Spend Management To Boost Business Efficiency

by Sohini Bagchi    Oct 31, 2005

More and more, companies are constantly looking for innovative ways to reduce cost and improve bottom line for business efficiency.

To achieve this, one important area that is fast becoming every CXO’s priority is Procurement and Supply Chain Management.

Moreover, no business can survive without a procurement and supply chain management strategy that will utilize current and future technologies. With Indian companies stepping into sourcing, players like Ariba see interest in spend management and e-procurement.

In an enlightening conversation with CXOtoday, K. Jaya Kumar, MD, Ariba Technologies and Jeff Chang, VP, international development, Ariba Technologies shared their views on importance of enterprise spend management and how the company’s solutions can help manage spending and improve bottom line in an organization.

Giving an overview of spend management, Jaya Kumar said, “Spend management solutions and e-procurement began taking root during the dotcom days. Over the years, Ariba has crafted an effective e-sourcing strategy to reduce business costs and encouraging uniformity into the sourcing process.”

He emphasizes on the cost factor, “Today’s procurement officers are faced with many challenges. Under stringent IT budget and pressure to cut cost, CIO/ CTOs are constantly looking for solutions and resources that can enhance the speed and effectiveness of their procurement efforts and drive a breakthrough in enterprise wide spend.”

According to him, with the launch of Ariba’s ESM suite, companies can manage spend lifecycles from the initial planning stage to payment. The comprehensive suite of applications and services helps in increased speed, sustainability, and coverage of any operations.

Quizzed on how the solution was different from any other ERP in the market, Jaya Kumar stated, “It not only tracks direct spend in a company but also indirect spends which IT managers or CXOs miss out on many times. It talks to other ERP solutions and accelerates operations in an organization. Moreover, the software is Internet-based and runs across platforms.”

Recognizing Indian market’s size potential, Ariba has set up its operation in India. It caters to clients across verticals like BFSI, FMCG, pharmaceutical, automobiles and textiles to name a few. With existing clientele like Dabur India, Tata Motors and Ranbaxy adopting ESM for over 50% of their procurement, Jaya Kumar believes that there has been an increased awareness across verticals to adopt Enterprise Spend Solutions.

“Indian companies are increasingly opting to get faster results, streamlining purchasing processes, avoiding subjectivity, introducing transparency and applying global best practices in the buying process. An example of this is Dabur’s procurement projects of over Rs150 crore from Ariba,” said Jaya Kumar.

Jeff Chang stated that in his opinion, with the effective deployment of management solutions, the South Asian market could save between $3 to 10 billion

On the company’s procurement solution, he said that the Ariba Procurement Solution delivers flexible applications and services to provide rapid, easy-to-use requisitioning and procurement capabilities for handling every aspect of spend. Also, the spend visibility software helped integrate data from different systems, and identify opportunities for improvement in sourcing and supply.

Headquartered in California, the spend management enterprise is currently working on developing a more integrated procurement line-up through the Ariba Supplier Network (ASN), which would allow buyers send purchase orders, change orders and cancel orders through the network to be routed to the appropriate suppliers, who can submit acknowledgements, invoices and other workflow information in return and electronically manage their transactions with buyers.

Spend management market has a strong potential. Jaya Kumar feels that though the concept reached maturity only 4-5 years ago, it is fast picking up in India today as more and more CXOs are looking forward to accelerate business by delivering speed, coverage and sustainability, wherein spend management solutions can certainly be a lifesaver.