Weathering The Storm: Why Spend Analysis Is Vital To Meeting Latest Public Sector Spending Cuts

In the same week that Chancellor George Osborne confirmed Government plans to reduce public spending by a further £30bn, Advanced Business Solutions (Advanced) co-hosted a roundtable with SPS Consultancy to discuss radical changes required to cope with additional funding cuts.

The event - Spend Management and Analytics – took place at the institute of Directors in London. It brought together procurement professionals from NHS trusts and local government with procurement transformation specialists from SPS and Advanced to share their opinions.

With public spending set to be cut to levels not seen since the 1930’s, procurement managers are facing the greatest challenge of their careers to date. The first rounds of cuts were only the beginning and as Ken Cole, Managing Director of SPS Consultancy pointed out, spend analysis must now be a continuous process and not a one off exercise. 

This point was unanimously agreed, however as one delegate asked, how do organisations achieve the balancing act of cutting costs without jeopardising front line services?

Making use of leading business intelligence solutions like Spend Analytics from Advanced is essential to improve financial control and highlight spending anomalies.  By consolidating data from an organisation’s finance and procurement systems it is able to provide a unified and accurate view of all spending in real-time.

Spend Analytics is a customer-driven solution which was originally developed for the NHS in the South West which needed to aggregate and monitor the spending activities across 39 hospitals. The system has since been adopted by organisations in the public and private sectors including Rotherham Metropolitan Borough Council and Aer Lingus.

It allows staff to rapidly identify price variances, non-compliant ordering, invoice processing issues and common purchasing inconsistencies, such as one department paying more than another for the same product.

The system also includes drill-down functionality that allows organisations to analyse spend by company, supplier, cost-centre, product unit of issue and contract categories. Tailored key performance indicators identify where targets are not being met, providing greater intelligence when renegotiating contracts with suppliers to ensure more competitive pricing.

For many organisations, further cost cuts will only be possible if they overhaul existing procurement policies. Closer collaboration between multiple departments, eliminating manual-based processes and the consolidation of purchasing data is key to identifying where savings can be made.

These are the toughest times most people in the public sector can remember. However by harnessing the right technologies, and using these to transform procurement, organisations stand a better chance of successfully weathering the storm. 

By Dean Dickinson, Managing Director, Advanced Business Solutions (Public Sector & Enterprise Division)