Comparison of Spend Management Tools & Software

Definition Spend Management Software: What is Spend Management and why is it needed?

Spend management software has numerous alternative designations such as expenditure management software, tail-spend management software, procurement-spend management software or business-spend management software. For large corporations, there are special enterprise spend management software solutions. All of them describe the same thing: namely a system that facilitates purchasing and procurement controlling as well as managing other company-essential expenses (Source-to-Pay - S2P). In fact, expense control in companies with many suppliers and spend items is only possible with such software. It creates transparency and improves the overview of procurement volume. Suppliers, prices, quantities, intervals and all other important data of spend management from all business areas, possibly worldwide, converge here. This centralized and holistic organization enables structured analysis of expenses. Potential areas for optimization can be identified precisely and costs can be saved. The software allows all spend processes to be monitored long-term. The following typical adjustment requirements emerge:

• Optimization of the supplier base
• Calls for bids for special potential fields
• Initiate price negotiations in a targeted manner
• Rethink conditions of framework agreements
• Adjusting working capital

How does Spend Management Software work?

As previously described, with the help of spend management software, various aspects related to purchasing and procurement can be optimized. The journey towards this begins with the digitization of typical procedures in the administration of suppliers, invoices and payments. All of this is combined by the spend management software into a simple, intelligent process. The system is connected to all other important programs for corresponding expenses and thus makes it possible to precisely record and analyze expenditure data. The main objective is to get an overview of the company's total expenditure. This broad insight and data form an ideal basis for implementing highly efficient optimizations at various levels of purchasing and procurement.

What are the advantages and disadvantages of Spend Management Software?

Especially in large companies - with perhaps hundreds of expenditure categories and thousands of individual items - spend management can be quite difficult. Not a few such companies still work with manual processes and legacy systems that require a lot of time and effort and yet only allow rudimentary organization. This makes not only spend management itself more difficult. Other specific problems are associated with such superficial control, such as low transparency of expenditure, poor compliance with contracts, higher transaction costs or longer cycle times. Spend management software can be the solution. It allows all related processes to be looked at centrally and sometimes even automated. Such a software-based spend management provides a range of strategic, operational and financial benefits. Below are the five central reasons why companies should definitely consider using spend management software.

Higher Process Efficiency Spend Management software helps to reduce the time and work required for routine tasks in spend management. A comprehensive spend management system can support the optimization of all Source-to-Pay (S2P) processes, such as spend analysis, strategic procurement, contract management and supplier relationship management. This allows the procurement team to focus more on implementing strategic work, among other things.

Higher expenditure conformity With a spend management software you can get expenses under control and ensure that all purchases are made on the basis of valid contracts and with the appropriate approvals. Users can make purchases through pre-authorized online catalogs, without having to initiate paperwork or lengthy approval processes. Since all S2P processes are digitalized and automated, everything can be easily traced and documented. This prevents contract non-compliant expenses and improves compliance with expense criteria.

Improved Expenditure Transparency To make the right business decisions, procurement experts are dependent on accurate and timely expenditure data. Spend Management Software enables expenses to be recorded centrally and responsible people at all levels of the company to access the most important expenditure data for their area. This increases transparency and accountability in expense management while optimizing cross-departmental collaboration.

Better Risk Management The best way to reduce risk is to identify risks in advance and take preventive measures before they occur. Spend management systems enable the identification of risks through a detailed analysis of trends in the procurement market, contracts, and supplier performance scorecards. With a comprehensive spend management platform, companies can monitor performances compared to the SLAs in the supplier contracts. They receive automated alerts regarding the procurement market and are regularly informed about the contract status in order to detect and limit dangers.

Increased Flexibility and Mobility Cloud-spend-management software allows users to access business data anytime, anywhere, and with almost every conceivable internet-enabled device. Users have the chance to use custom dashboards on the go or promptly in a meeting, call up ad-hoc reports or even approve orders. This not only means more flexibility, but ultimately also better and faster decision-making and shorter cycle times.

How to choose the right Spend Management Software or what features should you look for?

Regardless of whether it is a growing startup, a medium-sized or an established company - the right spend management software helps every company save time and money. Although the tools and functions required are generally quite similar across different sectors, different companies prioritize and require different things when looking for the right solution.

• Small businesses: Start-ups and small businesses generally need a simple system to manage their expenses. A fee-based spend management software that offers basic functions, such as expense tracking, expense analysis and receipt tracking, is recommended here.
• Medium-sized companies: Medium-sized organizations and growing companies have higher expenses, which come with additional suppliers and customers. Here, more complex solutions are often needed already, with expenditure control, procurement management, and forecasts. These tools can be used to predict future growth based on data.
• Large companies: Large companies often have numerous departments and thus complex expenditure processes. Such firms particularly benefit from systems that can process multiple types of expenses, revenues and currencies. The focus here should be on features for approval workflows, expenditure control and procurement management, in order to efficiently manage all supplier relationships and purchasing.

Typical Functions of Spend Management Software

• Contract management: Users manage the creation, negotiation, signing and renewal of legally binding contracts using contract management features. Points that cause particular costs can be tracked/optimized, administrative automations can be created and legal compliance can be ensured. In contract management, all processes of the contract life cycle must be organized clearly.
• Expenditure Forecast: Corresponding features combine historical data with predictive processes and business intelligence to make forecasts on procurement spending, prices and quantities for the future.
• Expenditure Analysis: The idea here is essentially to evaluate past purchases to find future savings. Expenses can be organized based on categories, suppliers can be classified, and current reports can be created based on real-time analysis.
• Centralized Organization from Procurement to Payment: Spend management software enables management of all aspects of the procurement process. This includes purchase requests, purchasing, receipt of goods, payment and accounting for received goods or services. Some systems can even automate the process from procurement to payment. Complex manual workflows are eliminated while improving transparency and budget utilization.

What do Spend Management Softwares cost?

Usually, spend management software providers offer trial versions. This means that users are given the system for a first test for free over a certain period of time. After this testing period, costs usually incur. Typically, these free intervals last 14 to 30 days. The costs for spend management software then start at around ten to 20 Euros per month and user. This applies to cloud-based solutions with a subscription-based price. Most spend management software is currently offered according to this model. But there are also on-premise solutions, i.e., programs that are purchased once and then installed on site. The great advantage of Cloud software is that companies only need to ensure its beneficial use. Almost all administrative tasks and the entire hosting, updates or other maintenance work are in the hands of the provider. Also, such systems can quickly be used over a browser or app on almost any internet-enabled device. With on-premise software, the reach is much more limited and all management tasks rest with the user company. However, financial data remains exclusively with the company, whereas with a cloud variant it is stored and organized externally. Prices vary - like almost always with software - depending on the scope of the system. If only basic functions such as expenditure tracking, expenditure analysis and receipt tracking are required, companies need to calculate much less than with a solution with complex AI-supported forecasting features. Expenditure management software with a large range of functions can quickly cost 50 euros per month and more.