A Look at Why Companies Should Choose Spend Consultant for Their Spend Analysis Tool from a Data Science Perspective
Developing Source One’s spend analysis as a service tool, SpendConsultant.com, has been a welcome and exciting challenge for the leading procurement and strategic sourcing firm. The new tool has given Source One’s clients a unique opportunity to gain spend visibility, clearly identify their cost reduction opportunities, and receive insight into the best practices for achieving their goals. In this three-part interview series, Source One’s Senior Data Scientist and lead Architect for Spend Consultant, James Patounas, has shared with us an insider’s perspective on the major milestones and challenges of developing and launching the spend analysis platform. In this final installment, Patounas explains what makes Spend Consultant different from traditional spend analysis software and why companies should consider Source One’s innovative tool for their spend analysis and cost reduction needs.
What does SpendConsultant.com do?
Ultimately SpendConsultant.com is a vehicle for us to make the results of our data cleansing and classification processes and analyses available to procurement and sourcing professionals for self-exploration. In short, it is a tool with summary statements, tables, and charts that allow you to identify quick win projects in order to build momentum, get instant feedback on realistic savings targets, and see category-specific sourcing strategies.
How does Spend Consultant compare to other spend analysis tools?
Let me begin with explaining Spend Consultant’s similarities to other spend analysis software in the market. Every spend analysis process starts with data that is subsequently cleansed, enriched, and classified through semi-automation.
You say ‘semi-automation’ as opposed to ‘automation’, why?
Automation in this sense refers to some combination of supplier identification and classification. As the architect of a spend analysis system, I can save money and time by loosening the parameters for string processing so that I may identify every single supplier in your dataset at the expense of correctness (type I error) or I can be very meticulous and use highly conservative parameters which will result in few to no identifications (type II error) – and therefore a useless system. Let us assume that I have optimized my parameters and we were miraculously able to correctly identify every single company in your dataset. Now I must classify them. As the architect for any spend analysis software-based solution, my classification rules, likely some combination of statistical algorithms, distance metrics, decision trees, neural networks, must be based upon what I believe to be the most likely thing to occur within any spend dataset. Emphasis on the fact that I elected to use the word any and not the word your. I would be remiss not to add this qualifier: I could be smart and mine past analyses for clients with a similar spend profile. While this may be more accurate, my above statements would still hold true.
In summary, manual classification and validation is a tedious but necessary part of the spend analysis process. Since Source One has been around since 1992, which predates the popularization of algorithms for this type of work, we have an awful lot of experience in handling the manual element of spend analysis. This is one of many reasons that we elected to perform spend analysis as a service rather than build a software solution.
So, what makes Spend Consultant different?
Spend Consultant is different from other spend analysis tools for a few reasons. Superficially, many of the popular tools for spend analysis are a bit antiquated in appearance and so we have a leg up because we used modern technologies such as D3.js and Qlik Sense to drive the user experience.
Our process was designed to combat a common business paradox. Organizations struggle to fight the complexity of spend analysis by adding additional layers of complexity – Software integrations that require significant investments of money, time, and IT resources to implement. Even after implementation, additional resources are required to tailor a solution to meet business needs. Designed from a software engineer’s point of view, rather than a procurement professional’s, these tools may require immense customization and configuration to truly meet Procurement’s needs. Finally, procurement may end up with a tool to view spend, but automation alone can’t produce savings strategies or an opportunity assessment – so procurement pros must invest more of their time and energy to do so. All told, a fully realized software solution could take years before it even begins to add value, all the while your procurement team is spinning wheels not identifying and pursuing savings.
On the other hand, by being rapid, simple, and requiring minimal input from our clients – that’s really where Spend Consultant shines. Our clients simply provide us with their spend data, and we take care of the rest. And after our analysis is complete, they have much more than simply a cleansed view of their spend to identify savings opportunities – they have an actionable strategic sourcing path to achieve them. As a procurement consulting company, we take great pride in the fact that we don’t just put together reports and analyses and hand them to our clients. We also can manage and implement savings initiatives from beginning to end, and really enable them to get the most value out of their investment. And we do realize that it’s an investment on their part.
How did Source One’s core business as a procurement consulting firm impact the development of this tool?
We were more than fortunate to have a large pool of expert procurement practitioners available that we could tap into. These practitioners have hundreds of years of collective experience in identifying and implementing strategic sourcing projects. Furthermore, we have a lot of data at our disposal. This includes third party market data as well as data that we are generating on our own through thousands of sourcing events. For instance, we track the time invested in our projects down to the task level. We have visibility into how much time is spent on completing the baseline, contract analysis process, data collection, implementation, market assessment, etc. for each one of our cost reduction initiatives.
In developing Spend Consultant we tapped into all these resources so that we could construct processes that would help our clients identify the likely ROI, difficulty of implementation, speed to implementation, and optimal strategy at the project level. This way you can not only identify potentially lucrative strategic sourcing initiatives, but you can also identify how you should pursue them and in what order.
Spend Consultant is truly a spend analysis tool created by procurement professionals – for procurement professionals. For more information on how Source One’s strategic sourcing and procurement experts can help you get your cost reduction initiatives off the ground quickly, visit www.SpendConsultant.com.