Jargon Watch: “Spend Intelligence”
Back when I masqueraded as an academic, I had an obsession with elegant, simple prose. I abhorred Dickensian literature with big words and plots that took centuries to develop. And in a similar vein, I attempted to swear off language that hid the truth (which is ironic, given my later interest in marketing). Because of these strong feelings, it was not surprising that I eventually found and came to agree with George Orwell's writing philosophy. Spending 15 minutes with his essay, Politics and the English Language, can show anyone just how poor our language -- and by extension our thinking -- has become in the last century. The problem, according to Orwell, is that if "thought corrupts language, language can also corrupt thought. A bad usage can spread by tradition and imitation even among people who should and do know better."
There are a number of great lessons in Orwell's observation for all of us. But perhaps the best news it that we can apply his literary philosophy to critiquing modern business and political jargon to help cut through noise and misleading language. Consider how in a recent study, Aberdeen adopted the term "spend intelligence" to describe the broader spend visibility and analytics market. The purpose of my post today is not to rip into the findings -- the study itself is highly useful -- but to challenge the thinking behind Aberdeen's use and definition of the phrase, "spend intelligence," which at this point feels dangerous to me, just as overly political language feels dangerous to Orwell. Why? As an attempt to shoot some Botox into a segment of the Spend Management market that can be challenging to explain and position, Aberdeen's choice of language shortchanges and over simplifies a concept, potentially corrupting how the market will look at a key Spend Management business process.
I believe the phrase "spend intelligence" to be misleading. To me, it sounds like a new take or sub-segment of business intelligence software applications which offer analytics and dashboard capabilities and sit on top of existing systems of record. The problem is that spend visibility and analytics is much more complex, requiring data cleansing, rationalization, classification and other efforts which go far beyond what is needed to gain insight into basic HR, financials, IT and other internal information, which fall cleanly in to the BI camp.
Fundamentally, "spend intelligence" should exist both inside and outside the organization, but Aberdeen's usage might lead companies to think that everything they need lies within. The problem with this thinking is that supply market information changes all the time, and in some cases, suppliers have more information about a customer’s consumption habits than even they know (e.g., consider the healthcare GPO market). As a result, merely analyzing "internal" intelligence -- which could easily be misconstrued by others as the combination of market and internal intelligence -- might lead an organization down the wrong decision path.
As important, "intelligence" itself can be self-defeating, depending on where it comes from. Consider how military intelligence often leads to botched efforts, or how the term "intelligence" can be off-putting or insulting to team members, who might try to sabotage efforts because the usage of the phrase implies that they -- or their work product -- lack it. At the same time, by focusing too much on the final insight itself, "spend intelligence" conjures up images of the end-result, rather than the journey or path to get there (which can be as insightful as the data crunching itself). For example, in data gathering efforts, procurement can learn just as much about spend categories by talking with design engineers and operations team members as reading the SAP tea-leaves where dirty data resides. It is in these conversations and interactions where spend strategy formulation and discussions can help launch a team down the right path and strategy. After all, if it's just better "intelligence" that we're after, why don’t we simply focus on making our "spend" smarter to begin with. If only it were that simple ...
- Jason Busch
There are a number of great lessons in Orwell's observation for all of us. But perhaps the best news it that we can apply his literary philosophy to critiquing modern business and political jargon to help cut through noise and misleading language. Consider how in a recent study, Aberdeen adopted the term "spend intelligence" to describe the broader spend visibility and analytics market. The purpose of my post today is not to rip into the findings -- the study itself is highly useful -- but to challenge the thinking behind Aberdeen's use and definition of the phrase, "spend intelligence," which at this point feels dangerous to me, just as overly political language feels dangerous to Orwell. Why? As an attempt to shoot some Botox into a segment of the Spend Management market that can be challenging to explain and position, Aberdeen's choice of language shortchanges and over simplifies a concept, potentially corrupting how the market will look at a key Spend Management business process.
I believe the phrase "spend intelligence" to be misleading. To me, it sounds like a new take or sub-segment of business intelligence software applications which offer analytics and dashboard capabilities and sit on top of existing systems of record. The problem is that spend visibility and analytics is much more complex, requiring data cleansing, rationalization, classification and other efforts which go far beyond what is needed to gain insight into basic HR, financials, IT and other internal information, which fall cleanly in to the BI camp.
