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Intelligent Spend Management
Supports Better Decision-Making
Across Modern Business Functions
Transcript of a discussion on how a data-rich view of spend patterns across corporate services,
hiring, and goods reduces risk, spurs new business models, and helps develop better strategic
decisions.
Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: SAP Ariba.
Dana Gardner: Hi, this is Dana Gardner, Principal Analyst at Interarbor Solutions, and
you’re listening to BriefingsDirect. Our next thought leadership discussion on attaining
intelligent spend management explores the findings of a recent IDC survey on paths to
holistic business processes improvement.
We will now learn how a long history of legacy systems and outdated methods holds
companies back from their potential around new total spend management optimization.
The payoffs on gaining such a full and data-rich view of spend patterns across services,
hiring, and goods includes reduced risk, new business models, and better strategic
decisions.
To help us chart the future of intelligent spend
management, and to better understand how the market
views these issues, we are joined by Drew Hofler, Vice
President of Portfolio Marketing at SAP Ariba and SAP
Fieldglass. Welcome back, Drew.
Drew Hofler: Thanks, Dana. It’s great to be with you
again.
Gardner: What trends or competitive pressures are
prompting companies to seek better ways to get a total
spend landscape view? Why are they incentivized to
seek broader insights?
Hofler: After years of grabbing best-of-breed or niche solutions for various parts of the
source-to-pay process, companies are reaching the limits of this siloed approach.
Companies are now being asked to look at their vendor spend as a whole. Whereas
before they would look just at travel and expense vendors, or services procurement, or
indirect or direct spend vendors, chief procurement and financial officers now want to
understand what’s going on with spend holistically.
And, in fact, from the IDC report you mentioned, we found that 53 percent of
respondents use different applications for each type of vendor spend that they have.
Hofler

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Sometimes they even use multiple applications within a process for specific types of
vendor spend. In fact, we find that a lot of folks have cobbled together a number of
different things -- from in-house billing to niche vendors – to keep track of all of that.
Managing all of that when there is an upgrade to one particular system -- and having to
test across the whole thing -- is very difficult. They also have trouble being able to
reconcile data back and forth.
One of our competitors, for example -- to show how this Frankenmonster approach has
taken root -- tried to build a platform of every source and category of spend across the
entire source-to-pay process by acquiring 14 different companies in six years. That
creates a patchwork of applications where there is a skim of user interfaces across the
top for people to enter, but the data is disconnected. The processes are disconnected.
You have to manage all of the different code bases. It’s untenable.
Gardner: There is a big technology component to such a patchwork, but there’s a
people level to this as well. More-and-more we hear about the employee experience and
trying to give people intelligent tools to make higher-level decisions and not get bogged
down in swivel-ware and cutting and pasting between apps. What do the survey results
tell us all about the people, process, and technology elements of total spend
management?
Unified data reconciliation required
Hofler: It really is a combination of
people, process, and technology that
drives intelligent spend. It’s the idea of
bringing together every source, every
category, every buying channel for all of
your different types of vendor spend so
that you can reconcile on the technology
side; you can reconcile the data.
For example, one of the things that we are building is master vendor unification across
the different types of spend. A vendor that you see -- IBM, for example -- in one system
is going to be the same as in another system. The data about that vendor is going to be
enriched by the data from all of the other systems into a unified platform. But to do that
you have to build upon a platform that uses the same micro-services and the same data
that reconciles across all of the records so that you’re looking at a consistent view of the
data. And then that has to be built with the user in mind.
So when we talk about every source, category, and channel of spend being unified
under a holistic intelligent spend management strategy, we are not talking about a
monolithic user experience. In fact, it’s very important that the experience of the user be
tailored to their particular role and to what they do. For example, if I want to do my
expenses and travel, I don’t want to go into a deep, sourcing-type of system that’s very
Intelligent spend is the idea of bringing
together every source, every category,
every buying channel for all of your
different types of vendor spend so that
you can reconcile on the technology
side; you can reconcile the data.

