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Iasta – Confidential

Removing the Barriers to Business

Intelligence in Procurement:

Iasta Global Headquarters

+1-317-594-8600

Iasta European Headquarters

+44(0) 124 970 0726

Website: www.iasta.com

Email: [email protected]

Leveraging Modern BI

Approaches for Improving

Procurement’s Performance

http://www.iasta.com/

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Table of Contents

Executive Overview ................................................................................................................................ 3

The Context for Business Intelligence: Why Now More than Ever? ........................................................ 4

Business Discovery and Self-Service ....................................................................................................... 6

Managing External and Unstructured Data ............................................................................................. 7

Addressing Modern Procurement BI Needs .......................................................................................... 10

Concluding Insights .............................................................................................................................. 13

About Iasta .......................................................................................................................................... 14




Executive Overview

Too much information is a common struggle in modern life, both personally and professionally. Trying

to get a handle on all this information and knowing what to do with it is one of the biggest challenges

facing executives today. For instance, Gartner predicts that enterprise data will grow 650 percent in the

next five years, while IDC argues that world’s information now doubles every year and a half.1 Chief

Procurement Officers (CPOs) are no exception to this dilemma.

As procurement’s role has increased in strategic importance, the amount of information needed for

effectively managing the procurement function has also elevated. For the contemporary CPO or

procurement executive, the struggle is grounded in managing the number of disparate data sources

needed to create actionable intelligence. Today, bringing the entire source-to-settle process into an

executive framework requires both the flexibility and ease-of-use to interrelate sourcing, spend,

contract and supplier information for understanding approaches to maximizing savings.

Yet in a world that is progressively real-time driven and with data being generated daily, procurement

pros also need to create Business Intelligence (BI) that goes beyond descriptive analysis of internal

systems. New approaches and technologies need to easily integrate or assimilate external third party

sources. Building an analytical framework that can incorporate internal and external source

information holistically is critical for understanding trends, predicting outcomes, and avoiding costs that

have the biggest impact on procurement’s success.

This paper takes a brief look at procurement’s challenge with business intelligence and describes how

BI technology, such as Iasta Executive Analytics Suite (EAS) and Iasta SmartAnalytics offerings, have

been designed to create agility in upstream procurement while improving performance and reducing

risk.

1 http://www.datamation.com/applications/big-data-analytics-overview.html

http://www.datamation.com/applications/big-data-analytics-overview.html




The Context for Business Intelligence: Why Now More than Ever?

The term Business Intelligence (BI) represents the tools and systems that play a key role in the

strategic planning process of the corporation. BI systems generally allow a company to gather, store,

access and analyze corporate data to aid in decision-making.2 To be successful at BI, the information

must first be built off the proper data and datasets. Having the right foundation is essential to the

bigger picture of “procurement analytics.” Creating a solid foundation starts by bringing together

different types of data within a complex enterprise. The ability to improve procurement’s performance

and reduce risk with BI is reliant on a number of factors such as refresh frequency, proper classification

and normalization, pre-built line of business based data models, and the overall quality of data for their

effective use.3

While loading and managing data is the technical “behind the scenes” foundation of analytics, business

users rely on BI tools for analysis, visibility and reporting, and thus for ultimate decision making. And

today, more than ever before, companies are facing the requirement of having to make decisions

faster. As a result, busy executives are increasingly reliant on their BI tools for enabling them to gain

the visibility required to make quick decisions supported by data. The pace of business has accelerated

in such a way that executives, and those that report to them, do not have the time to learn complex

systems or wait on IT for extracting intelligence from their enterprise systems. To boil it down, BI

today requires an enabling approach that takes the idea of content and platform to effortlessly provide

them the “right information” at the “right time”.

What is Driving the Change?

In an age that is screaming for access to better information at an accelerated pace, most organizations

still struggle to understand how to effectively manage BI. The essential problem is that collecting more

information does not necessarily translate into better results, particularly if the data is not interpreted

or used in the right context.

The Past Failures - While many organizations have already heavily invested in BI, the reality is

companies have had limited success in getting the business users to adopt BI solutions.4 For instance,

in a 2011 study, Gartner estimated that between 70 to 80 percent of corporate business intelligence

projects fail. Another study from Forrester Research in 2012, found that in 64 percent of enterprises,

2 http://www.webopedia.com/TERM/B/Business_Intelligence.html

3 http://data-informed.com/guides/guide-to-procurement-analytics/

4 http://www.gartner.com/newsroom/id/1748214

http://www.webopedia.com/TERM/B/Business_Intelligence.html

http://data-informed.com/guides/guide-to-procurement-analytics/




fewer than 10 percent of decision makers are actually using BI.5 The barriers to better use of BI tools

today continue to be plagued with issues of data quality, data availability, and the training/proper skills

for using BI tools. In addition to those challenges, lack of user adoption may be exaggerated by poor

communication with IT and lines of business, because of not asking the right questions, or even

thinking about the real needs of the business. As a result, most BI projects fail to deliver.

