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SAP Spend Performance Management: A new supply risk and spend analysis option

In the procurement and supply chain world, we usually don't put the words "SAP" and "innovative" together in the same sentence.

In 99% of product development cases, SAP is either a fast follower or slow mover, but it's rarely out in front of the market with the very latest in technology and solutions when it comes to

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Yet SAP's new Spend Performance Management software bucks this trend. It combines spend analysis, supply risk information and limited aspects of supplier performance. In fact, SAP can lay claim with its latest offering to having the first true procurement and supply chain analytics mashup that combines different internal and external risk information (e.g., D&B data enrichment, internal inventory and quality data) with spend analysis content (e.g., A/P data and supplier provided invoice data). It promises it will deliver an integrated view into analytics and risk going down as far as line-item detail.

Our latest research suggests that supply risk insight often becomes that much more accurate (and valuable) when an organization looks at data and leverages analytics in the context of other fields rather than independently. For example, if an organization aggressively monitors supply performance (e.g., quality, on-time delivery) as well as financial risk elements (either in an automated manner or by manual number crunching) and collectively looks at the information together under the right lens, the chances of predicting a supplier bankruptcy months before it happens increases significantly. Or, in the case of private suppliers where financial information sources are not available, looking at the intersection of similar or other performance-related issues (e.g., PPM, escapes, service levels, on-time performance) in the context of receivables behavior (e.g., early payment requests, discount taking, term renegotiation) gleans proactive insight, where such a task may have seemed impossible before.

Spend Matters recently published a report looking at the importance of analytics in examining enterprise risk data. We found that in their latest iterations, many spend analysis solutions provide one means to incorporate risk as a central component of analysis. While these tools began almost exclusively as a capability to help companies build visibility into spending patterns and sourcing strategies, they have since taken on the added role as a repository to gather and share risk enrichment data.

Spend Matters' analysis of the supply risk solutions market suggests that solution providers offering full or partial elements of a risk management solution fall into the following four categories:

Spend visibility solutions: These tools began almost exclusively as a capability to help companies build visibility.

Supplier information management (SIM): These solutions started out as tools to enable targeted supplier management initiatives, including supplier on-boarding, supplier diversity, CSR and compliance.

Supplier performance management (SPM): SPM tools began with ERP and off-line (e.g., Excel) scorecards and now include a range of capabilities such as supplier assessment, performance evaluation, performance monitoring and supplier development. SPM tools should ideally allow companies to roll up information from a variety of systems and non-system sources.

Standalone risk management solutions: Standalone supply risk management solutions represent the newest entrant into the risk management arena. Some began as an extension capability or targeted solution offered by enrichment providers to showcase their relevance.

Our current research suggests that spend visibility solution providers include AECSoft, Ariba, BIQ, BravoSolution, Emptoris, Endeca, Global eProcure, Iasta, Ketera, Oracle, Rosslyn Analytics, SAP, Spend Radar and Zycus. Many of these providers now offer supply risk enrichment from D&B, Equifax and other sources as an add-on capability to their core solutions.

Stand-out analytics providers in the spend visibility arena with unique capabilities and/or analytics experience include BIQ, Endeca, Rosslyn Analytics and SAP. At the time of publication, SAP appears furthest along (among these) from an analytics-driven supply risk management solution perspective, while Endeca offers the most flexible capability for examining and integrating disparate data sources in a new type of spend visibility/supply risk mashup approach.

If you are interested in learning more about the importance of SAP Spend Performance Management and how to use analytics as a central component of spend analysis, supply risk management and supplier management, we encourage you to download our latest report, "The Intersection of Analytics and Supply Chain Risk Management – Using Intelligence to Drive Early Intervention," on  spendmatters.com:

Jason Busch is Principal Analyst at Spend Matters. His contributions are based on Spend Matters Compass research which examines a range of procurement and supply chain technology solutions and trends.


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