Spend Management: Driving Greater Value From Your ERP System
Data is the foundation of sound decisions. And there is no shortage of technology-based tools to help companies collect and manage it. Technology promises an efficient and effective way to streamline business processes and data flows for better decisions and greater collaboration and performance. But traditional offerings often fall short due to the costs and burdens of installing and maintaining business software applications on site, including:
Over the past decade, increasing numbers of companies have invested large sums in the set up and expansion of back-end software systems such as enterprise resource planning (ERP) to help them get a handle on their data. This means they’ve taken on the challenges above in doing so, but this needn’t be the case.
A new breed of solutions has emerged to help companies efficiently manage their data without hassle. They’re known as ‘on-demand’ and incorporate the delivery of software, content, and services as flexible, web-based services. On-demand bucks the challenges of installed software by delivering data management, application functionality and process automation as a service. On-demand solutions require only a Web browser for access, eliminating the need to install or maintain software or hardware. They also replace upfront licensing fees and lengthy implementation cycles of traditional installed applications with a ‘pay-as-you-go’, subscription-based service relationship. For business managers, this means that many of the core functions that are required to get the job done are offered as integrated web services, including:
There’s no doubt that ERP systems are very effective at automating transactional processes and routine reporting – particularly in the areas of finance and human resources. But they do not provide the insight into information that companies need to make strategic business decisions.
In today’s economy, companies need clear forecasts with regard to spending and spend structures across all departments, business divisions, systems and categories. They not only need to know how much they are spending, but on what and with whom. While ERP software provides the means to automate and manage transaction processing and financial reporting, it does not provide the deep and clear view into data that is necessary to identify opportunities for savings and drive them to the bottom line. Nor does it connect buyers to suitable suppliers to fuel the collaboration required for success in a global business environment.
Enter spend management. Spend management extends beyond automating routine transactional processes to drive how companies excel in resource provisioning, risk management and operational excellence. To be a top performer, companies must have a clear and forward-looking view into their spend and spending patterns across departments, divisions and systems. Spend management solutions provide this view, giving companies timely access to accurate information on what and how they are spending, which they can use to support business unit decisions and perform the planning, budgeting and forecasting necessary to drive ongoing cost control.
More than just process automation, spend management drives fundamental improvements in procurement effectiveness by enabling companies to manage every pound they spend from sourcing and orders through invoice and payment – something not possible with ERP software alone. They also fuel the collaboration between buyers and suppliers that is so critical to success in a global economy – again, something that ERP on its own cannot deliver.
Unlike finance, spend management is not a mature function driven by globally recognised standards and processes. It is a dynamic activity that varies widely across organisations. While finance can benefit from large-scale systems such as ERP, spend management requires nimble solutions that can be tailored to accommodate unique horizontal processes.
A unique combination of software, market knowledge, category expertise, a global network and supporting services delivered in a single, integrated platform, spend management solutions enable companies to empower the people, processes and technologies required to lower costs, minimise risk, increase profits and improve competitive advantage.
By tightly linking spend management and ERP systems as powerful and complementary partners, companies can create an outstanding cost control system that enables them to continuously and sustainably drive cost reductions across all areas of their business. And by leveraging on-demand solutions to do it, companies can quickly and successfully adapt to change and deliver results.
How can you find the solution that’s right for your organisation? Consider the following:
With the right on-demand spend management solutions in place, organisations can not only get their data under control, but convert it to knowledge they can act on to drive their strategic business goals. In addition, they can greatly accelerate time to financial benefit, realising faster results, better return on investment and lower total cost of ownership. And at a time when cost reduction is job number one, few things are more critical.