Access to spend data is not the same as access to meaningful intelligence

Posted on March 29, 2011


NOTE: The following is today’s post from the Rosslyn Analytics Blog.

Governments are significant purchasers of goods and services and these markets represent huge opportunities for international trade.  Measuring government procurement for a large number of countries, in a consistent manner, is not a trivial task and careful attention must be paid to ensure that national data is gathered on the basis of harmonized procedures in all countries covered.  Quantifying the size of government procurement markets becomes even more complicated when attempts are made at distinguishing procurement between government levels (central versus sub-central), or by types of expenditures (consumption versus investment), or at measuring the share of procurement that is potentially opened up to international trade (contestable).  The latter indicator is meant to capture tradable purchases and exclude two categories of government purchases that are assumed to be non-tradable, i.e. the compensation of government employees and defense-related expenditure

the opening paragraph of the Executive Summary from the OECD paper Government Procurement: A Synthesis Report by Denis Audet

Back on March 15th, I wrote a post titled “Cross platform compatibility and data extraction/sharing pre-dates ERP applications” in which I talked about Rosslyn Analytics’ extraction for SAP solution within the context of how non-related applications traditionally shared (make that attempted to share) data .  Specifically, just gaining timely access to data was in and of itself a costly and time consuming endeavor.  Now that the question of speedy access has been addressed, are we any closer to actually leveraging the new availability of information in a practical and meaningful way?

Certainly, the above referenced excerpt from the OECD paper highlights the fact that there are many convergent points of competing (even contradictory) relevance that have to be taken into account,  which transforms the process from that of a siloed view to one of a relational understanding.

It is in this particular area that emerging SaaS spend intelligence solutions such as Rosslyn’s, demonstrate their greatest and most significant prowess for delivering insight through an intelligent filtering process that can be defined by the user to meet a variety of scenarios either along a single or convergent track of variables.  In essence a line of site that is so critical to maintain given the major impact an erroneous strategy will have on the enterprise as a whole.  Or to put it another way, when it comes to utilizing supply chain intelligence (and let’s call it that because ultimately the decisions that are made impact an organization’s supply lines), the sum is indeed greater than its parts .

A perfect example of this line of site visibility into intersecting elements of a supply chain was discussed during the PI Window on Business’ very first 90-Minute Special “For Want of a Nail: The Pandemic Effect.”  During the segment  we analyzed the consequences of the Mexican Government’s decision to close down what were classified as non-essential businesses during the H1N1 Pandemic in their effort to contain the spread of the virus.

The problem as we discovered was not an inherent flaw with the strategy to close down non-essential businesses but, in the determination of what was and was not an essential operation.  With a limited understanding of the connective impact associated with erroneous classification of non-essential companies throughout the supply chain, the Mexican Government inadvertently closed the packaging plants that produced the cartons that were necessary to safely ship the vaccine throughout the affected regions.  This obfuscated view failed to consider the ripple effect of the classification process beyond the immediacy of the business’ products and services, which meant that an important link in the supply line between the packaging manufacturers and pharmaceutical companies that were obviously deemed to be essential, was broken.

The potential for disconnected outcomes is not limited to the physical supply chain, as the establishment of destructive policies can also lead to problems including supply base erosion.

In the July 26th, 2010 Procurement Insights post “Procurement ombudsman says Federal buying policy unwittingly helping to create monopolies,” I talked about the Canadian Government’s procurement ombudsman Shahid Minto revelation that the Fed’s policies back in 2005 had “unwittingly” helped to create monopolies.

Both the Mexican and Canadian Government’s case references speaks to the very issue of intelligence myopia that results from a narrowly channeled acquisition and analysis of data in the context of a single consideration or interest, and why the acquisition and filtering mechanisms of the new spend intelligence solutions are both exciting and of critical importance.

Think of it in this light . . . accessibility gets you into the vast warehouse of the information that defines your business however, being able to sort through the reams of files in an orderly and relevant matter is what ultimately ensures that you will have the right information you will need to make the right decision at the right time.

Coming from the high tech industry, I am immediately reminded of the Yahoo/X1 Technology initiative in 2005 to help consumers and office workers sift through the digital mishmash stored on their computers’ hard drives through the introduction of a free software solution.  I use this example simply because access to one’s own hard drive was never an issue.  Searching the ever expanding data pool located on that drive was.

The whole point here is that when you consider a spend intelligence solution, you have to look beyond the accessibility factor to understand the manner in which data once acquired can be sorted and understood within the context of the desired outcome.  With the Mexican Government, this would have meant a projected line of impact that would have likely averted the unintended consequences of closing an essential supplier within their supply chain.