Tuesday, May 16, 2006

It's Time For Spend Management

In the year plus that this really unfocused show has run, I've never made it a secret that I'm a Spend Management Strategy Consultant for Ariba. I've just chosen not to blog about it, except when I wanted to toot my own horn or to highlight something Ariba was doing that was worthwhile.

Well, as some company recently said: it's time for spend management. Why write about spend management? Why not.

First, I've never quite been able to adequately explain to my friends and family outside of "the community of practitioners" what I do. If I talk about this stuff from time to time they might get it a little bit.

Second, there are blogs closely associated with several other companies out there, why not one by someone from Ariba, Inc? (I guess I should disclaim here that I am offering personal opinions, not company opinions.)

Third, there's been a wonky (or do I mean to say nuanced) semantic debate going on between Tim Minahan, Jason Busch, Dave Stephans , and David Bush on Global Supply Management vs. Spend Management terminology.

Surprise! Despite having grown up at FreeMarkets and having some GSM in my heart, I'm going with Spend Management (Did I mention that I work for Ariba?), and here's why:

Spend Management is a fundamentally larger discipline that includes Global Supply Management. The phrase Global Supply Management takes me directly to direct materials for manufactured products. For this group of professionals, GSM is an exciting, even sexy term, particularly at a time when risk (which often goes hand-in-hand with cost) is high and rising. Who wouldn't want to be involved in a profession that demanded category expertise, an understanding of macro economic trends and a working knowledge of world business cultures.

The problem is, even in a manufacturing company supply management doesn't resonate outside of that product related spend. People don't feel like it applies to them. The human resources department trying to contain benefits costs doesn't view that as managing supply. The marketing department purchasing logoed premiums doesn't think that way. Many services companies have a difficult time thinking about the items that they buy as a component of their service costs and don't think of spend as supply management. It just doesn't resonate as well as it would for a manufacturing company.

Every company, on the other hand, understands that they spend money, and that by spending less or getting a higher return out of money spent they can drive profitability. The term spend is intuitively applicable to everything a company purchases from pizza to parts to prescription drug benefits.

For each type of spend there may be differing types of strategies that breed success -- from automate and disengage to highly integrated strategic supplier relationships. Some people will make good money practicing GSM as a career, but many more will be participating in some form of Spend Management.

I'll conclude with a question...if blogs existed when fast food was exploding would McDonald's argue with Burger King about the merits of calling what had previously been called a hamburger a Big Mac or a Whopper?


At 6:11 AM, Blogger Enaviya Information Technologies Pvt.Ltd said...

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