Driving ROI - Procurement Performance Management

The Business Case for a Proven Procurement Performance Management Solution

As global markets continue to fluctuate, the pressure on procurement departments to deliver tangible cost savings and operational efficiencies has never been greater. Procurement performance management is undergoing a significant transformation, driven by technological advancements and an emphasis on overall procurement value. Organizations need innovative solutions to deliver on their savings targets and to enhance efficiency and effectiveness.

Hobson & Company (H&C), a leading research firm focused on Return on Investment (ROI) studies, worked with SpendHQ, a leader in procurement performance management solutions, to explore these challenges and learn how industry leaders are responding H&C conducted independent research consisting of twelve in-depth interviews across SpendHQ’s customers and found that SpendHQ addressed specific customer challenges to deliver a quick and compelling ROI

In three years, a representative SpendHQ customer can generate a:

814% ROI

with Procurement Performance Management

The impact of SpendHQ's Procurement Performance Management solution is not only strategic but measureable.

Based on this analysis, an organization with $2B in total spend volume and $1B in average annual addressable spend would pay back the cost of SpendHQ in less than three months and generate an ROI of over 814% in three years

Procurement Performance Management Challenges

Customers interviewed for this study noted consistent challenges for procurement professionals trying to track and manage large portfolios of procurement projects. Below is a list of some of the most universal concerns

Inefficient Procurement Workflows

Procurement projects are often tracked in vulnerable, siloed Excel spreadsheets, making it difficult to aggregate and view the landscape. Gathering the data from disparate operations, tools, spreadsheets, and practices to identify and prioritize initiatives and allocate resources is timeconsuming. While understanding variances in the forecasted savings is critical to the business, reporting real-time project status is challenging

Missed Savings Opportunities

The traditional relationship between procurement and finance is built on distrust, poor communication, and a lack of understanding of supply chain and financial realities, leading to missed savings opportunities.

Customer research identified five benefits of the SpendHQ solution across two key business objectives: Streamline Procurement Workflows Reduce

Streamline Procurement Workflows

Reduce time spent tracking and statusing projects

PPM’s Performance Dashboard module gives users day-to-day operational oversight on progress and risks. It allows users to stay informed and quickly assess how project status is tracking against goals and KPIs. In addition, the Pipeline module gives internal stakeholders the visibility needed to track initiatives in a central hub Finally, PPM’s Savings and Value Reporting module allows users to see the current forecast for savings and non-financial performance alongside the original targets and any historical data that is available

“Prior to PPM, we couldn’t do the statusing like we do today. We would forecast completion dates, but it was a much more nebulous process. We would have monthly reviews with finance that would take 20 people 1-2 hours to prepare and another hour in a meeting. Now we have a designated resource that meets with finance to review projects that are larger than $5m, and they can go into PPM and do it themselves ”

- Senior Director, Sourcing

Clients interviewed reported:

90% REDUCTION in time spent reporting and responding to adhoc requests

Clients interviewed reported:

60%

REDUCTION in time spent tracking and statusing projects

Reduce time spent reporting and responding to ad-hoc requests

PPM’s Savings and Value module allows finance to easily view audit outcomes through centrally stored detailed project reports that can allocate savings by business unit, suppliers, time-period, or region In addition, PPM’s Dashboard module allows users to aggregate outcome reports for effective performance management and collaboration

“Prior to PPM, we would have to use a combination of Excel and Power BI dashboard to create the reports that we needed. We used to spend 1-2 hours per month to pull the data, analyze, and visualize it, and now the information is readily available in PPM.”

- Head of Indirect Procurement

Reduce time spent prioritizing projects and allocating resources

PPM’s Pipeline module gives users a view of the entire procurement project pipeline, allowing team members to monitor resources and drill down to details

“PPM has allowed us to utilize a different structure that moves project identification away from team leads to networks that consider a global view when determining initiatives and allocating resources. Prior to PPM, the leadership would have had to request this information, and everyone would have scrambled to pull it together, but now it is automatically built into how we work. The decision making is quicker and a lot clearer because we are all operating from the same foundation of information.”

- Senior Portfolio and Performance Manager

Clients interviewed reported:

30%

REDUCTION in time spent prioritizing projects and allocating resources

Streamline Procurement Workflows (cont’d)

Reduce time spent aligning with finance on procurement savings

Clients interviewed reported:

50%

REDUCTION in time spent aligning with finance

PPM’s Performance Dashboard module provides operational oversight on progress and risks with procurement projects with visibility to progress against goals and KPIs throughout the entire life of a savings project, giving finance visibility along the entire life of the project. In addition, users can aggregate outcome reports for effective performance management and collaboration.

“PPM lets us easily see what has been validated and what has not been validated. Prior to PPM, we had 25 people spending 2 weeks aggregating the data and the report would go out every 2 months and needed validation for every single line. It was a huge effort because people working on it were from different organizations and it was challenging. Once we put PPM in place, that all changed.”

- Senior Director, Sourcing

Reduce Spend

Increase and deliver higher savings targets

PPM’s Opportunities module allows users to collaboratively identify, assess, prioritize, and approve new procurement sourcing and valuecreating projects In addition, the Pipeline module lets users easily create, organize, and update initiatives, as well as manage timelines, priorities, status, and resources across a portfolio of procurement projects

“Even in a very challenging environment and volatile markets, our year over year savings targets continue to grow with PPM Initially our targets were between $7$9m annually on $1B annual spend Last year our target was $17m and we finished the year at $18m, and this year we are targeting to save $20m against the same spend.”

- VP Global Procurement Strategy

Clients interviewed reported:

50%

INCREASE in savings targets

Key Findings

Research Results

The value of a validated procurement performance management solution is immediate and demonstrable A sample organization with the below profile can realize significant financial benefits from an investment in SpendHQ's solution:

$2B in total spend volume

$1B in average annual addressable spend

For this typical organization, an annual investment of $32,500 generates a positive return in less than 2 months and a 3-year ROI of over 814%, with annual benefits exceeding $300K

3 yr. Investment vs. Return

Benefits by Business Objective

About SpendHQ

SpendHQ is the leading best-in-class provider of enterprise Spend Intelligence and Procurement Performance Management solutions These products fill a critical strategic management gap in the solution landscape, by producing actionable spend insights that drive new initiatives, goals, and clear measurement of Procurement’s overall value to the business Backed by nearly 20 years of procurement expertise, SpendHQ’s solutions give businesses the rapid, accurate spend intelligence and performance optimization needed to drive better financial and non-financial outcomes, advance procurement maturity, and demonstrate impact with data. www.spendhq.com.

About Hobson & Company

Hobson & Company helps technology vendors and purchasers uncover, quantify and validate the key sources of value driving the adoption of new and emerging technologies. Our focus on robust validation has helped many technology purchasers more objectively evaluate the underlying business case of a new technology, while better understanding which vendors best deliver against the key value drivers Our well researched, yet easy-to-use ROI and TCO tools have also helped many technology companies better position and justify their unique value proposition For additional information, please visit wwwhobsoncocom

Disclaimer:

The return-on-investment (ROI) and other financial calculations expressed in this research paper are based on data provided by SpendHQ customers and various assumptions and provide estimates only The actual ROI realized by customers may vary from the estimates provided SpendHQ offers this tool to assist clients with evaluating their solutions; however, SpendHQ and Hobson & Company (the firm that created the tool) are not responsible for the accuracy of any estimates

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