Tail spend can be a nuisance to deal with, as it comprises of multiple low-value spends which have to be managed with valuable organizational resources. The time that could be utilized for strategy formulation is consumed by a tedious process of tail spend management. It all starts with the needs of the end consumer within the organization and then guiding them to accomplish their goal within the company policy. There are few alternatives available to them in order to take care of their tail spends, outsource the process, use managed services, or turn towards technology.
Outsourcing has been the norm across all organizations in the developed parts of the world. However, outsourcing the tail spend results in the process being managed by new resources. Such a shift usually involves a learning curve that can slow production, incapable resources, or incompatible technology. Finally, outsourcing agents may not possess industry-specific knowledge or expertise that results in inefficient spend management.
Various ERP systems have burst onto the scene in order to curb the tail spend in an organization. Organizations are increasing their dependency on eProcurement tools, P-cards, helpdesk, and automation to leave the hassle of tail spend up to technology. Technology can assist tail spend management program in a proactive, reactive, or iterative manner. For instance, by studying existing contracts and spend analysis of ERP data organizations can proactively identify savings opportunity. However, enabling technology to take care of tail spend requires a huge commitment in terms of finances and other resources.
Organizations opting for managed services can perhaps be the best option to control their tail spends. Managed service providers are experts who provide technical expertise and service consistency and flexibility across multiple vendors, geographies, and technology. They can help with the overall operations using existing organizational resources to reduce overheads and improve efficiency. Managed services provider offer an extensive suite of services that includes managed collaboration and productivity services, managed CX services, and multi-vendor management. Managed service providers can identify the problems faced by the organization and redefine policy changes, increase service level expectation, reclassify category spend, reduce maverick spends, and consolidate spend management by centralizing it.
Organizations can take better control of their tail spend by turning towards managed service providers who use technology to segment spends to analyze how buying performance (cycle time, savings, etc.) is affected by different input variables (business unit, source system, spend type, among others). Managed service providers using such technologies can help achieve high levels of savings in tail spend by monitoring the spends and automating tasks.
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