Spend Analytics Software

Spend analytics in procurement

With SaaS costs increasing by an average of 11.4% each year and as much as 45.7% of software licenses going unused or underutilized, it comes as little surprise that organizations are looking for ways to reduce costs and optimize spend.

One such way this is being achieved is through the use of spend analytics software.

By providing companies with invaluable insights into not only their procurement spending data, but also their purchasing processes, spend analysis software can help uncover opportunities for cost savings, efficiency gains, and more strategic decision making.

Benefits of using software to analyze procurement spend

Procurement spend, particularly for SaaS, has become out of control in many organizations. Rising software prices, increased vendor complexity, and lack of visibility are all factors contributing to inefficiencies and unnecessary costs.

The best spend analytics software solutions are therefore designed to not only help companies analyze their procurement spend and extract the maximum value from their expenditure, but ultimately help them keep costs down without having to compromise on their preferred tech stack.

Some of the specific benefits of using this type of software include:

• Improved visibility – Spend analytics software not only acts as a centralized repository for all SaaS contracts, but it also provides a real-time overview of all procurement spend, helping companies identify inefficiencies and areas for cost reduction.
• Cost savings and spend optimization – With the right tool, companies can track indirect spending patterns and pinpoint opportunities for cost-savings, for example instances of underutilized licenses or duplicate tools. The best spend analytics platforms will also provide negotiation-as-a-service, leveraging benchmarking data, peer insights, and vendor knowledge to secure the best possible price on any contract.

See how one company was able to save $155,000 on a single software contract

• Streamlined procurement processes – The more advanced spend analytics software solutions will provide procurement workflow functionality and automation capabilities, enabling you to streamline your processes from requisition to renewal.
• Greater compliance and risk management – Certain spend analysis tools can ensure that procurement practices and supplier contracts align with internal policies and regulatory requirements, reducing both legal and financial risks. Some will even leverage AI in the procurement process to simplify the contract review process.
• Time savings – By automating key tasks such as contract management and procurement spend analysis, not to mention delegating the negotiation process, procurement teams can free up time to focus on the more strategic initiatives that drive greater value for the organization.

Key features of spend analytics software

• Procurement spend visibility – Spend analytics tools provide a central repository of all subscriptions, offering a comprehensive view of spend across the organization.
• Spend tracking – Companies can monitor and analyze procurement spending across various tools and departments, ensuring alignment with budgets and uncovering potential inefficiencies.
• Software utilization tracking – With the right software, procurement leaders can more easily assess the usage rates of all software licenses, identifying those that are underutilized or entirely unused, helping to prevent wasted spend.
• Contract management – By managing the entire contract lifecycle, from purchase requisition to renewals, these tools ensure compliance with internal policies and regulatory requirements, all the while mitigating risks such as missed renewal deadlines.
• Approval workflows – Advanced platforms will offer features for streamlining and automating approval processes, ensuring that all indirect purchases are properly vetted, approved, and aligned with budgetary constraints and organizational goals.
• Cloud cost optimization – Enterprise spend analysis tools will also provide invaluable insights into cloud spending, pinpointing opportunities for cost reduction and eliminating unnecessary resources.
• Advanced procurement spend reporting and analytics – When evaluating a platform of this kind, make sure you’re understanding how it can leverage AI-driven insights, while also determining the quality and breadth of its database.

Real-world use cases: How spend analytics software drives value

Data is the cornerstone of any good spend analytics solution, providing the foundation for accurate reporting, cost-saving insights, and actionable recommendations to optimize procurement spend.

But how exactly can this data be leveraged by organizations to drive real change?

Below, we’ve outlined some real-world examples of how procurement spend analytics can be utilized to drive efficiency, reduce costs, and improve strategic decision-making.  

Eliminating maverick spending

These tools play a critical role in uncovering purchases made outside of formal procurement. As an issue affecting the vast majority of organizations, maverick spending is a major challenge that almost always leads to wasted resources and missed opportunities for cost optimization. In fact, research suggests that it is responsible for as many as 90% of companies having instances of duplicate tooling.

By providing organizations with complete visibility of their software stacks – including by flagging instances of shadow IT – these platforms can eliminate all instances of this rogue spending, while putting the processes in place to prevent it going forward.

