Qualitative Segmentation: The Spendata Difference

“Segmentation” refers to the way in which data, in our case spend data, can be organized into buckets in order to gain insight.

Spendata’s automatic familying and mapping tools are online and fully available to you — and they are both effective and easy to use. New columns like Preferred Vendor can be added instantly and mapped immediately.
For example, “month” is a segmentation, as is “quarter’ and “year.” You can think of segmentations as adding new columns to the dataset that can be summed up, filtered by, and so on.

Qualitative Segmentation

Qualitative segmentation is segmentation that is not trivially supported by the data. For example, is a particular supplier “Preferred” (we have a good contract) or “Bypass” (we should not be using them)? Should we source a vendor or commodity in the first wave, or the second wave, or not at all? What is our estimate of savings percentage by commodity? By commodity by vendor?

It is possible to do this kind of segmentation easily in Excel, but it is not helpful. BI systems and most spend analysis systems cannot do this at all. However, all spend analysis systems do provide two specific types of qualitative segmentation that are important for spend analysis:

  1. “Familying” vendors with multiple names under a single Vendor Parent. “Uber #1234” is effectively the same vendor as “Uber #5678” — except to the accounting system it isn’t. Vendors must be mapped together before the segmentation is useful.
  2. “Mapping” spending into a Commodity hierarchy. Clues in the data, such as Vendor Parent, General Ledger name, and Item Description can be used to map spending into Commodity categories that inform sourcing opportunity assessments.

The problem is, almost all spend analysis vendors perform these segmentations offline, with tools and procedures having nothing to do with the spend analysis application itself. Usually only the vendor can perform them, or they’re too confusing to be mastered. Either way, the end result is the same: a permanent, expensive dependence on the vendor to map new transactions or to correct errors in old mappings.

The Spendata Difference

In Spendata new columns can be added instantly and mapped immediately. No offline processing is ever necessary. Spendata’s automatic familying and mapping tools are online and fully available to you — and they are both effective and easy to use. Spendata’s manual mapping tools are also intuitive and powerful — just drag items from a source to a destination item, and you’ve created a mapping rule that will be remembered and replayed whenever you add data. All of these capabilities are fully documented, with both video help and written documentation.

Whether you choose to perform your own segmentation with Spendata, or hire a services provider to do it for you, you’ll always have the tools at your disposal to change mappings, to add new columns and mappings, or to build entirely new datasets. You’ll never be dependent on a third party to maintain your spend cubes, and you’ll always have the capability to make instant changes as required. You can shed your third-party services provider at any time. But regardless of whether you solicit help or not, there’s no more waiting for the next “refresh” in order to see your changes; just make the change and you’re done.

You can use Spendata’s segmentation power to take the system far beyond “just” a display of spend transactions. By creating meta-segmentations like Sourcing Wave and Estimated Savings, you can create entire sourcing plans. And unlike ordinary sourcing plans, you can take your plan to business unit managers and other stakeholders, modifying it on the fly during the meeting to conform to constraints or opportunities you were not aware of. A sourcing plan with everyone’s buy-in and everyone’s input can be created quickly and easily — and then provided back to stakeholders with progress against plan over time.