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What organization doesn’t want to get a better handle on spending? At large enterprises in particular, expenses can quickly get out of control and negatively affect bottom-line performance. IT has a big role to play in the realm of corporate spending, not only because technology accounts for some of the largest expenses an organization has, but also because IT can help businesses gain better control of spending.

Supply management, or spend management, applications enable organizations to gain more visibility and control over corporate spending while at the same time cutting costs through enhanced sourcing and procurement processes.

These applications enable organizations to analyze spending trends, manage contracts, and automate sourcing and purchasing processes. They can be applied to purchases of raw materials used in the manufacture of finished goods; supplies for internal use; or other corporate buying. Supply and spend management can be a key part of the overall supply chain management of an organization.

There’s increased demand for supply and spend management solutions, and the growth of the market for these technologies has been driven by several key factors, says Andrew Bartolini, v ice president of global supply management research at Aberdeen Group. These include the i ncreasingly strategic role of procurement within the enterprise; the growing impact of procurement on enterprise spending; the greater sophistication of procurement organizations and a general understanding of technology as an enabler; new features and functionality of applications; and the generally solid return on investment (ROI) of supply management products.

Supply and spend management applications have changed the way organizations acquire goods and materials, Bartolini says. “The broad transformation that procurement has undergone over the past decade has been technology driven,” he says.

The benefits an organization can derive from these solutions depend on the specific application they’re using, Bartolini says, such as spend analysis, electronic sourcing or electronic procurement. But in general, the potential business gains of supply management automation include cost savings, process improvements and efficiencies, process visibility, spend visibility, and compliance (contract, process and regulatory).

“Best-in-class procurement organizations [use] these solutions to impact product development cycles and build stronger supplier relationships by making better, more informed decisions,” Bartolini says. “They use technology to drive innovation, place more spend under management and save money.”

The growth of supply and spend management solutions offered in an on-demand or software-as-a-service delivery model has reduced the cost and technical challenges of deploying these applications, Bartolini says. Also, a wide array of services offered to support the deployment of supply management technology has helped slash the time it takes to see ROI on the applications, he says.

“While the challenges vary somewhat by application type, at the core this has been and will continue to be all about change,” Bartolini says. “Technology is an enabler, not a panacea.” In addition to deploying technology, he says, organizations need to map efficient, standardized processes to the technology; clearly identify an executive champion/sponsor for the technology; emphasize end-user training and maintain a clear focus on supporting end users; be willing to look outside the enterprise to acquire new skill sets and knowledge; and have clearly defined performance metrics tied to the use and adoption of the technology.

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