Tuesday 5 March 2013

Thoughts Around Data Quality for Spend Analysis

Authored by Mike Roberts

As those who recently attended our webinar Accessing Spend Analysis through the Government Procurement Service (if weren’t able to attend you can view it here) will recall, there were a few questions raised about the quality of data required in order to perform spend analysis. It is often wrongly assumed that to make spend analysis worthwhile that you need the most granular data at a invoice or PO line detail. I agree it certainly helps, but analysis without this level of detail can still be immensely valuable.

Clearly with the right data analysis at a product level including unit price and volume can provide great value, however this kind of analysis is really only relevant once all the broader strategic objectives are in place for a particular category (e.g. medical products price benchmarking). And very likely they may only realise marginal savings compared to those delivered by the larger strategic decisions. For example, in a collaboration with similar organisations it is often the high level supplier/category views that are used.

Of course those strategic opportunities can be planned and quantified with increasing levels of detail, however how much additional value may they provide? Even if the ‘poor’ data is 10% inaccurate, in many cases would this be enough to take another decision?

In most cases category managers use the data to justify hunches that they already had about the state of their category. Not having the full details does not necessarily change the decision that would have been made.

So in summary, as a spend analysis practitioner, I would always aim to extract the best data that I could. However if this is not always possible, then accept that spend analysis is a journey, but don’t stop. Move forwards with what you have, make the decisions that you can, and feed back to the ERP systems managers to make improvements to allow better data to be available in the future to help with the more detailed management of new contracts you have tendered.

No comments:

Post a Comment