IT Spend Analysis: Plan vs Actual Cost of IT CompanyOmnePresent Team
Budgeting is one of the most critical financial activities for any business. When we talk of IT teams, it assumes much more importance. As technology changes rapidly, a slight variation in figures can negatively impact the company’s finances. It is thus crucial to make IT spend analysis a vital aspect of your planning process.
One of the best ways to do that is with the help of Microsoft Power BI. This article looks at how you can do IT spend analysis with Power BI and the related aspects you need to consider.
What is Spend Analysis?
Spend analysis is a process to decrease the cost and increase the efficiency of any company. It is a process to collect, clean, and classify the data dedicated to software or any one of the spend cubes.
Now let’s have a look at how to add spend analytics. You can select the data and turn and twist it to examine or identify the patterns, which you can use in your next strategy to plan further for the following year.
Now, let’s look at the difference between spend analysis and spend analytics.
Before you carry out the spend analysis, you need to do the spend analytics to identify the patterns and layout the strategies. With the help of the spend analytics, you can also do the spend analysis on it. This way, you will get a brief idea about the spend analysis.
With the help of spend analytics, you can identify various options like saving opportunities, managing the risk optimization of the organization’s buying power, and improving your company’s efficiency.
Thanks to spend analysis, you can improve visibility into the corporate spend, drive performance improvements, and most importantly, save costs.
Spend analysis has the following features: products, prices, quantities, players, business unit, and payment terms.
So how does this go into line? First of all, we think about what we’re going to buy, how much we pay for that product, the quantity purchased, whom we buy from, and finally who is buying a product and on what terms. These are the essential features of spend analysis that will help increase your company’s efficiency.
What are the different types of spend?
There are two types of spend. Let’s look at each in detail.
- Direct spend
Direct spend refers to the goods and services directly related to the product. It includes things like raw material, hardware components, and many other services related to the product’s manufacturing process.
- Indirect spend
Indirect spend refers to the sourcing of goods and services not indirectly related to product manufacturing. Here are a few examples of indirect spend categories:
- Marketing services
- Travelling expenditure
- Transportation and management
- Utilities like electricity, water, gas
- Hardware, software- IT services
- Consultancy, maintenance, repair, and operations