Current & Future Challenge –The increasing amount of data created on a daily basis is another

factor that is driving change. In the world of exponential information growth, B2C and B2B constructs

are now inundated with information at an alarming pace. Prior to 2003, mankind had generated a sum

total of five exabytes of content historically.6 Today, researchers estimate we generate this amount of

content measured in days.7 The emergence of “Big Data” 8 has forced us to make sense out of an

increasing amount of information, giving rise to a “culture of analysis”. For procurement professionals

this means:

More data is being collected than ever before with more of this data coming from unstructured

sources like pdf files, PPTs, emails, blog entries, wikis, word processing documents, photos, graphic

images, videos, streaming instrument data, and webpages.

A wider group of individuals both within and around procurement needing access to spend and

supplier information, for managing complex areas such as supplier risk, savings tracking, internal

and regulatory compliance, and corporate social responsibility initiatives such as diversity.

A large portion of information being collected, particularly around suppliers, is coming from external

sources or other managed providers of data (D&B, LexisNexis, Equifax, Rage Frameworks, etc.)

that need to integrate or enhance information coming from enterprise systems such as Sourcing,

Purchasing, ERP or PLM systems.

Changing Control of Technology Decisions

As part of a growing trend, more BI technology decisions are being made by the practitioners who

were not traditionally a part of IT. Gartner research suggests that the CFO's influence over IT is

growing, given a large percentage of CFOs who actually now own technology purchasing decisions. The

higher level of reporting to the CFO demonstrates the need for companies to ensure that their CFOs

5 Forrester Research, 2012 BI Maturity Survey and Pioneer Self-Assessment

6 http://en.wikipedia.org/wiki/Exabyte

7 http://www.huffingtonpost.com/brett-king/too-much-content-a-world-_b_809677.html

8 http://www.forbes.com/sites/lisaarthur/2013/08/15/what-is-big-data/




are well educated in technology, and underscores how critical it is that CIOs and CFOs have a common

understanding of how to best leverage enterprise technology.9

Furthermore, as procurement moves from a tactical to a strategic function, the shift of technology

decision making to functions like finance provides a basis for the technology realignment for

procurement as well. CPOs now have a better chance in leading their own crusade when it comes to

technology in areas like analytics and BI.10 11 In fact, certain findings point to a trend of procurement’s

increased focus on BI and spend analysis in general:

An Accenture study from 2012 found that 68% of survey respondents rated their senior

management team (including procurement) as a whole to be engaged with and committed to

analytics and fact-based decision-making.12

IBM’s 2013 Chief Procurement Officer Study suggested that investment in a 360 degree view of

supplier relationships / procurement performance dashboards are on the rise, and are seen as

solutions/and or activities that will add the most value to the enterprise in the next three years.13

Deloitte Global CPO study discovered that 58 percent of 180 CPOs envisage some investment in

spend analytics over the next twelve months. 14

Business Discovery and Self-Service

As more time and money will be spent on improving insights into areas such as spend, category and

suppliers management in the coming years, companies will progressively need to improve the

platforms used that drive business intelligence decisions. Hence, in addition to improving the data

management elements of spend analysis efforts – consider garbage data in, garbage date out, what’s

just as critical to the business user on the front end will be the BI platform.

Procurement BI providing flexibility and collaboration at the same time

Traditionally reports or dashboards in most enterprise systems could only show a static view of data.

This translated into the ongoing need for IT to develop a new query, new view or new report every

time a custom requirement came up. Moreover, these technical barriers traditionally detracted from

strategic efforts focused on timely driven decision making. In fact, Aberdeen research found that the

average time it takes for IT to complete BI support requests, with traditional BI software, is eight days

9 http://www.gartner.com/newsroom/id/2488616

10 Business Effectiveness - Procurement Reporting Alignment. KPMG. 2011

11 The KPMG study High Impact Procurement Operating Models – found that centralized and center-led orgs are more likely to have the CPO

report to the CEO. Industries that are more likely to report to CFO are Agriculture, Banking/Financial, Public Sector, and Pharmaceutical. 12

Analytics in Action: Breakthroughs and Barriers on the Journey to ROI. Accenture. 2012 13

2013 Chief Procurement Officer Study, IBM Institute for Business Value 14

The Deloitte Global CPO Survey 2013

http://www.gartner.com/newsroom/id/2488616




to add a column to a report and thirty days to build a new dashboard.15 For a procurement executive

trying to find an answer, make a decision, or even solve a wider problem, that timeline is simply

unsustainable.

