Vijay Kumar has been dabbling with spend analytics since 1999. He has over 40 years of global business experience with deep knowledge on Supply Chain Management and ERP implementations. Vijay recently sat down with GoSourcing’s Thomas Cheah for a far-ranging discussion on how spend analytics have evolved since the early days. They delved deeply into Vijay's experience on integrating spend analytics into spend management that often requires great commitment from procurement leaders in managing risks and control in order to deliver the desired bottom-line.
GoSourcing: Where and when did early spend-analytic implementations begin?
Vijay Kumar: I’d say late ‘90s probably was the time when people started to take spend analytics seriously with the advent of using spreadsheets to analyze spend data. Till then it was merely routine to report budget variances at the aggregate levels. But project complexities warranted a closer look because when overspend outpaces the allowed escalation claims of a project then the net result is a loss, in more ways than one. More importantly a significant revelation dawned upon all of us - an accounting approach merely enabled us to sift through historical data; this is good as lessons for the future but not useful to apply in real time to control costs in large and complex projects.
Vijay Kumar: I’d say late ‘90s probably was the time when people started to take spend analytics seriously with the advent of using spreadsheets to analyze spend data. Till then it was merely routine to report budget variances at the aggregate levels. But project complexities warranted a closer look because when overspend outpaces the allowed escalation claims of a project then the net result is a loss, in more ways than one. More importantly a significant revelation dawned upon all of us - an accounting approach merely enabled us to sift through historical data; this is good as lessons for the future but not useful to apply in real time to control costs in large and complex projects.
 | "It is a misconception to think that spend analysis is only for large companies. I mean who wouldn’t like to save money? The perception that spend analysis requires access to complex computing resources is changing gradually as well." |
GoSourcing: Big data has been a buzzword in business and a major game changer in corporate marketing and promotional strategies for the past several years. How do you see procurement leaders can leverage big data to create a positive effect?
Vijay Kumar: Big data can be broadly segmented into four major areas: data relating to procurement spending, performance of suppliers, enterprise contracts, and procurement process analysis. Handling of big data is a challenge for any organization in any part of the world as it involves a large number of activities, like data collection, storage, search, transfer, sharing, analysis, retrieval and data management.
GoSourcing: Most procurement leaders perceive spend analysis as a resource intensive project (both time and financials) where only big companies that can justify such investment. Do you see how can spend analysis benefit small and medium-sized enterprises, which often have limited resources?
Vijay Kumar: It is a misconception to think that spend analysis is only for large companies. I mean who wouldn’t like to save money? The perception that spend analysis requires access to complex computing resources is changing gradually as well. Many software vendors now offer cloud based solutions that do not require significant upfront costs. Besides, who says you can’t use spreadsheets for this? However even smaller companies may be better advised to get some form of start-up help from an expert who knows more.
Vijay Kumar: Big data can be broadly segmented into four major areas: data relating to procurement spending, performance of suppliers, enterprise contracts, and procurement process analysis. Handling of big data is a challenge for any organization in any part of the world as it involves a large number of activities, like data collection, storage, search, transfer, sharing, analysis, retrieval and data management.
GoSourcing: Most procurement leaders perceive spend analysis as a resource intensive project (both time and financials) where only big companies that can justify such investment. Do you see how can spend analysis benefit small and medium-sized enterprises, which often have limited resources?
Vijay Kumar: It is a misconception to think that spend analysis is only for large companies. I mean who wouldn’t like to save money? The perception that spend analysis requires access to complex computing resources is changing gradually as well. Many software vendors now offer cloud based solutions that do not require significant upfront costs. Besides, who says you can’t use spreadsheets for this? However even smaller companies may be better advised to get some form of start-up help from an expert who knows more.
