Spend Management, is undoubtedly the most widely implemented subject area across industries within BI space. Spend KPI’s are monitored at all levels within organization hierarchy (i.e. vertically ) and across functional areas (i.e. horizontally).
Spend is a generic term given to any and all expenses incurred during normal course of operations of business. Broadly, two contexts while analyzing data related to “spend“, which are Procurement and Finance. Both perspectives differ based on source of data used for analysis. Although, both sources of data are interlinked to high degree, their analytical context varies to great extent. Finance perspective uses actual payments and billing details whereas procurement perspective uses purchase orders and requisitions.
|Context||Measure||Source of Data|
|Financial||Semi Additive||General Ledger|
Analyzing Spend Value from from financial perspective is more prevalent than purchasing context and the term “Spend Management” is synonymous with financial spend data. Being a financial measure, time context is critical and a transaction/fact actual time period is the period in which it was actually incurred i.e. recognized financially is used as baseline time frame for analysis.
Spend Value is reported along with budget and forecast values for the same time period for which actual values are reported. Spend Value as a KPI is analyzed for a specific time period (i.e. Month, Quarter, YTD) as well as an ongoing trend.
Spend Value at the organization level is reported to top management, but dimension based analysis plays a critical role due to the widespread nature of spend data usage across the organization. Few examples of dimensions for slice and dice of data as well as drill down into fine grain are below.
|Account Group||OPEX (Operational Expenses), CAPEX (Capital Expenses), SGA (Sales, General & Administrative)|
|Geography||AMERICA, EMEA, APAC|
|Cost/Profit Center||HR, Admin, R&D|
|Business Unit/Division||Health, Food & Beverage, Beauty, Personal Care|