Are you exploring a spend optimization solution for your IT services and wondering how they are deployed?
Want to make sure they are not an absolute headache for you and your business? Know the right questions to guide your selection criteria?
You’re in the right place. In this Article, we will go over the key parts to measuring a decent deployment:
- Document gathering
- Document extraction
- Data analysis
How these questions get answered will help you measure which solutions you can be confident in deploying.
Let’s get started.
A quick word on what spend optimization is
You’re here to understand how they are deployed. You know what an IT spend optimization solution is. It’s still worth a quick word just to make sure the solutions you’re evaluating are apples to apples.
A spend optimization solution is defined by its ability to help you automate the lifecycle of spend optimization. They should be:
The solution must use autonomous cost saving identification or you’re just creating more manual reports for your team to figure out on their own. The whole idea of a spend optimization solution is that it takes away the enormous time & resource requirement for your business to optimize costs.
It must be continuous and work every single day (or at least every month) in order to capture the full benefit for your business.
And of course, the data it produces must be explainable and accurate. Autonomous / AI solutions are notorious for producing questionable data. Many provides won’t guarantee accurate data above some comfortable threshold for them. Even if the data is accurate, how do you explain the opportunities it finds across departments and stakeholders? A good solution will have processes in place to ensure accurate data, and have workflow chains to show exactly what the AI has done and how.
With that out of the way, let’s look at deployments!
You can’t run a spend optimization solution without data! This will come from a variety of sources, but most commonly from documents including Contracts, Invoices, and Purchase Orders.
Finding these documents can be a showstopper before you’ve even begun. No one seems to have the right documents in the right format.
A good spend optimization provider will have processes in place to make this work easily and can help you gather extracts from your ERP or finance systems to build a target list of vendors. From there, they can engage directly with each vendor to gather your document history.
Ask upfront for how your spend optimization provider expects to tackle this area. If they expect you to provide everything to them – red flag!
Once your spend optimization provider has all the documents, how do they manage document extraction? What is their accuracy rate? Can they handle multiple languages? How long does it take to deal with new document formats?
Document extraction as a technology is not yet perfect. Most off-the-shelf document extraction tools are not built for dealing with complicated document formats with thousands of pages attached (which is often exactly what you’re dealing with for technology invoices and contracts).
Spend Optimization platforms have to work with thousands of documents in different formats, different languages, from different vendors. The efficiency and accuracy of this stage is vital to a successful deployment.
How does your spend optimization provider plan on analyzing data from so many different vendors around the world? Can they handle translating jargon into a common language everyone can understand? To what detail does their analysis go with regards to your products, services, and contract pricing?
Many providers will ask you to tell them upfront what kind of reports and analysis you want to see. This is totally backwards! While fine for traditional software development, spend optimization platforms deal with complex data analysis that require a full understanding of the data and technical domain. If you already have a full understanding and know exactly what reports you need, you honestly don’t need a spend optimization platform at all because you can schedule it within internal BI tools like Excel, Power BI, Tableau etc.
In 99% of businesses, the time & resource commitment is prohibitive to fully exploring your contracts and billing data. The point of a spend optimization platform is to automate that data exploration and turn up opportunities you couldn’t have found yourself.
User experience (UX) is a vital component of a successful spend optimization platform.
Spend optimization platforms deal in uncertain and complex data. The way they present data to you needs to be better than just a simple display of opportunities it found. It needs to present data in a way that explains each step the platform has gone through to identify an insight or opportunity, and allow for flexibility in how you choose to take action.
Make sure that your spend optimization provider can provide a detailed response to “explainability” and “workflow adaptability”. Workflows can and should be modified to adapt to your business for the best results.
Now that we’ve shown how spend optimization platforms are fundamentally data-driven and require a slightly different perspective than normal software-as-a-service deployments, you want to make sure your provider is able to not only boast true automation to collect the best data, translate jargon and languages into a common model, and find comprehensive cost saving and service improvement opportunities, but to perform these functions adequately so as not to waste your time with “yet another reporting application” that is rarely used. Thinking Machine is one of the only providers in the world that can do all that. We are a leading platform in spend optimization, where you can confidently deploy global solutions in under 2 weeks with trusted data.