In contrast, modern BI tools incorporate business discovery and self-service approaches that create

intuitive and interactive experiences. Using a solution that incorporates these principles enables

procurement users to easily explore and establish connections, patterns and outliers in data. Due to

the technical ability to easily drill-down into detailed information, through the use of dynamic

dashboards, there is no longer the need to “pre-model” or “pre-build” relationships (e.g. say between

suppliers, contracts and sourcing events) in the form of static reports or views. Moreover, for

organizations using business discovery and self-service enabled BI tools, Aberdeen finds that they are

actually 23% more likely to find the information they need in the goal timeframe.16

Managing External and Unstructured Data

Analyzing corporate procurement trends is a constant struggle and growing, if the information

presented in BI tools cannot easily render a broader view of the factors impacting spend and supplier

management decisions. Hence, in addition to the effort of using business discovery and self-service

efforts, BI also requires the collection of data from both internal and external sources.

While enhancing the understanding of internal data such as sourcing events, contracts, purchase

orders, invoices and payment is fundamental, using external sources of information provides a more

complete picture of what is going outside the business such as trends in the global economy, specific

industries, or even specific suppliers. Using information from external or third party sources becomes

necessary to identify potential red flags such as credit risk, fraud, legal challenges, bankruptcy and

regulatory compliance requirements that cannot be surmised from the creation and collection of data

from basic supplier profiles or fed primarily from internally generated information.17

The Challenge of External and Unstructured Data

The influx of news articles, web content, social media, email and other data types that exist outside of

typical databases cannot be managed or collected within traditional data warehouse systems. Because

so much information isn’t stored in convenient relational fields, more advanced BI tools must be able to

15

Aberdeen Research conducted a survey of 237 organizations on the topic of agile BI in March of 2011. See the report, “Agile BI:

Complementing Traditional BI to Address the Shrinking Decision-Window,” November 2011 16

A Simple Cost Justification for Self-Service Analytics. Aberdeen Group. February 2013. 17

Managing Supplier Risk with Third Party Supplier Data. Aberdeen Group. August 2012.




handle all types of data that include external structured and unstructured data. Consider the following

framework that aligns Big Data within the context of the procurement framework 18 -

The growth of structured and unstructured data in complex business environments, like health care

and financial services, has required more agile and accelerated BI approaches to manage the volume

and capacity of external and real-time sources into an enterprise capable with data discovery

dashboards and applications.19

For procurement and related areas, this means extending the view of supply management to a higher

level, by tracking and anticipating the factors that impact spend and suppliers the most. While a highly

technical and cutting-edge approach to agile BI is emerging, being able to easily extend and manage

both structured and unstructured data requirements is essential for meeting changing business needs,

and establishing a competitive advantage with the information collected.

Promoting the use of Data “Mash-ups”

One approach to the full integration of both internal and external, and structured and unstructured

data, is through the use of data “mash-ups”. This is where applications, data sets, and other content

are combined from different sources and presented in one common view within a common dashboard

or interface, without fully integrating the data sets on the back end. Through a mash-up approach,

organizations can easily expand their dashboards to include external applications through iframe

formats that are focused on providing information as part of their platforms or tools, while keeping the

18

Model adapted from the IDC Digital Universe Study, sponsored by EMC, June 2011 19

http://www.forbes.com/sites/danwoods/2011/10/26/an-agile-bi-maturity-model/




user engaged within one BI tool. APIs can also support the integration of contextual keywords for

displaying the search results within the third-party frames in the BI tool, without the cost and time of

managing and fully integrating external data into internal systems from these sources.

Examples of mash-ups with other providers could include:

Google Maps for providing visibility into mapping of existing supplier locations and supplier

density by geography

Leading market exchanges and charting technologies that provide a real-time views of market

indices for commodities and corporate news feeds on public companies

Providers of compliance, diversity, vendor risk management, and fraud prevention information

Real-time intelligence providers for managing market, category and/or supplier risk scenarios

Today, Iasta works with the leading providers of third party data to easily incorporate different types of

information that can easily be incorporated within our Iasta Executive Analytics Suite (EAS).

Examples of Data Mash-ups within Iasta’s EAS Suite

This screen shot example of EAS

demonstrates how a procurement

professional may analyze (a) supplier

profiles that need be verified as being

on-boarded or (b) those that are

labeled as diverse suppliers. As part of

this process, the iframe in the top left

(c) provides a click-down view of these

suppliers from a Google Maps.

b.

a.

c.




