Give Your Procure-to-Pay the Next Power of Analytics with SAP Spend Performance Management Solutions

  • by Rajesh Ray, Senior Managing Consultant and SCM Product Lead, IBM Global Business Services
  • May 27, 2014
Get an overview of the SAP Spend Performance Management solution and learn about the business case for implementing it. Learn the details about the features of Spend Performance Management. Using a case study example, gain an understanding of Spend Performance Management implementations and lessons learned.
Learning Objectives

Reading this article you will learn:

  • The different types of analytics possible with Spend Performance Management application
  • About Spend Performance Management’s data standardization, classification, and validation process
  • Lessons learned from the author’s own implementation experience via a case study example
Key Concept

SAP Spend Performance Management is an SAP BusinessObjects application that helps in multi-dimensional analytics of direct and indirect spend, and helps to proactively identify cost savings opportunities and supplier risk. Spend Performance Management is part of SAP’s Enterprise Performance Management (EPM) solution portfolio.

The SAP Spend Performance Management application comes with a strong repository of 120+ out-of-the-box spend analysis reports in a variety of dimensions on spend, trend, and variance reports, including exception reports, what-if reports, and waterfall analysis reports. I discuss what the SAP Spend Performance Management application is needed for, what business benefits it brings, and the key business drivers for investing in such an application. I also show the various kinds of analytics supported by this application. Finally, I discuss an end-to-end case study of an SAP Spend Performance Management implementation for a consumer goods company, including the business case and project scope, the different phases of the project, and a high-level overview of the activities performed and the key learnings from each stage of the implementation.

Business Case for a Spend Performance Management Application

Many organizations face challenges in terms of visibility of how they spend across their different direct spend categories (like production of raw material and labor costs) and indirect spends (such as office supplies and travel expenses). To illustrate, here are some common questions that many buyers regularly fight to get answers to:

  • What is my total organizational spending across all categories?
  • Who are my largest suppliers overall, category-wise?
  • What are my largest spend segments?
  • Over the last three years, which segments are growing in my overall spend? Which segments are shrinking?
  • What segments or parts had the largest price inflation in the last three years?
  • Am I paying more to one supplier than another for the same component? If yes, by how much?
  • Which buyer is managing the most items or spends? Which buyer is managing most of the contracts?
  • Where can I quickly cut costs by taking action?
  • Am I paying the contracted price for all items covered in the contract? If not, why?
  • How much am I buying off contract? Why?
  • What percentage of my spending is on procurement from low-cost countries?

Rajesh Ray

Rajesh Ray currently leads the SAP SCM product area at IBM Global Business Services. He has worked with SAP SE and SAP India prior to joining IBM. He is the author of two books on ERP and retail supply chain published by McGraw-Hill, and has contributed more than 52 articles in 16 international journals. Rajesh is a frequent speaker at different SCM forums and is an honorary member of the CII Logistics Council, APICS India chapter and the SCOR Society. 

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