A recent study by The Hackett Group indicates that government agencies might be forgoing up to 20% of targeted savings when employees makes purchases outside of defined buying channels. The study further indicated that most government agencies do not realize the extent of lost savings because of the lack of visibility over the true cost of maverick buying.
Michael Pyliotis, a Vice President APAC at Basware, says that the right data in the right systems can help government agencies gain control over procurement processes in this article from Government News:
Fortunately, spend visibility and advanced analytics are making it possible to highlight the true cost of procurement by ensuring all spend is 100 per cent visible. Advances in analytics and information management mean that the public sector can now work with information from the full spectrum of spend – from procurement, invoicing and even small item purchases.
Leveraging the advanced analytics and data technology allows government agencies to:
Review non-PO (purchase order) activity to check for non-compliance
Set targets for compliance and cost savings
Aim towards organisation-wide contract management processes
Improve supplier collaboration
Provide actionable insights to drive business value
Create more efficient places to work.
The result? Savings of 7-12 per cent. The benefits above are fairly substantial. However, they are not the most significant impact that true visibility can have on the public sector. Gaining 100 per cent spend visibility through combining spend and supplier data can save tax dollars – a lot of tax dollars. According to a report by PwC, “effective management of third party spend can on average release savings of between 7-12 per cent and can have a direct impact on the bottom line”.