Through the mash-up BI approach, procurement can consolidate and right-size their spend, sourcing,

and supplier management processes (and organizations) based on scenarios and role requirements

that best meet their needs. Moreover, getting related spend or supplier data “next” to each other can

provide content to identify patterns without the costly integration of different systems.

Addressing Modern Procurement BI Needs

The business discovery and self-service technique combined with the mash-up approach in BI, offers

procurement executives new ways for discovering and collaborating on opportunities in their corporate

procurement landscape that simply did not exist in the past.20 To get a better understanding of modern

BI approaches in practice, consider the following scenarios that can be easily handled by Iasta

Executive Analytics Suite (EAS) and Iasta SmartAnalytics technology today -

Scenario 1 – Better Management of Complex Spend

Consider a CPO who is planning for the new year and is looking to quickly understand the trend

in spend conducted over the course of last year. Her goal is to understand how to manage the

performance for her team over the next twelve months. She needs to assess the current talent

20

Iasta’s SmartAnalytics® and Executive Analytics Suite (EAS) are built on QlikView, a 2013 leader in Gartner’s Magic Quadrant for BI &

Analytics Platforms

The second screen shot shows an example of

how multiple components of external data can

be visualized as a user drills down into a

particular supplier. As part of a typical

analysis they can see (d) latest stock quotes,

(e) Twitter feeds, (f) RSS Feeds on negative

news or (g) access to a third party application

for analyzing public records on a company

news for that supplier.

d. e.

f.

g.




of her sourcing team particularly related to complex spend. At the moment she is looking to

interview a few candidates for a vacant position, given a trusted and most experienced senior

member is leaving.

Using her iPad she logs into SmartAnalytics and looks at complex category spend over the past

three years. She quickly realizes advertising and marketing needs to be addressed, given that

the number of sourcing events in this area has steadily decreased over time. As part of her

team meeting, she wants to specifically discuss this complex category and what this trend could

mean, consider seasonality as a possibility, and seek to get more sourcing projects on the

calendar for this quarter. Tracking savings within her BI tool from sourcing, she soon notices an

increasing difference between identified versus implemented savings. She also realizes that the

number of suppliers representing this category as part of off-contract spends has slowly

increased, further adding to her concern.

This prompts her to start taking notes within the SmartAnalytics dashboard to log some of her

thoughts as to why this needs to be improved, and prevent the off-contract trend in advertising

and marketing spend in the future. While in the BI procurement tool, she actively takes notes

on the screen to share with the rest of her team the next time the get together, and to take

account of the team’s dialogue for future reference as they plan more sourcing projects in the

coming year.

Scenario 2 – Addressing Supplier Diversity

Consider a Sourcing Manager that is analyzing supplier profiles by location and by diversity

status based on recent a conversation with a few executives including the CPO on corporate

social responsibility earlier that day. The goal of the meeting was to look at ways to increase

diversity spend for the coming quarter.

Shortly after the meeting he decides to look at overall supplier performance within EAS on his

laptop, and discovers a downward trend in the scorecard performance of a strategic consulting

partner; this is a supplier that currently represents over 20 percent of the spend in professional

services category, but has been a supplier for over a decade. Looking at the company’s stock

price in EAS he notices it’s increased based on a spike in Twitter and RSS feeds making note of

the possible acquisition. There have been rumors this growing company may get acquired, and

it seems the poorer performance of the consulting firm may be related to this news.

In viewing a map of his suppliers globally, he also realizes this may be a prime opportunity to

slowly replace this long standing consulting firm with a new consultancy; a firm that has

established a good reputation mentioned by one of the execs during the meeting. He sees that

this supplier has already been on-boarded, is labeled with WBE Certification, and is located in a

geographic area where they are actually trying to increase diversity spend. He may consider




bidding out some consulting service via an RFx to see if this consulting firm can be contracted

and help increase their diversity spend with local providers.

Looking to share the updates from his executive meeting during his conference call at the top of

the hour, he is concerned about losing his train of thought on this idea. As to not lose the

current view within EAS, he decides to instantly share a live Web session within the BI tool ad

hoc, and shares his screen with the rest of the team joining the conference call to address the

potential opportunity.

Scenario 3 – Managing Corporate Social Responsibility Efforts

Consider a Senior Commodity Manager has recently started a new position at a nation-wide

retail food chain company. One of the areas of his focus is the purchase of candies and

chocolates, a big money maker for the food chain particularly in the higher-end brands. Based

on his knowledge of the market for chocolate and chocolate-based products, he’s been closely

monitoring the price of cocoa butter, the vegetable fat extracted from cocoa beans which

makes up a quarter of every chocolate bar.

