{"id":5040,"date":"2022-04-18T19:30:45","date_gmt":"2022-04-18T14:00:45","guid":{"rendered":"https:\/\/stagingwww.zycus.com\/spend-data-analysis-for-spend-management"},"modified":"2023-11-06T09:59:57","modified_gmt":"2023-11-06T09:59:57","slug":"spend-data-analysis-for-spend-management","status":"publish","type":"post","link":"https:\/\/dev.zycus.com\/freshz\/blog\/spend-analysis\/spend-data-analysis-for-spend-management","title":{"rendered":"What kind of spend data is flying under your radar?"},"content":{"rendered":"

Most geniuses\u2014especially those who lead others\u2014prosper not by deconstructing intricate complexities but by exploiting unrecognized simplicities.- Andy Benoit.<\/strong><\/em><\/p>\n

And it holds good for our Spend Management<\/a>\u00a0as well! When it comes to S<\/i><\/em>pend <\/i><\/em>A<\/i><\/em>nalysis<\/i><\/em>,<\/a> it has been\u00a0too easy to recognize\u00a0the most visible parts of the business.
\nAfter all, it makes sense to keep spends that directly impact your business on a tight leash, right? Most firms agree and manage their direct expenditure in a tightly monitored, centralized way, with regular checks into probable saving opportunities.<\/p>\n

But this tunnel-focus on D<\/i><\/em>irect <\/i><\/em>S<\/i><\/em>pend<\/i><\/em>\u00a0can cause\u00a0crucial I<\/i><\/em>ndirect <\/i><\/em>S<\/i><\/em>pend<\/i><\/em>\u00a0data to fly under the radar. And within this \u2018out-of-focus’ indirect spend area, some spends go rogue<\/b><\/strong>. These are known as Maverick spends. These can include off-contract spends, fragmented spends, low-value transactions, non-PO spends, one-time purchases, unclassified\/misclassified purchases, and more. They\u2019re almost always a part of indirect spends, and are almost always invisible to firms<\/p>\n

Because of this invisibility, it is pretty common for procurement professionals<\/a> to look back at the end of a financial year and realize that their indirect spends have gotten completely out of hand.<\/p>\n

If you find yourself in the same boat, let us tell you that you\u2019re not alone; Managing invisible indirect spends<\/u><\/a>\u00a0can be quite a tough nut to crack.<\/p>\n

And keeping the difficulty of the task in mind, it is also worth pointing out that global indirect expenditure can be as high as 50% of a company’s total cash out<\/b><\/strong>–<\/b><\/strong>flow<\/b><\/strong>\u00a0to suppliers. And with most firms dropping the ball in this area, it can be a real opportunity to rise above the fold.<\/p>\n

Here\u2019s what most firms struggle with<\/b><\/strong>\u00a0when it comes to invisible indirect spends, and how you can ensure you don\u2019t:<\/b><\/strong><\/p>\n

Improper Categorization<\/b><\/strong><\/h2>\n

Owing to the diverse nature of requirements, indirect spends can span across innumerable categories, and without correct classification, it is impossible to make sense of them, let alone glean insights from them. Manual or weak-tech-based solutions are error-prone, time consuming and offer too little to no respite.<\/p>\n

The best bet to tackle this mammoth is to deploy machine learning algorithms. These automate the categorization of spend data by directly picking up information from fields including material, supplier or line-item description. Adopting an\u00a0ML<\/u>–<\/u>based solution<\/u><\/a>\u00a0can sky-rocket classification accuracy and give high\u00a0visibility into all sources of expenditure.<\/p>\n

Decentralization & Lack of Visibility<\/b><\/strong><\/h2>\n

Indirect Spends\u00a0are highly\u00a0scattered, and undertaken by multiple internal stakeholders with independent spend protocols and budgets. It is nothing short of a\u00a0nightmare\u00a0to track them<\/p>\n

