Original article published on Linkedin by Woody Fluharty
FIVE WAYS TO GET SPEND DATA OUT OF THE SILOS - Data, and the insights they bring, are essential in today’s business environment. In the press to enable fact-based decision making, organizations are making huge investments to capture and warehouse massive amounts of data.
The data itself does not give a return on investment - that comes from the ability to translate that data into actionable intelligence. So what are the keys to build and maintain a vibrant spend data management program within your organization?
1. Input Data – A survey of procurement officials from CIPS Australasia found the number one challenge to effectively managing spend was the availability of quality data. You will not have confidence in using the data to make informed purchasing decisions when you cannot count on the quality or accuracy of the data. Some common issues most affecting data quality include:
Organizations should look to invest in regular data cleansing as part of their business process to combat these issues. Equally important is that organizations begin emphasizing the importance of data constraints when inputting new data records which work to limit potential data quality issues in the future.
2. Data Enrichment – For data to be truly insightful it needs to be layered so that analysts can look for opportunities across many different factors. One major roadblock which organizations have is that valuable spend data is siloed across several disparate datasets. Organizations should begin data enrichment activities by first mapping all relevant data sources and related critical data fields into a single “source-of-truth” dataset for assessment. Data sets can be further enriched by adding complimentary data such as spend category, supplier preference, sustainable purchasing, and geographical locations to provide the most complete picture. Any factor that would be used to affect procurement strategies should be sufficiently tracked and reported on by your spend data management program.
3. Data Visualization – Reporting should be both developed efficiently and easily consumed by the end-user. Good data visualization should take complex data sets and make it easier for analysts to identify patterns, trends, and outliers. Organizations should look to invest in visually pleasing spend reports that are in a standardized format and contain all relevant information needed for management to make informed purchasing decisions. Effective reporting should also be real-time and on-demand meaning analysts can pull reports themselves on the most current data.
4. People – Spend data management programs will always only be as effective as the ability of its internal resources to interpret the data. It is important that we build the capacity of our employees to use and assess data. Organizations should seek to develop competencies of their people in manipulating data, building data reports, and most importantly interpreting data to develop procurement strategies.
5. Executive Support – Adoption of data management practices will only become the norm when supported by the top leaders of the organization. Executives can invest in the program by encouraging data-driven initiatives, promoting analytical skills, and creating a culture that prioritizes data as a strategic asset to guide decision-making. Procurement leaders should themselves also use data in management so that data use is a regular part of the organizational culture.
Success in establishing a strategic procurement focus - and by extension strategic sourcing - is driven by the ability of your employees to access, organize, and interpret complex spend data. Considering equally the investments in tools and the investments in our people will produce a robust spend data management program.
