When should spend analysis deliver ROI?

Global - A majority of procurement professionals do not know if and when a spend analysis solution should delivery a return on investment, and could be taken advantage of by spend analysis vendors.

The survey, conducted by Rosslyn Analytics found that 51% of respondents did not know if and when a spend analysis solution should deliver ROI. Further, while procurement views identifying cost as their number one business priority, a lack of data quality (34%) was the biggest obstacle to obtaining an accurate view of their company's spend intelligence. 

"The findings from our survey reveal that spend analysis vendors are taking advantage of procurement leaders who, confidentially, admit that they do not know when they should realise a return on investment," said Charles Clark, CEO of Rosslyn Analytics. "Spend analysis is such an important business-critical tool for organisations that Rosslyn Analytics challenges vendors to become more accountable to customers, including transparency stating when their solutions will deliver ROI."

The study found that though 83% of procurement leaders are content with their current spend analysis provider, 48% of respondents did not know if and when their vendor delivered an ROI. 42% of procurement said they had witnessed an ROI after three months while only 10% experienced this after a week.

"There is no reason why organisations should not know exactly when their spend analysis solution will deliver a ROI," Clark said. "In today's era of affordable, easy-to-use and fully automated web-based technologies, vendors have all the necessary tools to deliver significant cost savings in weeks, not months.

"Procurement and finance professionals must not accept anything less from the industry," he said.

The survey also found that 61% of procurement leaders rate identifying cost savings as their number one business priority.

Procurement professionals further admitted that the biggest obstacles to the adoption of spend analysis, after a lack of data quality (51%), are a lack of stake holder buy-in (23%), in adequate budget (23%), and limited understanding of spend analysis (18%).

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