimer, Rexam PLC

_________________________________________________________________

Q: I think you said you used  UNSPSC as the common coding. How accurate is enrichment? Do you use mapping  tables from ERP code or is enrichment based on invoice  description?


A: We felt that overall  the enrichment was accurate – see above for additional comments.  Ariba used a  few fields to classify invoices to UNSPSC , including ERP commodity and invoice  description.


Answered by James Mortimer, Rexam PLC

_________________________________________________________________

 

Q: To what level was your Finance  organization involved in your spend visibility efforts?  Closely aligned,  supported or independantly viewed?


A: Our finance organization was not a key part of the implementation as we did not prioritize having a close tie with our financial systems at this point. As we go forward, we are working on some efforts to align spend visibility reporting more closely to our financial reporting.

 

Answered by James Mortimer, Rexam PLC

_________________________________________________________________





1,131 Views 0 Comments Permalink Tags: best_practices, spend_analysis, data_enrichment, spend_classification, spend_management, maverick_spend
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