In today’s global economy, business leaders are constantly under pressure to drive optimal levels of performance across their entire organisational value chain. This is partly due to the increasing complexity of the modern business world, in addition to the growing expectations of always-connected customers. Today more than ever, business leaders need the ability to respond to a growing set of challenges with agility and accuracy. The balancing act of managing spend – particularly balancing growth and spend control – is a major tussle for modern C-suite executives.
Remaining responsive to business needs while focusing on optimising performance, especially when it comes to organisational spend, is key. Growth, innovation and new business capabilities are continually pressured by risk appetite. In today’s unpredictable world, one of the key approaches to helping leaders balance and drive higher levels of business value, is to adopt a real-time Intelligent Spend Management strategy.
The evolving world of Intelligent Spend Management
The task of spend management is expanding in scope and complexity. Increased data volumes, decentralisation and overall spend are giving rise to spend solutions, processes and data that gravitate toward the formation of organisational spend silos. Often this leaves CFOs blind, with no clear visibility over spend across the total organisational ecosystem. What’s more, organisations are under pressure to optimise their spend and invest in areas of growth. This has created the need for a new mandate, especially for finance functions within global organisations. CEOs nowadays mandate that Finance, Procurement, IT and Supply Chain leaders collaboratively explore new ways of optimising spend management across the enterprise.
What is clear is that how an organisation spends its money matters, now more than ever before. The pace of change, the need for adaptability, and the requirement to constantly evolve in order to meet customer expectations means that making the best strategic decisions around spend is an absolute necessity for survival. And making those decisions effectively is only possible when connecting all sources of spend, with full visibility and insight of that spend, across the entire enterprise.
Realising value from Intelligent Spend Management
Most organisations have spend functions concentrated within certain spend silos. This creates a challenge for CFOs, who have to ensure optimal spend management regardless of which silos are under-performing. Employees are making organisational spend decisions with less and less oversight, using a wide range of payment methods, which often poses a risk to total spend visibility, governance and compliance, efficiency and controls. For example, travel and expenses are generally one of the largest areas of spend for a company, outside of capital expenses, and often this category of spend is entirely left to individual employees.
Employees traveling to a new location creates logistical challenges for businesses. Companies have to plan for how many days a foreigner can work in the country before paying local income taxes. They must make sure all spend is aligned to company policy, especially when policy and local customs are at odds, or when the receipt is in another language. The sad reality is that most technology vendor solutions are ill-equipped to address spend management across the various spend silos. This lack of effective spend management through technology solutions often result in fragmented spend visibility, incorrect financial reporting, failing governance and compliance and many other challenges CFOs battle with on a daily basis.
With Intelligent Spend Management, SAP focused on harnessing the collective categories of spend within an organisation, which are often extremely diverse, centralising all spend across all sources. This enables the organisation to manage all spend regardless of category or silo in one place and allows them to capture and apply spend policies consistently to invisible or visible spend. Managing tax and other regulatory requirements becomes easier, and by virtue of having all spend in a centralised location, sourcing best practices can be applied across spend categories, risk management is optimised, and saving negotiation is amplified.
This leads to better rates and terms within contracts for the organisation. The key philosophy powering this approach is that when CFOs have full visibility over an organisation’s total spend, they can control costs better, can authorise investment better and make more accurate strategic decisions regarding organisational spend.
Reimagining Spend Management in today’s digital world
SAP’s approach to bringing Intelligent Spend Management to life for customers is rooted in driving a holistic business outcomes approach for organisational spend management. This is achieved by combining three key line of business solutions – SAP Concur, SAP Fieldglass and SAP Ariba – to offer customers the strategic capability of an end-to-end spend management service across all spend categories whether it’s direct, indirect, services, travel or expenses. Organisations that adopt a strategic approach to Intelligent Spend Management often realise business value much quicker than those who do not, especially around metrics such as organisational spend visibility, total employee spend, governance and compliance, spend optimisation, and accelerating vendor payments.
One of the easiest ways to kick start your Intelligent Spend Management journey and accelerate the realisation of business value is to connect travel and expense spending with all other employee expenses, especially as spending becomes more decentralised. This approach often empowers finance teams to strategically control all employee spend for this category with added benefits such as the ability to optimise invoice management, policy adherence and enforcement, governance and compliance, process automation and efficiencies, automating invoice matching against purchase orders as well as goods and services received.
For example, a fortune 500 SAP customer in the logistics industry with offices in 24 countries wanted to improve their ability to manage employee spend especially with regards to international and domestic travel. The challenges posed by the existing landscape were numerous, with the paper-based travel and expense process presenting three key problems for the company’s finance team.
The first was a lack of visibility into total spend. Secondly, this lack of visibility meant there was also a concern around compliance. And thirdly, the team handles upward of 200 claims per month and deals with multiple currencies and regulations, which made foreign VAT reclamation an extremely time-consuming manual process. While these issues had been a concern for a while, the introduction of VAT in the region made matters even more pressing and complex.
With SAP Concur as a foundational first step in their Intelligent Spend Management journey, the customer was able to meet their objectives of empowering their finance team to see where spend is happening, to easily find insights and ensure policy compliance, to reduce back office time, and especially track and monitor VAT spend so it could be reclaimed efficiently.
One of the biggest financial services institutions on the African continent, with presence in multiple Africa countries, also embarked on a similar journey using SAP Concur as their first step into Intelligent Spend Management. Their finance team regularly processes upwards of 50,000 expense reports annually, all of which were processed manually. As can be imagined, the sheer volume of the paper storage was overwhelming, not even mentioning the complete lack of insight into travel spend and overall reporting of it.
With SAP Concur implemented, they are now able to reduce reimbursement time by nearly 50%, travel agency booking fees have been reduced by nearly 60% and visibility into travel spending provides ability to negotiate volume vendor/supplier discounts.
Intelligent Spend Management is no longer a luxury that is the reserve of the multinational conglomerate. Intelligent Spend Management today is an absolute business-critical capability to ensure long term sustainability in the modern economy. Businesses small and large are able to reap the benefits of optimised spend management, starting their Intelligent Spend Management journey with SAP Concur and allowing for improved strategic decision making on growth and spend, across the entire enterprise, all powered by consistent, trusted, intelligence.