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As public sector organisations are finding themselves under increasing pressure to reduce costs, perhaps a spend analysis system can be of use, writes Buying SolutionsThe current economic environment means that many public sector organisations have had to scale back the costs associated with certain projects whilst maintaining, if not increasing, high levels of service in order to remain competitive. Such budget constraints mean that, more than ever before, organisations need to be as efficient and effective as possible in their spend management.
Teams working to deliver billions of pounds of savings and efficiencies rely upon accurate data in order to gain a comprehensive understanding of their organisation’s spend on goods and services.
One way to achieve this is by using spend analysis technology. Spend analysis is the process of collecting, cleansing, classifying and analysing data. A spend analysis system can provide a useful process of aggregating and leveraging spend data for the purpose of reducing costs, improving operational performance, enabling compliance and increasing opportunities.
The use of electronic spend data analysis and manipulation tools opens up the prospect of further savings and efficiencies for public sector organisations, through improved procurement. By having a clear picture of current buying behaviour, an organisation will be able to identify opportunities for aggregated spend, improved collaboration and the elimination of rogue spending. Spend analysis technologies can also be leveraged in other areas of business, including inventory management and product development.
Crucially, the technology can also provide organisations with the vital management information they need to assess the impact of measures put in place to improve performance and efficiencies.A complex picture
Trying to make sense of the complex picture of spend across public sector organisations can appear a daunting task.
The first challenge is identifying sources of data. Whilst some organisations may have tools to manage purchasing spend, process and procedure, inadequacies sometimes leave gaps in the data.
The obvious solution is to use payment data from the Accounts Payables modules of finance systems. Though spend may not always go through purchasing it will always generate some kind of payment record.
This data is usually coded to reflect consumption, with identifiers for who consumed it and how they consumed it. In addition, this usually reflects an internal classification that does not align well to the marketplace from which goods and services are bought.
A further problem is that supplier databases are often riddled with duplications and fail to identify relationships that can be important when negotiating.An accurate picture
The second issue to address is the cleansing and rationalisation of supplier data. By eliminating these duplications and tracking the ownership of supplier subsidiaries, a more accurate picture of where money is spent and, more importantly, the true extent of leverage with suppliers begins to emerge.
The third requirement is the re-coding of spend into a market facing classification aligning the things we buy with the way the marketplace itself is organised. This is essential to understand how to best organise expenditure for maximum value.
Though challenges exist, there is great reward for organisations that commit to using a spend analysis project.
Know your current position
Robert Knapman, director of eCommerce at Buying Solutions, sees great value in applying spend analysis technologies: “For all public sector organisations, establishing a clear and accurate picture of current spending patterns has to be the starting point. Without that certainty at the outset, it is very difficult to institute changes and improvements with confidence.
“But getting to the bottom of what the current position is can be quite difficult. Organisations have many different structures, existing IT systems often present barriers and the regular round of reorganisations that take place in the public sector can also muddy the waters.”
Buying Solutions’ Spend Analysis framework agreement delivers a range of data manipulation and analysis tools including extraction and aggregation of dispersed data, cleansing and enrichment of aggregated data, validation of data and web deployed user analysis tools.
The framework agreement offers all public sector organisations a tried and tested route to technology that will enable many of them, for the first time, to assemble a full and accurate picture of procurement spend, buying patterns, suppliers and the use of approved contracts.
The application of the tools provided through the framework agreement will also help to complete the big picture of how the public sector spends its budget of more than £150 billion each year – a key priority for the government as it pursues its Transforming Government Procurement agenda.
Keeping it simple
The Spend Analysis framework agreement followed a rigorous, EU-compliant competitive tender process. Services are split between the provision of technical solutions for analysing customer spend data and the provision of consultancy support to configure data analysis so that they deliver the greatest benefits for customers and comply with EU public procurement legislation.
This framework agreement allows public sector organisations to access the services they need swiftly and easily, and offers the added security of suppliers who have been specifically selected for their ability to understand and deliver in the public sector environment.
It also removes the need for individual organisations to carry out their own costly and time-consuming procurement exercise.
The suppliers appointed to deliver spend analysis services are:
Most of the suppliers employ a combination of proven databases, automated predictive coding and vast experience to build the spend database and load it into a search engine capable of multi-dimensional analysis.
“What we are all striving for is the information that enables us to negotiate from a position of strength, identify commodity or supplier aggregation opportunities and achieve efficiencies,” concludes Robert Knapman.
For more information
For more details about the Spend Analysis framework agreement visit the Buying Solutions’ website at www.buyingsolutions.gov.uk or call the Buying Solutions’ Customer Service Desk on 0845 410 2222.
By Graham Payne, CEO of Opencell, ensuring everyone indoors has network.
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