Our friends over at Sourcing Innovation, in conjunction with one of their sponsors, have released arguably the most detailed eBook on implementing a spend visibility solution ever. It is entitled “Spend Visibility: An Implementation Guide” and I’m going to review some of the more interesting aspects of the eBook here and then tell you how you can get your free copy.
First, I have to advise you that this eBook is highly scientific. It really gets into a lot of granular details and, occasionally, some tech-speak that may scare off the merely curious. However, if you’re looking to implement a spend visibility solution, you will appreciate this level of detail as the eBook covers a lot of the many, many landmines that one can encounter when taking on that task. Obviously, it’s better to identify the mistakes that are common before a project rather than learning them through making them on your own!
The majority of the paper revolves around a 10-step spend visibility implementation plan designed to “ensure that savings opportunities will be maximized year after year.” The paper takes a deep dive into each of those 10 steps.
Now, because this is a detailed eBook, even summarizing each section would be quite a lot for you to read. Therefore, let me quickly share some thoughts on my favorite parts.
Data Aggregation: Right from the beginning, the eBook stresses the importance of identifying where all of your spend data resides. Even in smaller mid-size companies, spend data is captured in various places and, as a result, isn’t easy to aggregate. Got a p-card program? Guess what…you already have a separate bank of data that you’ll need to aggregate with your ERP data. The eBook gives plenty of examples of other places spend data resides and, more importantly, some best practices on how to aggregate it for across-the-enterprise spend visibility.
Change Management: Despite the fact that this eBook is highly scientific, it does not ignore some of the human elements and challenges associated with spend visibility implementation. For example, it advises that “putting in a spend analysis system that ‘makes analysis easy’ may feel threatening to [a current analyst] if their job is to be ‘the data person’…Change can be frightening, so you need to work to prevent pushback from these people.”
Merging Data: About 1/3 of the way through the eBook, the authors shine some serious light on how data should be merged properly to avoid common problems that certainly plague the unsuspecting. From currency challenges to timing issues to more, the eBook alerts implementers to simple things that might get ignored, but can have an impact later. This is best illustrated via an excerpt: “Data draws from different systems may have different timing. You will need to confirm that transactions for the month of February represent the same range of dates. For example, one system might use the accounting date for transactions. Another system may use the check date. These will be close, but you will need to determine if adjustments need to be made.”
Commodity Classification: This is certainly my favorite part of the eBook because it is very consistent with what Next Level Purchasing teaches in our online course “Savings Strategy Development.” I will be the first to agree that getting your commodity classification scheme down is one of the most important things to do to maximize the success of a sourcing initiative. There are plenty of great pieces of advice for doing just that in the eBook, including how large a single commodity/category should be and how to determine where one commodity/category ends and another begins. Truly great stuff!
Commodity Mapping: Once you decide on your commodity classification scheme, it’s time to take all of that data you’ve collected, bring it into one central place, and have commodity codes assigned. Sounds much easier than it is. In my experience, I’ve built some pretty solid mapping schemes. But the mapping approach in this eBook is much more sophisticated than anything I’ve done in this area. It uses a “swiss cheese” analogy and sends the data through multiple layers to ensure that an extremely high level of commodity mapping accuracy is achieved. It’s easy to see how this approach can help get commodity mapping done right much earlier than a “try to do a decent job and tweak it later” approach that many organizations follow.
Again, I know that this summary is already long. But, if you’re still reading, you’re clearly interested in spend visibility best practices and I won’t take any more of your time. Instead, I suggest you go over to Sourcing Innovation and click on the Lexington Analytics logo under “Sponsors” on the right-hand side. You’ll get immediate (and free) access to the eBook. If you’re looking to implement a spend visibility solution, I don’t know of a more thorough resource out there on the topic!