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complex and based on my laptop. I want to go into a mobile app. I want to take care of
that really quickly.
On the other hand, if I’m sourcing some strategic suppliers I certainly can’t do that on
just a mobile app. I need data, details, and analysis. And that’s why we have built the
platform underneath it all to tie this together even while the user interfaces and the
experience of the user is exactly what they need.
When we did our spend management survey with IDC, we had more than 800
respondents across four regions. The survey showed a high amount of dissatisfaction
because of the wide-ranging nature of how expense management systems interact.
Some 48 percent of procurement executives said they are dissatisfied with spend
management today. It’s kind of funny to me because the survey showed that
procurement itself had the highest level of dissatisfaction. They are talking about their
own processes. I think that’s because they know how the sausages are being made.
Gardner: Drew, this dissatisfaction has been pervasive for quite a while. As we examine
what people want, how did the survey show what is working? What gives them the data
they need, and where does it go next?
Let go of the patchwork
Hofler: What came out of the survey is that part of the reason for that dissatisfaction is
the multiple technologies cobbled together, with lots of different workflows. There are too
many of those, too much data duplication, too many discrepancies between systems,
and it doesn’t allow companies to analyze the data, to really understand in a holistic view
what’s going on.
In fact, 47 percent of the procurement leaders said they still rely on spreadsheets for
spend analysis, which is shocking to me, having been in this business for a long time.
But we are much further along the path in helping that out by reconciling master data
around suppliers so they are not duplicating data.
It’s also about tying together, in
an integrated and seamless
way, the entire process across
different systems. That allows
workflow to not be based on
the application or the
technology but on the required
processes. For example, when it comes to installing some parts to fix a particular
machine, you need to be able to order the right parts from the right suppliers but also to
coordinate that with the right skilled labor needed to install the parts.
If you have separate systems for your services, skilled labor, and goods, you may be
very disconnected. There may be parts available but no skilled labor at the time you
It’s about tying together, in an integrated and
seamless way, the entire process across
different systems. That allows workflow to
not be based on the application or the
technology but on the required processes.

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need in the area you need. Or there may be the skilled labor but the parts are not
available from a particular vendor where that skilled labor is.
What we’ve built at SAP is the ability to tie those together so that the system can
intelligently see the needs, assess the risks such as fluctuations in the labor market, and
plan and time that all together. You just can’t do that with cobbled together systems. You
have to be able to have a fully and seamlessly integrated platform underneath that can
allow that to happen.
Gardner: Drew, as I listen to you describe where this is going, it dovetails with what we
hear about digital transformation of businesses. You’re talking not just about goods and
services, you are talking about contingent labor, about all the elements that come
together from modern business processes, and they are definitely distributed with a
lifecycle of their own. Managing all that is the key.
Now that we have many different moving parts and the technology to evaluate and
manage them, how does holistic spend management elevate what used to be a series of
back-office functions into a digital business transformation value?
Hofler: Intelligent spend management makes it possible for all of the insights that come
from these various data points -- by applying algorithms, machine learning (ML), and
artificial intelligence (AI) -- to look at the data holistically. It can then pull out patterns of
spend across the entire company, across every category, and it allows the procurement
function to be at the nexus of those insights.
If you think of all the spend in a company, it’s a huge part of their business when you
combine direct, indirect, services, and travel and expenses. You are now able to apply
those insights to where there are the price fluctuations, peaks and valleys in purchasing,
versus what the suppliers and their suppliers can provide at a certain time.
It’s an almost infinite amount of data and
insights that you can gain. The
procurement function is being asked to
bring to the table not just the back-office
operational efficiency but the insights that
feed into a business strategy and the
business direction. It’s hard to do that if
you have disconnected or cobbled-
together systems and a siloed approach to data and processes. It’s very difficult to see
those patterns and make those connections.
But when you have a common platform such as SAP provides, then you’re able to get
your arms around the entire process. The Chief Procurement Officer (CPO) can bring to
the table quite a lot of data and the insights and that show the company what they need
to know in order to make the best decisions.
The procurement function is being
asked to bring to the table not just
the back-office operational
efficiency but the insights that feed
into a business strategy and the
business direction.

