Majority of UK Procurement Leaders Unable to Determine ROI of Spend Analysis

Over half (51%) of UK procurement and finance professionals do not know if and when a spend analysis solution should deliver a return on investment (ROI), found a survey by technology firm Rosslyn Analytics.

The survey also uncovers that although procurement and finance leaders view identifying cost savings as their number one business priority, 33% cite the lack of data quality as the largest obstacle to obtaining an accurate view of their company’s spend intelligence.

Key findings of the survey include:

  • 57% of respondents view identifying cost savings as their number one business priority, followed by increasing profit margins (29%), managing supply risks (12%) and other (2%).
  • 61% of procurement leaders rate identifying cost savings as their number one business priority compared to 46% of finance leaders.
  • 40% of finance leaders view increasing profit margins as their number two business priority compared to only 24% of procurement leaders.
  • The three biggest obstacles to the adoption of spend analysis, after a lack of data quality (51%), are a lack of stakeholder buy-in (23%), inadequate budget (23%), limited understanding of spend analysis (18%), followed by other reasons (2%).
  • 33% of procurement leaders rank a lack of data quality as their number one internal obstacle to the adoption of spend analysis, followed by lack of stakeholder buy-in (26%), lack of budget (23%), lack of understanding of spend analysis (17%).
  • 33% of finance leaders identify a lack of data quality as their number one internal obstacle to the take-up of spend analysis, followed by a lack of budget (30%), understanding of spend analysis (20%) and stakeholder buy-in (17%).
  • 61% of those surveyed leverage spend analysis to identify greater saving opportunities within categories. The next three most cited benefits of spend analysis, for both roles, are negotiating lower supplier contracts (14%), improving information on contract compliance (8%) and managing supplier performance (5%).
  • 55% of respondents rank a lack of time in the day as the top pain point followed by additional time sensitive issues (23%) such as team meetings, communicating with stakeholders and prioritising tasks. Other (22%) pain points most frequently cite were people management and a lack of training.
  • Although 83% of procurement leaders are content with their current spend analysis provider, 48% of the respondents did not know if and when their vendor delivered a return on investment. More than 40% of procurement said they had witnessed an ROI after three months while only 10% experienced this after a week.

“Spend analysis is a diagnostic tool that lays the foundation for savings by enabling procurement to identify where its efforts will be most effective, both in terms of technology investment and supplier rationalisation. Conducting de-duplication and classification by category, on a manual basis, is an overwhelming project that does not yield timely information or adequate data quality. This explains why Gartner is observing renewed interest from organisations for spend analysis solutions,” said Deborah Wilson, research director of procurement strategies & systems, Gartner.

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