Most modern finance teams engage in some form of spend management activity, putting either people, audit processes or financial management systems (FMS) in place to analyze expenses, identify cash leakage and improve process efficiency within their finance function.
In most cases, the investment in these spend management approaches yields a narrow, incomplete, and often inaccurate view of the organization spend picture – the natural result of human eyeballs or limited analysis tools attempting the inspect large data sets. Firms with multiple lines of business and international subsidiaries are even more challenged, with multiple systems, disparate data formats and no easy way to see and analyze company spend in aggregate.
The effectiveness of spend management is ripe for disruption through fundamental improvements in spend and risk visibility.
Shifting From Spend Management Toward Spend Optimization
What do organizations truly need? A spend optimization tool that consolidates spend data from all source systems and analyzes money flowing out for external goods and services to better optimize cash flow across departments and time.
An intelligent spend optimization system fed with the right data can provide a single view of organizational spend and make recommendations on how companies can find and manage risks. With a complete picture, firms can strengthen their financial controls, make better spend decisions, correct out-of-policy behavior, eliminate cash leakage, and maximize audit efficiency enterprise-wide.
There is strong demand for such systems, and leading organizations should note the pace in uptake: 78% of respondents to a Forrester survey commissioned by Oversight said they are either interested in or are currently rolling out some form of Spend Optimization toolset.
Spend Optimization Today vs. Spend Optimization Tomorrow
Today’s spend optimization is what Oversight does for it’s clients: enabling organizations with a complete view of spend and dashboard views of trends across individuals, departments, vendors, over time and through other pattern-based considerations.
While the capabilities we provide our clients represent today’s cutting edge in spend risk analysis, an even greater capability set awaits in the near future. Oversight itself is an evolving platform that enables complete understanding and control of spend in an organization. Our platform developments are towards more comprehensive optimization models that integrate cross-sectional data to help businesses understand the value of spend.
For example, how does an organization understand the value of spend? By integrating spend data with business outcome data. By understanding the relationship between travel and sales, for example, your organization might find that successful sales pitches are heavily correlated to in-person meetings at client locations. Or you may find the opposite to be true, in a post-COVID world, that the Zoom call has sufficiently replicated the business trip.
In either hypothetical case, the knowledge is powerful for future sales efforts.Spend optimization identifies where to reduce spend and where to invest in growth; it informs what to protect and where to double-down.
Yet, per Gartner, 44% of organizations have not yet adopted even the most basic spend optimization tools. For those organizations starting their finance transformation today, the advice is that analysis of spend data and risk is a great place to start. Oversight can help.
With a platform like Oversight, you can:
Consolidate Your View and Manage 100% of Spend
Using Oversight’s AI-powered platform, you can aggregate company-wide spend into a single, consolidated view. From this view, you can analyze 100% of spend for questionable or erroneous purchases, parse scored and ranked transactions by risk, identify potential duplicates, enforce important SOX controls and pin-point trend-based concerns. With this ranked, scored listing, finance teams can act in near real-time to prevent or remediate waste and cash leakage.
Become More Pattern-Focused
Artificial intelligence and machine learning are transforming the finance industry and reshaping best practices. Organizations can now fully automate expense report and invoice reviews and focus exclusively on remediating transactions that have been identified as problematic, no longer wasting time searching for non-compliance.
Not only can AI technologies drastically reduce the time you invest in controls, but it can also automatically detect complex patterns of risk than would go un-noticed by manual audit teams and core financial systems. With the power of AI, automated expense audit solutions can run thousands of tests in parallel across your entire spend data sets in search of trends, patterns and anomalies.
Shift Behavioral Norms, Build Spend Management Practices in Place
It’s incredible what happens behaviorally when organizations arm individuals with better data.
Based on Oversight analysis of more than $1 trillion in annual spending, 5% of employees are responsible for more than 95% of all high-risk activity in T&E. An additional 25% of employees engage in waste and misuse as well, but at far less frequent intervals.
Leveraging the power of patterns, machine learning, and data analytics, Oversight detects high-risk transactions, identifies repeat offenders, and prioritizes expense audit workflows to allow organizations to target those most responsible for misuse and waste. Oversight clients have used this approach to reduce T&E policy violations by an average of 70% within the first year.
The future of spend optimization is a direct line from today’s real-time spend management and pattern analysis towards deep-dive value-driven analysis. But to get to that future state, organizations must ensure that the systems and processes in place meet a future-ready standard; consolidating 100% of spend data from all source systems, leveraging AI-powered tools for trend-based analysis, and incorporating behavioral analysis and follow-up to optimize employee decision making.