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Gardner: Drew, what are the benefits you get along the way? Are there short-, medium-,
and long-term benefits? Were there any findings in the IDC survey that alluded to those
various success measurements?
Common platform procures benefits
Hofler: We found that 80 percent of today’s spend managers’ time is spent on low-level
tasks like invoice matching, purchase requisitioning, and vendor management. That
came out of the survey. With the tying together of the systems and the intelligence
technologies infused throughout, those things can be automated. In some cases, they
can become autonomous, freeing up time for more valuable pursuits for the employees.
New technologies can also help, like APIs for ecosystem solutions. This is one of the
great short-term benefits if you are on an intelligent spend management platform such
as SAP’s. You become part of a network of partners and suppliers. You can tap into that
ecosystem of partners for solutions aligned with core spend management functions.
Celonis, for example, looks at all of your workflows across the entire process because
they are all integrated. It can see it holistically and show duplications and how to make
those processes far more efficient. That’s something that can be accessed very quickly.
Longer-term, companies gain insights into the ebbs and flows of spending, cost, and
risk. They can begin to make better decisions on who to buy from based on many
criteria. They can better choose who to buy from. They can also in a longer-term
situation start to understand the risks involved across entire supply chains.
One of the great things about having
an intelligent spend platform is the
ability to tie in through that network to
other datasets, to other providers, who
can provide risk information on your
suppliers and on their suppliers. It can
see deep into the supply chain and
provide risk analytics to allow you to
manage that in a much better way. That’s becoming a big deal today because there is so
much information, and social media allows information to pass along so quickly.
When a company has a problem with their supply chain -- whether that’s reputational or
something that their suppliers’ suppliers are doing -- that will damage their brand. If there
is a disruption in services, that comes out very quickly and can very quickly hit the
bottom line of a company. And so the ability to moderate those risks, to understand them
better, and to put strategies together longer term and short-term makes a huge
difference. An intelligent spend platform allows that to happen.
One of the great things about having
an intelligent spend platform is the
ability to tie in through that network to
other datasets, to other providers,
who can provide risk information on
your suppliers and on their suppliers.

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Gardner: Right, and you can also start to develop new business models or see where
you can build out the top line and business development. It makes procurement not just
about optimization, but with intelligence to see where future business opportunities lie.
Comprehend, comply, control contingencies
Hofler: That’s right, you absolutely can. Again, it’s all about finding patterns,
understanding what’s happening, and getting deeper understanding. We have so much
data now. We have been talking about this forever, the amount of data that keeps piling
up. But having an ability to see that holistically, have that data harmonized, and the
technological capability to dive into the details and patterns of that data is really
important.
And that data network has, in our case, more than 20 years’ worth of spend data, with
more than $13 trillion in lifetime of spend data and more than $3 trillion a year of
transactions moving through our network – the Ariba Network. So not only do companies
have the technologies that we provide in our intelligent spend management platform to
understand their own data, but there is also the capability to take advantage of
rationalized data across multiple industries, benchmarks, and other things, too, that
affect them outside of their four walls.
So that’s a big part of what’s happening right now. If you don’t have access into those
kinds of insights, you are operating in the dark these days.
Gardner: Are there any examples that illustrate some of the major findings from the IDC
survey and show the benefits of what you have described?
Hofler: Danfoss, a Danish company, is a customer of ours that produces heating and
cooling drives, and power solutions; they are a large company. They needed to
standardize disparate enterprise resource planning (ERP) systems across 72 factories
and implement services for indirect spend control and travel across 100 countries. So
they have a very large challenge where there is a very high probability for data to
become disconnected and broken down.
That’s really the key. They were looking
for the ability to see one version of truth
across all the businesses, and one of
the things that really drives that need is
the need for compliance. If you look at
the IDC survey findings, close to half of
executive officers are particularly concerned with compliance and auditing in spend
management policy. Why? Because it allows both more control and deeper trust in
budgeting and forecasting, but also because if there are quality issues they can make
sure they are getting the right parts from the right suppliers.
The IDC survey [found] close to half
of executive officers are particularly
concerned with compliance and
auditing in spend management policy.

