Many procurement teams have harvested the low hanging fruit and easy pickings. They must now delve deeper into the spending behaviors of their organizations to achieve the sub-surface spend economies. This article argues that the way ahead lies in federated spend management platforms that offer the potential to indentify and act on sub-optimal spending behaviors that lie deeper within the norms of buying behavior of the enterprise.

1. $ub-$urface
$pend
Mining the Untapped Spend Economies
Ian Tomlin
How Federated Spend Analytics software taps into hard-to-reach sub-surface spend
economies with its ‘all seeing eye’ and fine-grained analysis

2. The Pivotal Role of Procurement to Raise
Enterprise Standards of Operational Excellence
People not acquainted with procurement so often see the discipline as a
reactionary back-office function.
Anyone who’s dealt with high performing procurement teams knows
that it’s one of the few discipline areas tasked with looking ACROSS the
silos of operation that tend to build up in organizations.
Procurers have the rare opportunity to invest time in seeking better
ways of working and find cost reductions through more thoughtful
buying approaches.
Often what procurement leaders lack are the insights to drill into
deeper sub-surface layers due to short-comings in spend analytics.
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3. Although there is no obvious single journey to
better ways of buying, procurement teams will
quite sensibly start cost reduction initiatives by
tackling higher spend areas first.
Next will come the poor performing or poorly
controlled areas spend.
Then a third tranche of cost economies is gained through rationalization
and compressing the supply-chain (these are typically more complex
‘root and branch’ changes that demand more transformation and
change in the way the enterprise works and so quite sensibly fall further
down the transitional scale even though sometimes the rewards can be
something akin to a step-change).
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4. Drilling Down to Deeper Layers of Spend
Economies
As procurement teams venture through this life-cycle, they change their
own DNA and transition from reactionary to proactive.
Mature procurement teams might well have delivered ALL of these initiatives
and are now on the march to find new sources of stakeholder value, cost
reduction and improvement (think of it as a mining company that initially
searches out mineral reserves on the surface to then move deeper and
deeper through the strata in search of new reserves).
Contemplating this next-stage sub-surface procurement initiative is where
many procurement leaders now find themselves – but they also know, to
achieve the best results whilst keeping their own operational costs down,
they need better exploratory tools for their teams.
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5. When the cost of mining sub-surface spend
economies outweighs the return
The obvious areas of cost economy in sub-surface procurement initiatives
comes as the result of better understanding the ‘when, where, hows and whys’
of procurement behavior to then benchmark approaches to ‘best practice’
(sometimes happening in different industry sector) to then install new – better -
behaviors.
Unfortunately, the costs of identifying, qualifying and acting on sub-surface
procurement changes can rack up. Procurement professionals need tools to
more easily speculate on areas that look on the surface to be efficient that MAY
hide deeper or unpredictable costs.
Time-to-value in turning potential weaknesses in procurement to rewards in
terms of cost savings becomes a key measure of success.
One hurdle that most procurement teams encounter when transitioning from a
‘reactive’ to ‘proactive’ procurement stance then is the need to source richer
spend-analytics across all disciplines. This is the role of spend analytics.
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6. About Federated Spend
Analytics
Federated Spend Analytics software is cloud-based business software that
places a lens across back-office administrative computer systems to expose
areas of potential spend economy. In this article I explore how the latest
generation of cloud-based applications platforms are facilitating fine-grained
analysis of spending behaviors to expose new opportunities for cost
reduction and efficiencies in the procurement function.
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7. Why Federated?
• Few organizations truly operate ONE computer system across their business.
Even companies that have committed to a core technology stack - such as
SAP, ORACLE, IBM or MICROSOFT - will often have multiple ‘systems’ of their
chosen platform to cater for disparate operating divisions, geographical
variances, group companies (etc.). This means SOMEHOW data needs to be
harvested, mashed together and normalized, then presented in a data-mart
that allows it to be interrogated.
• Like most systems that revolve around ‘people being curious’, good Spend
Management systems don’t simply regurgitate data in the form of charts and
dashboards, what they do is provide a platform for users to ask new questions
about what, where, when, how, why and whom in the enterprise spends
money.
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8. Role of Federated Spend
Analytics Platforms
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Federated Spend Analytics platforms are the newest breed of performance
tooling for procurement professionals operating in large and complex
organizations.
Federated platforms should as a minimum provide the following capabilities:
 Harvest data from existing applications without requiring manual
interventions
 Transform and normalize data to produce coherent data perspectives
 Form a unifying data-mart that auto-refreshes with the latest data from back-
office systems
 Present user interfaces supporting interactive charts, maps, dashboards, side-
by-side comparison tables and other visualization tools to distill key facts
 Support the ability for users to create their own KPIs, alerts, chart
and map views
 Install RASCI role accountability to spend analysis process
 Provide an always-on (secure) platform accessible via browser-based
devices
 Scale to meet enterprise needs

9. Rewards
By implementing a Federated Spend Analysis platform, what should procurement teams expect? While each
organization will benefit differently from adopting a federated system here’s a quick run-down of some of the more
common ROI outcomes:
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• Multi-threaded sourcing and multi-
linking of data; Tooling to harvest data
from multiple sources and augment
automation of information flows to
route data and place it into a data-mart.
• Ready-to-use design elements; Tooling
that provides self-service creation of
situational applications and analytical
dashboards, interactive charts, maps
etc. without coding.
• The means to be curious; to ask ‘when,
where, how and why’ questions without
hugely increasing frictional costs
associated with the enquiry process
itself (such as time spent authoring
reports, sourcing data, manual data
entry and data crunching, time spent
working spreadsheets etc.).
• The means to expose fine-grained
economies; which, by minimizing
enquiry and analytical costs, become
economic to act on.
ADD GROW
• Opportunities for sub-surface
procurement economies by distilling
fine-grained operational behaviors
(made affordable by reducing
enquiry/reporting/analytics unit costs).
• Time-to-value; expose weak-points in
procurement faster by having the ability
to interrogate data rather than creating
and running ad-hoc reports time and
again in the hope that a sub-optimal
behavior will be uncovered.
ADD GROW
Reporting and analytical overheads
Software change/upgrade costs
Technology complexity; save on the
number of tools needed to harvest,
analyze, report, share insights and
related cost of authoring situational
applications to ACT on learning lessons.

10. Thank You.
Article Sponsors:
Workforce and Talent www.workspend.com
IT and Technology www.ustechsolutions.com
Data Engineering and Customer Science www.ndmc.uk.com
Ian Tomlin is a management consultant and
author. He's written several books and
hundreds of white papers and articles on
the subject of customer science,
organizational growth, technology and the
evolution of the workplace.
Books by Ian Tomlin:
Agilization – The regeneration of
competitiveness
Cloud Coffee House – The birth of cloud
social networking and death of the old
world corporation
SOS - Social Operation Systems
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If you have implemented projects or tools to source sub-surface spend
economies it would be great to hear about them. Otherwise, if you’ve yet
to explore the potential for sub-surface spend projects I would be happy to
talk over the subject with you.