How to Justify Spend Analysis When There’s No Clear ROI

I know we don’t have to preach to the choir. Procurement professionals are all aware of just how practical spend analysis is for them, but sometimes find it challenging to explain exactly why. Some expenses are simply hard to justify. Spend analysis is often seen only as an added value to the organization, rather than an essential piece to uncovering hidden value opportunities. In an applicable paper, Spend Matters suggests 10 ways to justify the expense for spend analysis to the financial decision-makers at your company. Here are some key takeaways…

Bundle Your Initiatives

Bundle spend analysis with initiatives that more clearly affect the bottom line. Analytics is the means to the end, so shy away from making it the project in and of itself. Demonstrate what that “end” is, and how it will impact the project and hence the company as a whole. Show how spend analysis will affect a range of important projects, or pitch it as a piece of one or two of those projects.

Make it Personal

Put yourself on the line. Analyze your own performance, and show how spend analysis will make you that much more efficient. Tell the CFO and Chief Human Capital Officer how much more productivity they would get out of you and your team if procurement wasn’t stuck over-analyzing poor spend-related data. Give them some examples and paint a picture of the performance and potential spend savings they could expect with the help of spend analysis.

Highlight Spend Visibility…or Lack Thereof

The largest and most obvious benefit of spend analysis is the visibility it provides. It gives budget holders insight into where their money is going and what it’s doing. Be prepared to come to the table with the fragmented, incomplete, or incorrect data you’re currently working with and make your case on how a spend analysis tool could help achieve the visibility you need; providing you with exceptional data on spend and…the real important part (for this instance) — providing Finance with desirable data on savings.

These are just a few tips to justifying the expense for spend analysis. When your CFO, budget holders, and IT department see just how important, actionable data is contained in spend analysis, it will be far easier to get them on board. Contact us for a closer look at how to sell spend analysis to the decision-makers at your company, and discover just how quickly you can win them to your side.