October 19, 2012
What trend has been a major driver of technology M&A deals for the past three years, has experienced a five-fold increase in search term activity since 2011 and was the topic of more than 100,000 tweets just last month? The answer, of course, is big data. What’s so big about big data? And what does this mean for the procurement profession?
Fueled in part by the proliferation of digital devices and social media, previously incomprehensible streams of data are now quantified in terabytes or petabytes. Capturing, aggregating, storing and analyzing this data provides a rich opportunity for gaining predictive insight that can lead to huge social and business benefits, including reducing operating costs and risks while improving service levels.
But many procurement professionals are wary about the near-term promise of Big Data–and for good reason. Despite the claims of many software vendors, most organizations are still challenged to trust and translate the data they already have today into bottom-line business results.
The challenge is two-fold: how can you capture more pre-transaction data as part of the procurement process; and how can you improve the quality of that data to drive smarter spending. Unfortunately, there are no silver bullet solutions to these challenges.
More Data: Getting more pre-transaction information into the pipeline requires increased adoption of current systems for procurement automation, contracts management and supplier management. This requires better strategies for stakeholder engagement and change management and possibly changes to the underlying processes to capture the right spend data elements. The success of these efforts will ultimately determine the relevance, quality and volume of spend under management.
Better Data: How many times have you reviewed a spend analytics report with a business stakeholder who justifiably questioned the accuracy of the underlying data? Improving the accuracy of data requires sustainable and repeatable processes within your BI framework for analyzing and categorizing the supply base and for cleansing and normalizing data streams from disparate systems.
At Shelby, we believe that there’s a bright future for big data in optimizing procurement. But before procurement departments can capitalize on the promise of big data, we need to first focus on increased adoption for current systems and do the vital work required to improve the accuracy and relevance of the information we are using today to promote smarter spending.