Fundamentally, "spend intelligence" should exist both inside and outside the organization, but Aberdeen's usage might lead companies to think that everything they need lies within. The problem with this thinking is that supply market information changes all the time, and in some cases, suppliers have more information about a customer’s consumption habits than even they know (e.g., consider the healthcare GPO market). As a result, merely analyzing "internal" intelligence -- which could easily be misconstrued by others as the combination of market and internal intelligence -- might lead an organization down the wrong decision path.
As important, "intelligence" itself can be self-defeating, depending on where it comes from. Consider how military intelligence often leads to botched efforts, or how the term "intelligence" can be off-putting or insulting to team members, who might try to sabotage efforts because the usage of the phrase implies that they -- or their work product -- lack it. At the same time, by focusing too much on the final insight itself, "spend intelligence" conjures up images of the end-result, rather than the journey or path to get there (which can be as insightful as the data crunching itself). For example, in data gathering efforts, procurement can learn just as much about spend categories by talking with design engineers and operations team members as reading the SAP tea-leaves where dirty data resides. It is in these conversations and interactions where spend strategy formulation and discussions can help launch a team down the right path and strategy. After all, if it's just better "intelligence" that we're after, why don’t we simply focus on making our "spend" smarter to begin with. If only it were that simple ...
- Jason Busch
" <i>In society, says Mr Mahaffy, every civilized man and woman ought to feel it their duty to say something, even when there is hardly anything to be said, and, in order to encourage this delightful art of brilliant chatter, he has published a social guide without which no debutante or dandy should ever dream of going out to dine. Not that Mr Mahaffy's book can be said to be, in any sense of the word, popular. In discussing this important subject of conversation, he has not merely followed the scientific method of Aristotle which is, perhaps, excusable, but he has adopted the literary style of Aristotle for which no excuse is possible. There is, also, hardly a single anecdote, hardly a single illustration, and the reader is left to put the professor's abstract rules into practice, without either the examples or the warnings of history to encourage or to dissuade him in his reckless career. Still, the book can be warmly recommended to all who propose to substitute the vice of verbosity for the stupidity of silence. It fascinates in spite of its form, and pleases in spite of its pedantry, and is the nearest approach, that we know of, in modern literature to meeting Aristotle at an afternoon tea.</i> "
Almost 129 years later, I could simply substitute Mr Mahaffy with a random analyst in the "spend management" or "supply management" sector and "dine out" with "sell" and it would be as applicable today as it was then. We still suffer from the "vice of verbosity", we still suffer from "rules without form", and we still suffer from prose so dry I might as well be reading my organic chemistry text.
Now if you'll excuse me, <i>I must decline your invitation owing to a subsequent engagement</i>.
I must come to the defense of my alma mater on this matter. You aptly point out that spend data is tied up in multiple, disparate systems both within (e.g., AP, Finance, Purchasing, etc.) and outside the enterprise (e.g., P-cards, ACH, any third party buying goods/services on your company's behalf). You are also right in that the real effort in this daunting task is not building a spend cube or reporting but aggregating, cleansing, classifying, and enhancing/enriching spend data.
It is the classifying of spending information to a structured schema and then the enrichment of this data with related business information (e.g., parent-child relationships, financial risk scores, contracts, performance information) that turns spend data into true spend intelligence that a company can use to make fact-based sourcing and supply decisions rather than gut-based or hunch-based decisions.
This is an important distinction. Whether it warrants an entirely new solution marketspace is debatable.
This is where philosophy and literature are different from business. But to continue drawn the parallell drawn by the author, before we define our interpretations on the term "Spend Intelligence" let us understand what they individually stand for. "Spend" refers to the "amount spent by organization on the various purchases it makes". "Intelligence" refers to "the capacity to acquire and apply knowledge, especially toward a purposeful goal". The arena to "spend management" itself doesnt date back too far. But it has been one of the areas who has seen massive acceptance in the industry. As the author rightly, pointed out "Spend Data Management" is about data cleansing, rationalization etc. This is a terminology we have often used, understood and adopted.
But as we progress, we realize that there is more to it than just data massaging and for that matter event reporting. It is learning and applying the benefits of Spend Data management and that is what I beleive, Spend Intelligence is all about.
For Spend Intelligence, it is necessary to look in the orgnaization as well as outside it, which is aptly mentioned in the article. However, the aim should be to educate companied on that, rather than treat spend intelligence as just another misnormer in the world of words.