As part of his research, he collects RSS news feeds on the top ten suppliers of chocolate used

by his company, and notices a market newsfeed that the cost of cocoa beans hit a two year

high due to drier weather in West Africa. With this increased cost and anticipated surge in

demand from emerging markets like China and India, there is a concern that the quality of the

chocolate will go down due to replacing cocoa butter with flavorings such as vegetable fat or

palm oil. He thinks that some of his suppliers may be affected by this news and will look to cut

their costs by selling chocolate brands that do not meet the higher levels of cocoa that the food

chain’s customers are accustomed to.

Another item on his agenda is increasing the company’s spend on sustainable chocolate

providers that are certified as Fairtrade, UTZ Certified and Rainforest Alliance. Based on a

recent survey that was shared company-wide on internal newsletter by the company’s CEO, he

understands that their customers are well educated on the trend in sustainability and socially

responsible food chains. While sitting at his desktop and looking at the EAS dashboard, he

screens for supplier profiles listed with these Industry certificates; he thinks sourcing from these

types of vendors will be seen as a competitive advantage for his company, and thus is a hot

item on his agenda.

With these discoveries, he decides to share some of this information with a counterpart who

reports to the Chief Sustainability Officer (CSO) and his CPO by taking snapshots of the

dashboards identified within his analysis. He also starts a discussion by tagging a note to the

opportunity dashboard for his colleagues to view and make additional comments. He starts a




formal discussion on the impact of the cost of cocoa on his suppliers and the business case for

moving towards more sustainable suppliers in this food commodity area.

Concluding Insights

As organizations look to adapt to the influx of information collection within their enterprises, the

consideration for improving BI usage is critical. In the age of Big Data, this is no longer a luxury but a

necessity. Providing the modern BI framework not only decreases the requirements on IT to manage

business requirements based on the inherent and newly found flexibilities, but empowers insight by

putting it in the hands of the business. Better BI also means procurement is now empowered to make

a more meaningful contribution to decision making, whether that is the identification of strategic

opportunities, earlier identification of risks, or more proactive management of suppliers.

At Iasta we see our clients taking advantage of the BI trend by leveraging the next generation of BI

using our tools today. Through capabilities provided by Iasta, our clients are able to deliver a quicker

ROI and demonstrate the impact procurement is having on the organizations through the

demonstration of improved performance. As one analyst put it - “Simply licensing a front-end BI tool

and sending a bunch of folks a Cognos workshop ain’t gonna do it”.21 By this token, our best-in-class

technology tools like the Iasta Executive Analytics Suite (EAS) and Iasta SmartAnalytics offerings are

delivering business discovery and self-service approaches that are desperately needed.

By using one-click discoveries and data associations in Iasta, procurement is enabled to make

purposeful identification of KPIs and milestones wrapped around a wider procurement business

plans.

By using our collaborative features such as setting up collaborative session, making notes on

reports and line items and answering questions in real time, they are easily able to convert their

discoveries into actionable intelligence

By investing in third party partnerships, our clients are able to look at sourcing, contract, and

supplier reporting holistically by leveraging internal and external data sources in one location.

With organizations looking to increase their BI investments, it is essential that they are able to work

with a partner that can demonstrate the advantages of their BI technology. BI technology is expected

to continue evolving, and thus organizations must partner with those that are staying on top of the

game in this evolution. For those considering BI in the in the near future, understanding the key points

presented in this paper should provide a better framework for understanding why BI is important than

21

http://spendmatters.com/2014/01/02/deloitte-cpo-study-technology-analytics-high-priorities/#sthash.DT8SnoDA.dpuf

http://spendmatters.com/2014/01/02/deloitte-cpo-study-technology-analytics-high-priorities/




ever. If BI becomes the next technology for transforming procurement into a strategic function, Iasta

may be the answer you are looking for.

About Iasta

Iasta is a team of dedicated sourcing and analytics experts who empower procurement to expand their

impact and influence across the organization. Our unmatched blend of software and services allow

companies to incorporate best in class purchasing practices through Iasta’s spend analysis, business

intelligence, supplier management, strategic sourcing, decision optimization, and contract management

solutions. We empower procurement organizations with the tools and the experience needed to make

responsible business decisions. Most importantly, the heart of Iasta's business model is customer

success. We believe that strong customer relationships drive user adoption, which increases the ROI of

our easy-to-use software and exceptional service offerings.

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