When deciding between different spend management solutions, it’s crucial to consider their ability to integrate with your current ERP software. Integrating your new spend management solution with your ERP software will enable the two systems to securely and efficiently share key data and insights. The result will greatly enhance your capacity to make informed data-driven business decisions.
The first step toward integrating your ERP suite with state-of-the-art spend analyses functionality is to choose a spend management solution with exceptional spend-data categorization, visibility, and scope. Full and seamless integration will allow you to uncover cost-saving insights into your company’s overall spend.
Key Characteristics of Effective Spend Analysis Software
Spend analysis is the critical, complex process of gathering, normalizing, cleansing, categorizing and ultimately analyzing all of your company’s spend data.
Only with a best-in-class solution will your team accurately isolate the complete spectrum of strengths and weaknesses in your company’s current and historical spending patterns. A thorough spend analysis will generate new, often surprising, data-driven insights that will help you end unnecessary spending while helping you leverage wise, constructive spending.
Spend Data Categorization
To perform a thorough spend analysis, an effective spend management solution will include highly sophisticated data categorization options accommodating not only a variety of spend types (e.g. direct, indirect and MRO), but also custom categories and widely used standards, such as the latest version of UNSPSC.
Spend Data Visibility
Your spend analysis software should have powerful, granular data visibility that captures detail down to the purchase order line item level.
Spend Data Scope
The data-capturing scope of your spend analysis solution should also be state of the art, with a dedicated spend management database fully capable of drawing data from a wide variety of systems, including legacy systems and physical invoices.
Integrating ERP and Spend Analysis Software
Let’s approach the power of integration through the lens of a hypothetical case involving unidentified losses that only a thorough spend analysis can properly uncover. Suppose, for example, that your company is experiencing ever-increasing sales, but is nonetheless struggling to attain profitability. After examining your price points, you find that your prices closely track market demand. If you raise them, your struggle for profitability will only worsen. Therefore, you cannot raise prices and will need to cut costs. But from where?
To uncover the answer, the executive team agrees that a top-to-bottom spend analysis is in order. As a cutting-edge company in the digital age, you already have a robust ERP solution in place. Yet its spend analysis functionality isn’t effective in revealing insights hidden in the data. Therefore, you make the wise choice to look into independent spend management solutions designed by companies that specialize in strategic e-Sourcing software.
While shopping for spend analysis software, you know that it must integrate seamlessly with your current ERP suite in order to properly contribute to your company’s master data. This is the data that you access through a single ERP user interface in order to make key, company-wide, data-driven business decisions. You are also aware that system-wide error handling and troubleshooting also become far easier after a complete integration. System improvements in these areas also become markedly easier with integration: business process management, regulatory compliance, upgrades, standardization, data validation, and data consistency.
After finding a best-in-class spend management solution that integrates seamlessly with your ERP solution, you proceed with a highly sophisticated spend analysis. As a result of your spend management solution’s tight integration with your ERP software, the reason that your company has struggled to maintain profitability soon becomes clear. According to your in-depth spend analysis, nearly 20% of your total spend has been on perishable, highly regulated materials that are sitting in your warehouses beyond their federally mandated expiration dates. With no contractual option to seek supplier compensation for delays of time-sensitive shipments, which are clearly contributing to the expiration problem, your company has had no choice but to scrap the materials and write them off as a loss.
Understandably, this insight leads your executive team to revisit the current status of supplier contracts. The team immediately isolates the suppliers consistently responsible for the late shipments of time-sensitive materials and either discontinues their corresponding contracts or renegotiates them to enforce strict timeliness. Within six months, the expiring-materials problem is solved and your company returns to profitability.
Uncovering Key Spend Opportunities
In order to securely and efficiently share data and insights between your ERP solution and your new spend analysis software, integration is an absolute necessity. Making informed, data-driven business decisions requires that the two systems work together seamlessly. Choosing a best-of-breed spend management solution is the first step toward that end.
As you explore your options, look for highly sophisticated spend analysis software with the following features:
- spend-data categorization encompassing a wide range of spend types and categories
- spend-data visibility that reaches all the way down to the PO line item level
- data-capturing scope that includes a wide variety of systems, including legacy systems
Even more importantly, ensure that the spend analysis software you choose fully integrates with your existing ERP solution. Once you’ve achieved integration, your ERP solution, enhanced with the power of effective spend analysis software, will uncover key spend opportunities that can restore or enhance your profitability time and again.
Related Article: Spend Analysis – Analyze Your Procurement Spend in 5 Easy Steps
ProcurePort is a global leader in providing spend management solutions. Our experienced team of sourcing professionals can assist with successfully executing your spend management project. Improve spend visibility and identify cost-saving opportunities by leveraging ProcurePort’s On Demand spend analysis tools.
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