You can combat this by classifying spend categories into\u00a0specific workflows<\/b><\/strong>, partnering with Account Payables (AP)\u00a0and Finance teams to devise targeted response and escalation protocols. Also, maintaining a central repository <\/b><\/strong>of organization-wide spend data is critical\u00a0and makes auditing and reporting simpler.<\/p>\n

Bloated and Weak Supplier Pipeline<\/b><\/strong><\/h2>\n

Multiple touch-points in indirect procurement<\/a> can often mean an over-abundance of suppliers. And because many purchases are ad-hoc undertakings, the firm\u2019s relationships with suppliers tend to be more tactical than strategic.<\/p>\n

Consolidating <\/b><\/strong>suppliers and pooling volumes can help unlock economies of scale<\/b><\/strong>. It\u00a0can be achieved by improving supplier performance<\/a><\/u>\u00a0and risk evaluation. And by filtering out undesirables, better prices can be negotiated among a smaller pool of quality partners with whom better relationships can be maintained.<\/p>\n

The above challenges and more plague the indirect procurement functions of firms on the regular, and ignoring them can prove costly.<\/p>\n

And what\u2019s more? A recent survey by Gartner found that managing indirect spends can deliver greater ROI than managing direct, or hybrid spends<\/i><\/em>.<\/p>\n

The complexity and size of this invisible spend data necessitates smart, automated solutions; One\u2019s that can not only offer multi-level deep visibility, but also actionable insights and seamless integration of relevant data across all stages of procurement.<\/p>\n

Related Read:<\/strong><\/p>\n

    \n
  1. Blog \u2013 Direct Procurement vs. Indirect Procurement : Key Differences Explained<\/a><\/li>\n
  2. Blog \u2013 Realizing Savings in Indirect Spend: A Guide for Procurement Teams<\/a><\/li>\n
  3. Blog -Procurement Benchmarking: Analyzing the Cost of Procurement as a Percentage of Spend<\/a><\/li>\n
  4. The Need for Government Procurement Transformation in ANZ<\/a><\/li>\n
  5. White Paper \u2013 The Evolution of Spend Analysis and the Rise of Big Data<\/a><\/li>\n
  6. White Paper \u2013 Spend Analysis: Making sense of Data<\/a><\/li>\n
  7. Spend Analysis Software<\/a><\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

    Most geniuses\u2014especially those who lead others\u2014prosper not by deconstructing intricate complexities but by exploiting unrecognized simplicities.- Andy Benoit. And it holds good for our Spend Management\u00a0as well! When it comes to Spend Analysis, it has been\u00a0too easy to recognize\u00a0the most visible parts of the business. After all, it makes sense to keep spends that directly […]<\/p>\n","protected":false},"author":1,"featured_media":97175,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[1942],"tags":[],"ppma_author":[170],"class_list":["post-5040","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-spend-analysis"],"acf":[],"authors":[{"term_id":170,"user_id":0,"is_guest":1,"slug":"zycus-inc","display_name":"Zycus","avatar_url":{"url":"https:\/\/dev.zycus.com\/freshz\/wp-content\/uploads\/2025\/02\/zycus-author.png","url2x":"https:\/\/dev.zycus.com\/freshz\/wp-content\/uploads\/2025\/02\/zycus-author.png"},"author_category":"0","last_name":"Agentic Procurement Platform","first_name":"Zycus","job_title":"","user_url":"https:\/\/dev.zycus.com\/freshz","description":"Zycus is an Agentic Procurement Platform that is redefining procurement from Source-to-Pay to Intake-to-Outcomes. Its unified platform combines native Intake, agentic AI, and an end-to-end S2P core to help enterprises drive real procurement outcomes \u2014 not just transactions. Recognized by Gartner, Forrester, IDC, and customers worldwide, Zycus is shaping the next generation of procurement with the Merlin Agentic AI Platform."}],"_links":{"self":[{"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/posts\/5040","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/comments?post=5040"}],"version-history":[{"count":0,"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/posts\/5040\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/media\/97175"}],"wp:attachment":[{"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/media?parent=5040"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/categories?post=5040"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/tags?post=5040"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/ppma_author?post=5040"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}