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Spend Analysis: Product or Service?

It’s always been hard to tell. Circa 2001, there was often no “product” at all. Spend analysis systems from vendors like Frictionless Commerce consisted entirely of licensed third-party components. Data was prepared offline either by the vendor or by yet another third party.

Newer generations of spend analysis offerings began innovating with custom data viewers and custom databases. Later entrants offered customers the ability to prepare and map data themselves. But by 2012 the trend toward product and innovation in the spend analysis space had begun to collapse in favor of piggy-backing on top of a new generation of BI tools like Qlik, Tableau, and PowerBI.

These BI tools give vendors a compelling cost-of-development advantage, since they include database, data viewer, and hosting in one convenient package. A new spend analysis vendor need only build some nice-looking dashboards, load in prepared data, and a new product is ready. The economics of this model, as they did in 2001, favor the vendor — since the vendor owns the data and the data prep, the customer must pay for services on an ongoing basis.

Hence, a large proportion of today’s spend analysis offerings are, fundamentally, just a data services contract and a BI license.

At Spendata we think it’s time to think again about product and innovation. Analysts want freedom to manipulate data — to load new data, map it, family it, derive new dimensions from it, to mark and filter it in new and innovative ways. The BI view of data, which is the traditional database view, is woefully inadequate to support modeling and what-if scenario planning, never mind mapping and familying (entirely foreign concepts to the BI mindset). And, the database needs to be dynamic, not static — the data needs to be responsive to real-time changes, so that when dimensions depend on other dimensions, one change can automatically create a cascade of dependent changes, including dimension derivations themselves.

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