- Purchasing leaders face many challenges from globalization, risks management, costs, and corporate social responsibility. - Spend analysis is the most important tool for purchasing leaders to effectively manage these challenges as it provides visibility into spending. - Benchmarks show that simply conducting spend analysis can result in savings of 2-10% on total spend within 12 months and up to 30% in long term savings. It also establishes a baseline and justification for organizational changes. - However, few organizations currently have the capability or are attempting to conduct spend analysis in practice. Emerging cloud-based solutions make the process more comprehensive, efficient and offer a quick return on investment.

1. CPO Challenges Update
Spend Analysis Drives Success
Chief Procurement Officers, Purchasing Vice President, Purchasing Directors and Purchasing Managers all face many
challenges from Globalizing, Risks Management, Cost and Corporate Social Responsibility to name a few. The most
important tool available to Purchasing Leaders is having an effective process of spend analysis.
A follow up to previous discussion regarding CPO challenges and Big Data impact on Purchasing
Bill Kohnen May 2015

2. Summary
• Purchasing Leaders and their organizations face more challenges and changes than ever
before
• A review of public data as well as proprietary independent review shows that Spend
Analysis is the single most important process and tool that Purchasing leaders have.
• Benchmarks suggest that simply conducting the analysis itself will:
• Result in savings on total spend of 2%.
• Identify Savings opportunities achievable in 12 months of 5% to 10%
• Show potential long term savings of up to 30%
• Provide baseline and justification for organizational development
• Surprisingly in practice few organizations have the capability or are even attempting to
review total spend
• Technology alone is not the answer but emerging solutions are more comprehensive,
efficient, and offer a near immediate ROI
Bill Kohnen May 2015

3. CPO CHALLENGES ARE THE SAME AS THOSE SHARED
ACROSS ORGANIZATION
Globalization Innovation Mobile
Visibility Transparency Legacy process/technology
Cost Risk CSR
Widening gap between ability to hire/train people for work needed to be
done.
More than anything the CPO needs real visibility to global spend to set a
baseline, manage operational needs determine a path forward.
Bill Kohnen May 2015

4. What does Spend Analysis Show
• Opportunities
• Assessment of tools and process
• Capability of existing process
• Basis for organizational buy in
• Delivers immediate and ongoing value to organization
Bill Kohnen May 2015

5. Why after 100 years of formal corporate purchasing are
we still discussing this?
• Data has been hard to get
• Resources to study and analyze information
• Inability to collaborate and act on data globally
• Spend Analysis viewed as project not a process
Bill Kohnen May 2015

6. Technology to the Rescue?
Not so far
• Mainframe: information not easily accessible
• Client server networks arguably spread data even further
• ERP: Data is there but barely usable, and not shared between instances.
• Spreadsheets – Manual, time consuming, prone to error but at least get the process started
• Cloud Solutions – A good option but have been questions about security and process
START TODAY WITH SPREADSHEETS. THE WORK DONE HERE WILL
ENABLE A FASTER ENGAGEMENT WITH A CLOUD SOLUTION
Link to discussion of steps for a straight forward guide to spreadsheet/manual process
http://www.slideshare.net/wkohnen/big-data-analytics-with-a-small-budget
Bill Kohnen May 2015

7. Spend Analytic Cloud Solution
What does this mean?
• You will provide raw spend data in any format to the solution which will transform the data to
meaning views.
Not all providers are alike ask basic questions:
• How long will it take
• What is the analytic engine in the tool? Is it designed by the provider or licensed from a third
party
• How much of the analysis is automated and how much is done by people
• If by people where are they located
• What is their experience
• How is data protected
• Is the Spend Analysis Solution designed as a stand alone solution or is it a piece of an
integrated solution
• Ultimately most important is how the data is presented. Spend lots of time looking at this.
• Ask for examples of how the provider uses the solutions and also reference customers
Bill Kohnen May 2015

8. Business Considerations
Not Consistent from providers
• Some providers view Spend Analysis as high cost solution
• Many set it up as a subscription
• Often requires professional services engagement
• Some providers, even stand alone solutions, offers at a relatively low cost
or even low cost in exchange for
• A portion of the savings
• Linking the analysis with a P Card or other payment solution that includes a rebate
and sharing the rebate
• Simple low cost as entry to additional solutions
Bill Kohnen May 2015

9. Conclusion
• Spend Analysis is the most powerful process and tool available to
Purchasing Leaders
• Today most organization still struggle with spend analysis
• It is better to get started today even with a manual process and tools and
ultimately technology simply supports but does not itself drive results
• Emerging cloud based tools do offer value with a fast ROI. It is worth
making a careful review of spend analysis options a priority still in 2015 and
engaging with a solution provider with at least a demonstration project.
Bill Kohnen May 2015

10. Reference Presentations
• http://www.slideshare.net/wkohnen/purchasing-future-trends-2015
• http://www.slideshare.net/wkohnen/chief-purchasing-officers
• http://www.slideshare.net/wkohnen/big-data-impact-on-purchasing-
and-scm
• http://www.slideshare.net/wkohnen/review-7-key-areas-to-save
Bill Kohnen May 2015