How Businesses Can Prioritize Top Spend Categories with Automated Spend Analysis Tools
You might not think that automated spend analysis has anything to do with The Jetsons, but hear me out… In the opening theme to the classic cartoon, George drops off each of his family members at their daily activities—Elroy to elementary school, Judy to high school, and Jane out shopping—and gives each a little money as well.
Of course, at the end of the song, George offers his wife a few dollars and she takes his whole wallet 💸.
Procurement officials may feel like George sometimes. With a set budget to purchase goods and services used to run the business, there may be a feeling that available funds disappear quickly and without notice. That is what makes automated spend analysis software such a powerful tool.
Spend analysis software can provide analyses, information, tools, and overall guidance to improve efficiency across a business while simultaneously strengthening cash flows. Not only does spend analysis software help businesses organize overall procurement spend, but it also provides analytical analysis that can improve results.
While spend analysis software can provide benefits in every area of procurement there are some categories where the product especially shines:
Information technology and communication
These tools serve as the backbone of any organization, whether it has 10 employees or 10,000. Businesses need modern IT systems that can help employees efficiently do their work while staying in communication no matter where they work.
Automated spend analysis software can greatly help business procure the technology systems it will use. That includes everything from mainframe equipment and system software to personal computers and telecommunications hardware. These systems are not just about computers but the necessary technology to keep employees connected. Technology has the potential to get expensive so it is imperative that businesses understand where technology dollars are spent and what areas could reduce some of the cost.
Corporate real estate
The world of real estate has changed perhaps more than any other sector in recent years. Businesses today now have different ideas of what they want their real estate footprint to be. Some businesses want more employees to work remotely, reducing the need for physical office space. On the other hand, some businesses may want a more modern office space that can accommodate an open work plan, while others may simply need to open new offices to be near clients.
Real estate can be expensive, but these changes in workplace culture also present an opportunity. Organizations can use automated spend analysis software to find better prices on real estate, or find investment opportunities. Corporate real estate procurement also goes beyond just office space. It also includes costs like cleaning materials, contract services, building maintenance and heating and cooling. All of these services must be purchased and represent an opportunity for cost savings.
Professional and outside services
Another area where spend analysis software can make a major impact is in professional and other outside services. For example, many small businesses may outsource their legal needs as opposed to hiring a full-time attorney. Other services include consultants that may be brought in to advise on a certain facet of the business, such as hiring or temporary services, like an outsourced marketing firm.
There are also smaller services as well, such as courier services and credit reporting. These smaller services can make up a significant portion of spending and, while rarely thought of, can be an important part of a business’ day-to-day operational needs.
Overhead and support
From business travel to office supplies, there are a lot of elements that go into keeping a business running. All of these items contribute to the bottom line but also offer lots of competition. Businesses using automated spend analysis software can typically find cost efficiencies by taking advantage of the large market of potential suppliers.
Marketing and advertising
Many small businesses, and even some large ones, outsource these types of services. While these services sometimes get created through past relationships, businesses looking for a new partner will want to solicit bids and learn the expertise of available firms to get their message out to the larger public.
Employee Benefits
Along with salary, employees will care most about the benefits they receive when joining a new company. From life insurance to pension plans, these extra benefits can be a major cost for businesses. While businesses want to provide employees with top benefits, they also want to ensure they do not get overcharged.
Need automated spend analysis software?
Businesses spend a lot of money in different areas to provide the goods and services they need to operate. Some expenses are obvious while others exist on a case-by-case basis. Regardless of the need, business owners want to ensure that every dollar they spend creates the most value. Automated spend analysis tools organizes these spending needs and helps procurement leaders make strategic decisions on how to optimize spending to align with their budget as well as generate cost savings.
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