{"id":2838,"date":"2010-03-03T14:54:00","date_gmt":"2010-03-03T14:54:00","guid":{"rendered":"https:\/\/www.certitrek.com\/nlpa\/2010\/03\/03\/whitepaper-wednesday-spend-analysis-vs-erp\/"},"modified":"2021-07-27T07:58:33","modified_gmt":"2021-07-27T11:58:33","slug":"whitepaper-wednesday-spend-analysis-vs-erp","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-spend-analysis-vs-erp\/","title":{"rendered":"Whitepaper Wednesday – Spend Analysis vs. ERP"},"content":{"rendered":"

Welcome back to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. This week, I\u2019ll be reviewing a whitepaper entitled \u201cSpend Analysis \u2013
\nIt\u2019s what you don\u2019t know that costs you (Part I)\u201d from Iasta and Purchasing Magazine.<\/p>\n

Don\u2019t miss updates on Procurement & Supply Chain, Subscribe here!<\/p>\n

Considering that this whitepaper is 23 pages long and it is a \u201cPart I\u201d of an undeclared number of parts, Iasta appears to be trying to teach everything there is to know about spend analysis<\/a>. Because they sell spend analysis software, that\u2019s obviously a good thing for Iasta. But it\u2019s also a good thing for you because, judging by this whitepaper, Iasta is providing some valuable, easy-to-read material that is focused on true purchasing education and not on pimping their software.<\/p>\n

While this whitepaper covers a variety of topics, I found particular value in the sections contrasting doing spend analysis with a best-of-breed spend analysis system compared with using an ERP system. The whitepaper correctly points out that, because of the way that data is entered, ERP systems are rife with incomplete data, duplicated vendors, poorly categorized purchases, and more problems that, without the data cleansing capabilities of a true spend analysis system, significantly impair a purchasing department\u2019s ability to access the information that could drive cost savings decisions.<\/p>\n

One of my favorite quotes from this section of the whitepaper is: \u201cA good ERP system does allow those requisitioning products to assign category codes but in many cases the requisitioner is not familiar with the coding structure, especially from a Spend Analysis perspective. Very often people do not take time to search for the correct code because they do not understand the importance. As a result the data is incorrectly tagged with the infamous \u20189999 \u2013 Miscellaneous\u2019 category.\u201d<\/p>\n

I definitely know what they are talking about here. In this type of situation, it would be easy for a purchasing department to understate its volume when compiling its RFP and, thus, fall short of comprehensively leveraging its spend.<\/p>\n

Further illustrating Iasta\u2019s grasp of real-world problems with relying solely on ERP systems for sourcing information is this paragraph:<\/p>\n

\u201cWhen a payment is recorded in the ERP system, it contains the vendor name, the organizational unit responsible and the general ledger (GL) code against which the spending is booked. The GL codes are designed to support the accounting function, not the procurement function. These codes are heavily regulated by the authorities. For example, when a bank buys a printer from HP, the procurement group wants to link it with all other printers bought by the bank. However, the accounting for this printer will vary depending on how it is used, and on specific accounting rules that may apply. Two hundred printers bought at once would generally be considered capital goods in one set of accounts, but the same printer, bought as a single item, might be expensed. This means that the spending for a single commodity can be scattered across the balance sheet.\u201d<\/p>\n

The whitepaper goes on to discuss other spend analysis challenges from data in the ERP system being unchangeable after accounting periods have ended to political battles between purchasing and IT departments. Again, all very real-world stuff.<\/p>\n

So, as you may imagine, I recommend downloading the whitepaper if you are thinking that the data you can get out of your ERP system is inadequate for what you want to accomplish. You can get your own copy of this whitepaper from Purchasing Magazine\u2019s Web site (registration required).<\/p>\n","protected":false},"excerpt":{"rendered":"

Welcome back to another installment of Whitepaper Wednesday here on […]<\/p>\n","protected":false},"author":12,"featured_media":4138,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2838","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-procurement"],"yoast_head":"\nWhitepaper Wednesday - Spend Analysis vs. ERP - Next Level Purchasing Association (NLPA)<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-spend-analysis-vs-erp\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Whitepaper Wednesday - Spend Analysis vs. ERP - Next Level Purchasing Association (NLPA)\" \/>\n<meta property=\"og:description\" content=\"Welcome back to another installment of Whitepaper Wednesday here on […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-spend-analysis-vs-erp\/\" \/>\n<meta property=\"og:site_name\" content=\"Next Level Purchasing Association (NLPA)\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/NextLevelPurchasing\/\" \/>\n<meta property=\"article:published_time\" content=\"2010-03-03T14:54:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-07-27T11:58:33+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/11\/nlpa-images-148.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1600\" \/>\n\t<meta property=\"og:image:height\" content=\"1067\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Galo Matagay\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@nextlevelpurch\" \/>\n<meta name=\"twitter:site\" content=\"@nextlevelpurch\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Galo Matagay\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-spend-analysis-vs-erp\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-spend-analysis-vs-erp\/\"},\"author\":{\"name\":\"Galo Matagay\",\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/#\/schema\/person\/72d094fab77892483dfa6e061cb27eaa\"},\"headline\":\"Whitepaper Wednesday – Spend Analysis vs. ERP\",\"datePublished\":\"2010-03-03T14:54:00+00:00\",\"dateModified\":\"2021-07-27T11:58:33+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-spend-analysis-vs-erp\/\"},\"wordCount\":597,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/#organization\"},\"articleSection\":[\"Procurement\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-spend-analysis-vs-erp\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-spend-analysis-vs-erp\/\",\"url\":\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-spend-analysis-vs-erp\/\",\"name\":\"Whitepaper Wednesday - 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