Taking Control of Contracts and Spending

March 13, 2007
To the ears, “spend management” may sound odd. But nothing is strange about a company ensuring that it’s on the path to capture and sustain the level of spending that will make it competitive and keep it successful.
Steve Markle defines spend management as being part supplier management and part visibility in spending and sourcing, as well as putting new suppliers under contract. But most importantly, spend management is about buying against those contracts, says Markle, director of solutions marketing for sourcing and contract management for Sunnyvale, Calif.-headquartered vendor Ariba Inc. (www.ariba.com).Hosted software solutions enable these things. For generic hosted solutions, Markle suggests three requisite features. Usability or ease of adoption by end-users is one. Another is having a provider with training and services necessary to help end-users. Speed—“doing it quickly”—is the third feature, Markle says. “We’re filling a large gap in what ERP (enterprise resource planning) does. ERP solution time-to-benefit might take years, but we’ve seen it in weeks with our technology.”Ariba’s technology—Spend Management on Demand suite of options—presents all enterprise leadership levels with the flexibility to actively manage spending, Markle explains. End-users may choose some or all six principal solutions that comprise the suite’s offerings. One is visibility of spending, which allows end-users to actively manage, unlike 10 to 20 years ago, says Markle, “when they had to look in the rear-view mirror.” Another is sourcing, which contains what Markle calls an RFX—a generic request-for—function for requests for quotes, proposals, technology and the like.The suite’s other solutions involve contract management, procurement and expense, and invoice and payment—as well as supplier management. For instance, a contract capability allows end-users to author contracts. A repository functionality enables a search of all contracts. “We have compliance functionalities to make sure that once contracts are in place, people are complying with the contracts,” Markle adds. “We also have invoicing capabilities that automate the supplier-invoicing payment process.”The suite also includes knowledge offerings. For example, for acquiring new suppliers, end-users can get information on suppliers’ prices. Yet another knowledge offering is packaged expertise that could provide understanding on RFXs, for instance. Then there’s benchmarking, through which interested end-users can find out how they’re doing against industry peers in cost of purchased goods. Also, if an end-user desires, there’s a quarterly view of other manufacturing sectors.Another significant way in which the hosted solution lends value comes through its sourcing support desk. Basically, it’s an office run by Ariba’s global-service organization. “Customers who use our on-demand offering can log into the technology. If the end-user is going to issue an RFX, he can publish that. Our global team can review it for its strategy,” Markle explains. Then, to improve the RFX’s effectiveness, the team gives the end-user a write-up on how to improve the RFX’s structure.Fast accessAt bottom, on-demand is about getting fast access to what’s needed from a provider, without a large, resource-intensive project to get from point A to point B, Markle emphasizes. Giving the solution its flexibility is its ability to allow multiple points of contact within the end-user’s company.But besides flexibility and offerings, its independence from information-technology (IT) groups may make the on-demand hosted solution attractive to manufacturing units. “We make sure the business owner is prepared to own and operate this on a continuous basis without IT [being involved],” Markle explains.Key to owning and operating on-demand is the Web, he adds. “If you have access to the Web, you can get access to our technology,” he says, noting that support “is 24/7/365 and global.” C. Kenna Amos, [email protected], is an Automation World Contributing Editor.