If you’ve read our recent posts, you’ll know that we’ve previously written about the benefits of spend analytics and the use of data in organisations, with the inclusion of decision making. So, when you have both the data and an implemented spend analytics process in place – how can you use this to maximise benefits?
The first step is to see extensive data as an opportunity. Often business owners are simply unaware of how the vast amounts of data they already have can assist them in cost saving exercises. There are many instances where data has proven helpful to prevent decisions from being made based on cost alone. For example, a simple decision to switch to a cheaper provider may seem a good choice, however, data may show a return on investment that is far greater than the cost saving of switching.
So, whilst the thought of collating, maintaining and storing extensive data may seem daunting the benefits may far outweigh the investment. Now, data is used more and more in the process of savings decisions.
We’ve outlined our key benefits of having extensive data to make informed savings decisions below:
Whilst it may feel new to begin with, analysing and using data will likely provide you with added assurance in the decision-making process. Not only will you feel comfortable that your decision has been backed up and verified with data but you will also feel more confident in sharing these decisions with your peers.When used to its full potential data can not only help you analyse your current situation, it can also inform you of the results of any changes. So before finalising a cost saving decision, you should be able to review the impact that it may have. Not only will this instil an increased level of confidence in your decision-making, but it will also assist with your risk management process as well. How? Data is logical and final in ways that human instinct is not. Whilst the use of data is not without risks, the balance of intuition along with data evidence is a perfect balance to make effective decision making for your business.
It’s common for businesses to implement a data-driven decision-making process because of a recommendation, an existing problem, or another type of reactionary measure. Therefore, data is often used to make savings decisions that are required imminently or to verify ones that have already made.
The benefit of implementing a data-driven process in cost saving measures is that it can be used to make and advise on business savings opportunities. It’s very possible that with the right quantities of data, your business can take proactive action, identifying cost savings before your competition does. Similarly, when done correctly you will be able to proactively detect risks or threats before they become issues.
Having extensive data allows business owners to use historical data to give insights into future trends. Effective spend analytic tools will be able to use your data to provide insights into spend patterns, supplier activity, bid comparisons (and much more). All of which give your organisation a competitive edge in areas such as bid management, opportunity assessments and contract negotiations. Similarly, historical data will enable your finance teams to make better prediction with forecasting and budgets. Knowledge is indeed power, and data will provide you with the insights needed to make better financial decisions.
Having an extensive pool of data, along with an implemented data-driven decision process will introduce a new way of working to your organisation. This will provide your whole organisation with a structured process when it comes to spend management, and decisions that need to be made by your teams.
With an introduction of a data-driven organisational culture, efficiency can increase as staff will be inducted into the process. Eventually you will have astable operational process in place. Likewise, teams will be supplied with the information they need to make quicker, more confident decisions when it comes to saving measures.
Whilst the benefits are vast, it is important to note that the success of using data to make informed decisions is reliant on three things:
1) The quality of the data.How has the data been collated, stored and has it undergone the data cleansing process? This removes duplicated, corrupted and outdated information from databases. Read more about this in our previous blog here.
2) The spend analysis process.How has the data been analysed and are the mechanisms/tools used to undertake and present the spend analytics of good quality?
3) The interpretation of the data.Has relevant data been analysed to meet the overall objective? In simple terms, do you have the right data, and has it been presented in a relevant way, to make the appropriate decision?
Once you have an effective data management process in place, you are able to start taking advantage of the opportunities in spend management that this presents.
Need help using data in your decision-making process? Look no further.
OurArrowhead software offers SMEs the ability to gain transparency over their entire company spend through a simple and user-friendly interface. Along side our software, our experience procurement officers can guide your team through the entire spend analytics process.
Ready to get started? Get in touch with us today at email@example.com