Strategic Spend Management helps organisations to improve profitability, competitiveness and agility in the most demanding business environments. Optimising spend across business lines and its entire supply chain requires an organisation to have pin-point control over every cost centre – especially those relating to its workforce channels.
In this guide:
SAP Ariba says Strategic Spend Management is, "the tried and true practice of comprehensively managing all supplier relationships and company purchasing to identify every dollar spent and get the most out of it."
The key part of that sentence when considering an organisation's on-demand workforce channel spend is 'identify every dollar'.
The pace and flexibility of on-demand workforce models creates unchecked and mismanaged hiring processes, often bypassing existing HR and established onboarding checks and balances, and results in an organisation having an unseen, uncontrolled, and 'hidden' workforce. For example, Freelance marketplaces enable any line manager with a credit card to hire a freelancer.
The hidden workforce is therefore a significant challenge to overcome in Strategic Spend Management. Without being able to confidently ‘identify (and attribute) every dollar’ to a vendor, project or business unit, it proves very difficult to leverage any opportunities to optimise spend.
Independent Contractors billing time and materials, Freelancers engaged via a private talent pool and highly skilled Consultants working against a statement of work are just three very different examples of non-employed, off-payroll worker who comprise the extremely diverse on-demand workforce.
A challenge for Strategic Spend Management is that these new workforce channels and methods of engaging talent are emerging and establishing themselves faster than organisations can figure out the best way to control and manage them.
Driven by market pressures and the competition for talent, organisations are having to adapt very quickly and often this results in the process being managed with less than optimal methods and records being kept in decentralised spreadsheets.
The solution is to consolidate all on-demand workforce channels into modern on-demand workforce management software, like Talon, which is designed to handle the pace and diversity of engaging freelancers, independent contractors and statement of work engagements.
Of course, managing on-demand workforce spend with a solution like Talon is only one component of Strategic Spend Management (albeit an increasingly important one).
Strategic Spend Management requires an organisation to be able to optimise spend across the entire supply chain and the answer to tackling Strategic Spend Management is the integration of specialised spend management tools via a central point of truth.
For example: SAP Ariba for goods, SAP Fieldglass for vendor management and Talon for directly sourced contractors and freelancers. Through technical integration, it is feasible for all requisition orders to be created in Ariba with each specialised system in the technology stack managing the specific workflow and automations of their spend/supply chain channels behind the scenes.
Strategic Spend Management presents organisations an opportunity to benefit from a significant competitive advantage: closer supplier relationships combined with cost efficiency creates agility and an improved ability to react to market movements and customer demands.
However, to realise Strategic Spend Management’s full potential an organisation must ensure the diversity of on-demand workforce channels and its increasing level of spend is included in its optimisation efforts – and making the right software choice is a critical first step.
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Freelancers are not employees. They are not bound, or managed, by the same rules and it is common for hiring managers, line managers and operational teams to experience challenges as they start to engage a larger number of freelancers.
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