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2nd QUARTER 2014
Raj Durai is the founder and CEO of Innospire Systems, a NJ-based boutique IT consulting company. Over his 25 years of experience, Durai has gained a reputation for developing standards
and procedures to deliver high-quality systems on time and at attractive price points, translating his personal strengths. His corporate clients include Merrill Lynch, UPS, Dun & Bradstreet,
Vanguard Mutual Funds, Schlumberger, and BarnesandNoble.com. Durai is an expert in delivering Enterprise Performance Management, Business Intelligence, and Predictive analytics solutions.
I
n today’s complex financial landscape,
strategic sourcing of products and services
can be a challenge for CFOs tracking the
organization’s purchasing activities in an
attempt to discern if they are getting the best
available prices. Too often data is incomplete
or inconsistent, making it difficult to ensure
collaboration across departments or to reduce
spending without cutting services.
Confusion can arise when the lack of an
industry standard classification results in
different codes describing the same supplier
or commodity across divisions. Relationships
between suppliers may be undefined or
unclear within an enterprise resource planning
(ERP) system. Tax breaks or other financial
advantages are missed when the minority
status of a supplier is not in the ERP system.
To help CFOs or Chief Procurement Of-
ficers (CPOs) track and analyze purchases
more easily, many software companies offer
self-service business intelligence (SSBI)
solutions that provide a number of key
performance indicators (KPIs). These KPIs
serve as predefined, measurable values that
help a financial executive determine the
benefits or detriments of a purchasing
choice. For example, “Purchase Price
Variance” provides the difference in value
of the price paid compared with the actual
price of an item, while “Cost Reduction”
reflects savings in the current year compared
to the previous year.
Going Beyond KPIs
The largest challenge for CFOs is to be sure
they have the most current KPIs and are
acting on them before a savings opportunity
is missed, or spending gets out of control.
This is where Innospire’s Spend Analytical
solution takes strategic sourcing a few steps
further. Our customizable dashboard and
alert programs provide executives with a
higher level of actionable, up-to-the-minute
data than standard SSBI platforms provide.
The Innospire dashboard helps end
users to analyze spend across multiple
parameters, with quadrants that capture
information around finance, people, supplier,
and process. A scorecard linked to each of
these four quadrants allows users to drill
down to granular-level data, performing
in-depth spend analysis for a specific cat-
egory, department, or product.
An alert system pings the CFO or other
appointee if any KPIs exceed specific
parameters set by the organization — such
as excessive spend or failure to meet contract
pricing. This allows the financial executive to
immediately take the appropriate actions.
For example, a large retailer used our Spend
Analytical solution and identified multimil-
lion-dollar saving opportunities. The client’s
spend data was not all available in a central
repository and the data in local systems was
not consistent in form or structure. Innospire
started by analyzing the groupwide P&L and
identified top-spending brands that should be
included in the scope of analysis.
The initial challenge was to integrate the
data from various source systems. Our
approach compared the spend data with their
A/P, Purchase ledger dumps, and other spend
information for two financial years, working
with stakeholders from the centralized
purchasing department. The effort revealed to
the client that it had been purchasing similar
items frommultiple suppliers at varying
contractual prices. This enabled the client to
optimize its supplier base and design policies
to leverage Pcards for small-value purchases.
C
RAJ DURAI
CEO, Innospire Systems Corporation
Learn more about the author
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Spend Analytics
How to find cost reductions across spend categories and increase compliance
