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Rosslyn Analytics Survey Reveals Majority of Procurement Leaders Unable to Determine ROI of Spend Analysis

Originally published July 22, 2009

The survey, conducted by Rosslyn Analytics, a technology company, also uncovers that though procurement and finance leaders view identifying cost savings as their number one business priority, they cite the lack of data quality (34%) as the largest 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 realize a return on investment,” said Charles Clark, CEO, Rosslyn Analytics. “Spend analysis is such an important business-critical tool for organizations that Rosslyn Analytics challenges vendors to become more accountable to customers, including transparently stating when their solutions will deliver returns on investment.”

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 percent).
  • 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 percent) 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.
  • Though 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. 42% 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 rationalization. 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 organizations for spend analysis solutions,” said Deborah Wilson, Research Director of Procurement Strategies & Systems, Gartner.

This BeyeNETWORK news item contains information from a recent press release by the company mentioned.