Spend Management Litmus Test

Every once in a while, you come across an idea or a metric that is simple and powerful in communicating a fundamental point. For example, “Speaking with One Voice” (a topic we have covered in past postings) is one of those powerful ideas whose name practically explains itself (For more on this topic, see my previous blog posts here and here).

How about spend management? What might be a singularly-powerful metric relating to spend management? In the experience of one of my colleagues it is this:When you sort through your current spend data, from largest category to smallest, where does the infamous “Miscellaneous Other” rank?

If “Miscellaneous Other” spending appears in the “top 10,” you have a lot of work to do. But, you also have a very clear message regarding opportunity to take to your senior management. Because, without good spend analysis capabilities your ability to identify opportunities, source them properly, and ensure the benefits make it to the bottom line will be severely constrained. With good spend analysis capabilities, you have a facts-based foundation to accomplish great results.

Where does “Miscellaneous Other” appear in your spend category ranking?