How Big Data will revolutionise procurement benchmarking

In a new article for Spend Matters, procurement analytics expert Matti Sillanpää has called on procurement teams to extend their horizons when setting benchmarks with Big Data tech. Noting that many procurement teams continue to adhere to an internal perspective on spend, Sillanpää considers the focus on previous spend visibility based on internal taxonomies, supplier information and transactional data too insular when Big Data offers far greater potential. More data has been generated in the last two years than in the entire span of previous human history. But finding ways of extracting value from it has been notoriously difficult – that is, until Big Data analytics. It offers procurement pros the means to combine their internal procurement data assets, in real time, with relevant external data assets to benchmark their organisation’s performance against peer-groups. This is especially in the areas of cost reduction, sourcing savings, category management and many other core procurement functions. Most data still sits within silos, Sillanpää observes, but procurement Big Data analytics can liberate it, making it available for comparison. It’s not uncommon for procurement big data repositories to encompass spend data amounting to hundreds of billions of pounds spanning hundreds of millions of transactions that are constantly updated. This means that vast data sets can be managed in a way that was once simply inconceivable because the technology to analyse it didn’t exist. But it does now: machine learning data classification methods enable deep category and sub-category drill-downs across customer sets, anonymously and constantly updated. This transforms the benchmarking process: instead of the abstract, high-level practices based on survey data that characterised conventional benchmark reports, it provides up-to-the-moment, refreshingly actionable guidance on benchmarking performance against peer-groups. The new age of data-driven procurement benchmarking inaugurated by Big Data tech is set to revolutionise the nature of spend analytics, and the way overall spend is managed over the coming two decades. Firms that grasp the potential of Big Data first are going to reap a considerable competitive advantage.
Date Posted: 05/10/2018 Category:
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How Big Data will revolutionise procurement benchmarking

Date Posted: 05/10/2018 Category:

In a new article for Spend Matters, procurement analytics expert Matti Sillanpää has called on procurement teams to extend their horizons when setting benchmarks with Big Data tech.

Noting that many procurement teams continue to adhere to an internal perspective on spend, Sillanpää considers the focus on previous spend visibility based on internal taxonomies, supplier information and transactional data too insular when Big Data offers far greater potential.

More data has been generated in the last two years than in the entire span of previous human history. But finding ways of extracting value from it has been notoriously difficult – that is, until Big Data analytics. It offers procurement pros the means to combine their internal procurement data assets, in real time, with relevant external data assets to benchmark their organisation’s performance against peer-groups. This is especially in the areas of cost reduction, sourcing savings, category management and many other core procurement functions.

Most data still sits within silos, Sillanpää observes, but procurement Big Data analytics can liberate it, making it available for comparison. It’s not uncommon for procurement big data repositories to encompass spend data amounting to hundreds of billions of pounds spanning hundreds of millions of transactions that are constantly updated.

This means that vast data sets can be managed in a way that was once simply inconceivable because the technology to analyse it didn’t exist. But it does now: machine learning data classification methods enable deep category and sub-category drill-downs across customer sets, anonymously and constantly updated.

This transforms the benchmarking process: instead of the abstract, high-level practices based on survey data that characterised conventional benchmark reports, it provides up-to-the-moment, refreshingly actionable guidance on benchmarking performance against peer-groups.

The new age of data-driven procurement benchmarking inaugurated by Big Data tech is set to revolutionise the nature of spend analytics, and the way overall spend is managed over the coming two decades. Firms that grasp the potential of Big Data first are going to reap a considerable competitive advantage.

In a new article for Spend Matters, procurement analytics expert Matti Sillanpää has called on procurement teams to extend their horizons when setting benchmarks with Big Data tech.

Noting that many procurement teams continue to adhere to an internal perspective on spend, Sillanpää considers the focus on previous spend visibility based on internal taxonomies, supplier information and transactional data too insular when Big Data offers far greater potential.

More data has been generated in the last two years than in the entire span of previous human history. But finding ways of extracting value from it has been notoriously difficult – that is, until Big Data analytics. It offers procurement pros the means to combine their internal procurement data assets, in real time, with relevant external data assets to benchmark their organisation’s performance against peer-groups. This is especially in the areas of cost reduction, sourcing savings, category management and many other core procurement functions.

Most data still sits within silos, Sillanpää observes, but procurement Big Data analytics can liberate it, making it available for comparison. It’s not uncommon for procurement big data repositories to encompass spend data amounting to hundreds of billions of pounds spanning hundreds of millions of transactions that are constantly updated.

This means that vast data sets can be managed in a way that was once simply inconceivable because the technology to analyse it didn’t exist. But it does now: machine learning data classification methods enable deep category and sub-category drill-downs across customer sets, anonymously and constantly updated.

This transforms the benchmarking process: instead of the abstract, high-level practices based on survey data that characterised conventional benchmark reports, it provides up-to-the-moment, refreshingly actionable guidance on benchmarking performance against peer-groups.

The new age of data-driven procurement benchmarking inaugurated by Big Data tech is set to revolutionise the nature of spend analytics, and the way overall spend is managed over the coming two decades. Firms that grasp the potential of Big Data first are going to reap a considerable competitive advantage.

Nick Ford

Nick has over 30 years procurement experience in consulting, outsourcing and line roles within industry with international experience across many sectors and industries and led many procurement programs with blue chip organisations.

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