Tail spend management

Many organizations simply don’t have the time or resources to handle tail spend effectively. The issue is, this area of low-value spend often accounts for as much as 20% of an organization's total expenditure, and by allowing these smaller, less strategic purchases to go unnoticed, companies are almost certainly missing out on opportunities to rightsize contracts, identify cost-saving opportunities, and even secure better rates during at the point of renewal.

Procurement spend analytics software ensures that all spending, regardless of size, is captured, tracked, and analyzed.

By managing tail spend, these platforms ultimately empower teams to negotiate better deals, drive cost efficiencies across their entire software portfolio, and maximize procurement’s value.

Supplier consolidation

Another example of how procurement and spend analytics can be utilized is by consolidating suppliers or vendors. Spend analysis specifically helps to identify instances where multiple suppliers are providing similar – or even the same – products or services across an organization.

The reality is that redundant applications and duplicate tools cause huge financial issues for companies, leading to a substantial amount of wasted spend. In fact, it is largely responsible for as much as $1.3 million being wasted by companies with a headcount of between 400 and 749. Those with more than 2,000 employees are wasting an average of $4.5 million annually.

By leveraging spend analytics software, companies can uncover these redundancies, streamline their vendor base accordingly, and consolidate contracts.

This not only reduces unnecessary costs but also allows procurement teams to negotiate better terms, secure volume discounts, and optimize their software stack, ultimately leading to more efficient operations and significant cost savings.

Evaluating spend analytics software providers: Key considerations

As with any software purchase, choosing the best spend analytics software provider for your company is an important decision requiring careful evaluation.

To help, we’ve put together a list of some key considerations that you should be taking into account.

1. Analytics and insights capabilities

When assessing the different platforms, it’s important to understand the quality and breadth of their data, as this will determine the depth, relevance, and accuracy of the analytics they provide and the insights they deliver.

As an example, you should consider asking:

• How many vendors does its benchmarking data cover? A broader range of vendors means more comprehensive insights and a better foundation for making strategic decisions.
• How many countries is it present in? This can impact the quality and relevance of global data, especially for multinational organizations or those with diverse procurement needs.
• Does the provider utilize the data itself for handling negotiations on your behalf, or does it simply provide you with the data? Understanding whether the platform offers proactive support through negotiations or leaves that responsibility to you can significantly influence its value.
• How does the platform leverage data and analytics within itself? For instance, does it provide in-workflow insights that simplify and guide the procurement process, or does it focus solely on reporting? In-workflow insights can streamline decision-making and improve the efficiency of procurement activities.

Want an unbiased comparison of how the leading SaaS management and procurement platform providers support spend analytics? View the Lionfish Tech Advisors Report

2. User-friendliness and customization

User-friendliness is crucial for ensuring that your team can easily adopt and maximize the value of the spend analytics software. A good platform should have an intuitive, easy-to-navigate interface that requires minimal training.

Customization should also be a core requirement, as different departments within your organization may have unique needs, so the ability to tailor dashboards, reports, and workflows will help ensure the platform is as effective as possible for all stakeholders.

3. Supplier and contract management

Spend analytics tools play a crucial role in helping you track supplier performance, consolidate vendors, and optimize contracts. Find out how each platform can support contract lifecycle management, for example by tracking renewal dates and notice periods, monitoring compliance, and identifying areas for efficiencies or cost savings within each individual SaaS contract.

‍4. Security and compliance

Given the sensitive nature of procurement and financial data, security should be another critical factor. Ensure that the provider adheres to industry-standard security protocols, such as encryption, access controls, and regular security audits.

5. Cost and ROI

With the purpose of any spend analytics tool being to identify cost-savings, you want to make sure that any platform you consider investing in can guarantee a return on investment.

Finding out whether or not the provider offers a savings guarantee can quite literally pay dividends, as it can give you the reassurance that they are committed to delivering tangible value.

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See how one company achieved a 600% ROI in less than a year by partnering with Vertice

‍Start analyzing your procurement spend with Vertice

Vertice not only has the capabilities to optimize your spend and streamline your procurement processes for maximum efficiencies, but we can also handle negotiations on your behalf, leveraging our extensive pricing database to ensure the very best deal on any contract.

By partnering with us, you can gain the hours back in your day to focus on more strategic initiatives, leaving us to handle the rest, while retaining full oversight of your contracts and spend.

Why not see for yourself how we helped one company achieve savings of more than $330,000 in just three months.

Alternatively, take a self-guided tour of our platform to get a better idea of how we can help you not only analyze, but get maximum value from your procurement spend.