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The capability for Danfoss to pull all of that together into a single version of truth -- as
well as with their travel and expenses -- gives them the ability to make sure that they are
complying with what they need to, holistically across the business without it being spotty.
So that was one of the key examples.
Another one of our customers, Swisscom, a telecommunications company in
Switzerland, a large company also, needed intelligent spend management to manage
their indirect spend and their contingent workforce.
They have 16,000 contingent workers, with 23,000 emails and a couple of thousand
phone calls from suppliers on a regular basis. Within that supply chain they needed to
determine supplier selection and rates on receipt of purchase requisitions. There were
questions about supplier suitability in the subsequent procurement stages. They wanted
a proactive, self-service approach to procurement to achieve visibility into that, as well
as into its suppliers and the external labor that often use and install the things that they
procure.
So, by moving from a disconnected system to the SAP intelligent spend offering, they
were able to gain cohesive information and a clear view of their processes, which
includes those around consumer, supplier, procurement, and end user services. They
said that using this user-friendly platform allowed them to quickly reach compliance and
usability by all of their employees across the company. It made it very easy for them to
do that. They simplified the user experience.
And they were able to link suppliers and
catalogs very closely to achieve a vision of
total intelligent spend management using
SAP Fieldglass and SAP Ariba. They said
they transformed procurement from a
reactive processing role to one of
proactively controlling and guiding, thanks
to uniform and transparent data, which is
really fundamental to intelligent spend.
Gardner: Before we close out, let’s look to the future. It sounds like you can do so much
with what’s available now, but we are not standing still in this business. What comes
next technologically, and how does that combine with process efficiencies and people
power -- giving people more intelligence to work with? What are we looking for next
when it comes to how to further extend the value around intelligent spend management?
Harmony and integration ahead
Hofler: Extending the value into the future begins with the harmonization of data and
the integration of processes seamlessly. It’s process-driven, and it doesn’t really matter
what’s below the surface in terms of the technology because it’s all integrated and
applied to a process seamlessly and holistically.
They … transformed procurement
from a reactive processing role to
one of proactively controlling and
guiding, thanks to uniform and
transparent data, which is really
fundamental to intelligent spend.

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What’s coming in the future on top of that, as companies start to take advantage of this,
is that more intelligent technologies are being infused into different parts of the process.
For example, chatbots and the ability for users to interact with the system in a natural
language way. Automation of processes is another example, with the capability to turn
some processes into being fully autonomous, where the decisions are based on the
learning of the machines.
The user interaction can then become one of oversight and exception management,
where the autonomous processes take over and manage when everything fits inside of
the learned parameters. It then brings in the human elements to manage and change the
parameters and to manage exceptions and the things that fall outside of that.
There is never going to be removal of the human, but the human is now able with these
technologies to become far more strategic, to focus more on analytics and managing the
issues that need management and not on repetitive processes that can be handled by
the machine. When you have that connected across your entire processes, that
becomes even more efficient and allows for more analysis. So that’s where it’s going.
Plus, we’re adding more ecosystem
partners. When you have a networked
ecosystem on intelligent spend, that allows
for very easy connections to providers who
can augment the core intelligent spend
functions with data. For example, for
attaining global tax, compliance, risk, and
VAT rules through partners like American
Express and Thomson Reuters. All of these things can be added. You will see that
ecosystem growing to continue to add exponential value to being a part of an intelligent
spend management platform.
Gardner: There are upcoming opportunities for people to dig into this and understand it
and find the ways that it makes sense for them to implement, because it varies from
company to company. What are some ways that people can learn details?
Hofler: There is a lot coming up. Of course, you can always go to ariba.com,
fieldglass.com or sap.com and find out about our intelligent spend management
offerings. We will be having our SAP Ariba Live conference in Las Vegas in March, and
so tons and tons of content there, and lots of opportunity to interact with other folks who
are in the same situation and implementing these similar things. You can learn a lot.
We are also doing a webinar with IDC to dig into the details of the survey. You can find
information about that on ariba.com, and certainly if you are listening to this after the
fact, you can hear the recording of that on ariba.com and download the report.
Gardner: I’m afraid we’ll have to leave it there. You have been listening to a sponsored
BriefingsDirect discussion on intelligent spend management through the exploration of
When you have a networked
ecosystem on intelligent spend,
that allows for very easy
connections to providers who
can augment the core intelligent
spend functions with data.

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the findings of a recent IDC survey. And we have learned how payoffs to gaining such a
full and data rich view of spend patterns across services, hiring, and goods include
reduced risk, new business models, and better strategic decision-making.
So a big thank you to our guest, Drew Hofler, Vice President of Portfolio Marketing at
SAP Ariba and SAP Fieldglass. Thanks so much, Drew.
Hofler: Thanks, Dana. I appreciate it.
Gardner: And a big thank you as well to our audience for joining this BriefingsDirect
Modern Digital Business Innovation Discussion. I’m Dana Gardner, Principal Analyst at
Interarbor Solutions, your host throughout this series of SAP Ariba-sponsored
BriefingsDirect discussions. Thanks again for listening, and do come back next time.
Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: SAP Ariba.
Transcript of a discussion on how a data-rich view of spend patterns across corporate services,
hiring, and goods reduces risk, spurs new business models, and helps develop better strategic
decisions. Copyright Interarbor Solutions, LLC, 2005-2020. All rights reserved.
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