(i) Spend management allows companies to efficiently analyze opportunities for savings, identify opportunities to choose the right suppliers, enter into favorable contracts, monitor compliance, and evaluate supplier performance in relation to an organization's long-term objectives.
(ii) Spend management softwares aid in streamlining, linking and integrating the procurement process. As a part of spend management strategy, the software solutions aid in spend analysis, contract management, and sourcing management. Firms can analyze, manage, consolidate, control and track spend data, which increase visibility, reduce costs, increase savings, and improve contract and government/enterprise compliance. For example, the 2008 study by Aberdeen group (Spend Analysis: Pulling Back the Cover on Savings, October 2008) indicate that spend management initiatives helped organizations to increase their contract compliance by 30.6 percent. Firms were able to gain savings of 92 percent from improved sourcing activities, and were able to increase their return on investments by around 40 percent.
Source: Dixit, A. 2009. A smarter way to spend your money. CSCMP Supply Chain Quarterly, Quarter 3/2009.