Spend Matters welcomes a guest post from William Murcia, Procurement Practice at Archstone Consulting.

Sourcing managers frequently re-evaluate indirect spend to deliver bottom line results. While conducting spend analysis and re-sourcing spend categories is very valuable to drive cost reductions, people seem to rely on a baseline assumption of organizational need. Companies that aggressively source but do not aggressively evaluate the needs of their organization can become extremely efficient -- at spending money that doesn't need to be spent. Organizations should periodically build bottom-up budgets through zero-based budgeting to continually challenge spend that occurs using traditional budgeting.

Zero-based budgeting is an aggressive budgeting process that forces evaluation of organizational need to allocate funds for expenditures on a line-by-line basis. Business operators must justify each dollar of spend in the upcoming year. This bottom-up approach forces business operators to think strategically about spending and simultaneously builds strong budget ownership. Budgeting is thus not owned by finance, but rather by the entire organization.

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Spend Matters welcomes a guest post from Michael Eckstut, Principal, Strategy and Operations Practice at Archstone Consulting.

Procurement groups are generally measured by the value contribution they generate for their organizations, most often based on realized savings. As a result, most procurement organizations devote a time and effort to various forms of strategic sourcing -- identifying savings opportunities in specific categories, developing plans and conducting "transactions" to try to get to those savings.

The sourcing process is now well understood and established. Most leading organization select vendors and negotiate good prices and terms for products and services. They sign contracts (often after a torturous contract negotiation) and then, really high performing organizations will develop a transition plan, especially if a new vendor has been selected. Then they move on to the next category and the sourcing event, feeling good about what they just accomplished.

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Spend Matters welcomes a guest post from Steve Kekich, a member of the IT Consulting Practice at Archstone Consulting.

While there are differing views on the definition of cloud computing, the key is that an organization purchases computing services on a consumption basis versus paying for a dedicated resource or asset (software, hardware, storage, infrastructure, etc.). There is often much debate regarding the move to cloud computing, the risks, and what benefits it can provide. It is vital to understand your organization's IT needs and prominent factors in making the proper decision. Below are five questions I've come up with to ask yourself:

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Spend Matters welcomes a guest post from Scott Glen, Director, IT Practice, Archstone Consulting.

CIOs who entered into long-term agreements prior to 2010 will be faced with a critical decision in 2012 -- to determine if their current provider contracts are still competitive and, if not, if they should re-source the work or renegotiate their agreements.

The problem stems from most ITO deals prior to 2010 being primarily focused on labor arbitrage, often to the exclusion of innovation and continuous process improvement. This is exasperated by vendor account managers who don't fully understand that their clients are now looking for savings and improvements beyond cheap resources. Today's IT leaders are looking for savings stemming through opportunities such as cloud computing, virtualization, self-service for traditional "help desk" activities, application rationalization, improved operating processes and agile development. In addition, clients need their suppliers to be innovative rather than reactive, which typically isn't built into labor arbitrage-based deals.

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Spend Matters welcomes a guest post from Robert Derocher, Principal and Sourcing & Procurement Practice Leader at Archstone Consulting (A division of The Hackett Group).

Over the last 5-7 years, strategic sourcing organizations have started to address complex professional services, including management consulting. Yet most of these sourcing initiatives have failed to deliver lasting savings or benefit to the organization. At best, a set of rates cards are put in place with selected consulting firms but receive very little use.

As a card carrying member of the management consulting profession for the past 20 years, let me unveil some little known secrets and best practices to better manage spend with consultants. Similar to the masked magician who exposes the illusions of his industry, some of this information will seem obvious after reading it. Also, part of the trick with addressing a complex service category like management consulting is to have a comprehensive approach that considers the full lifecycle of the source-to-settle process.

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Spend Matters welcomes a guest post from Timothy Yoo, Principal at Archstone Consulting.

Manufacturers face continual pressure to lower their cost structures. As a result, more and more companies are considering MRO Outsourcing. Check out a previous article we wrote on the subject here.

As you probably know, MRO refers to maintenance, repair and operations. It's often used to describe the indirect expenses associated with keeping a manufacturing plant running. Plant engineers typically consider it anything but direct materials and labor, but that's too broad of a definition. Procurement would define MRO based on "source-able" subcategories (industrial supplies and spare parts, third-party maintenance services, internal maintenance operations). If we struggle so much with a simple definition of MRO, the potential pitfalls in trying to outsource it become clear. To help in managing your current MRO provider, here are five key considerations:

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Spend Matters welcomes a guest post from Josh Peacher, Procurement Practice at Archstone Consulting.

There are three underlying elements in PO volatility:

1. The variance in timing between POs
2. The variance in quantity ordered between PO's
3. The frequency of change orders

For most enterprises, some degree of PO volatility is necessary for success. Complexity of organizational structures and unpredictability of the marketplace reduces planning to anything but an exact science. As demand changes or new information becomes available, organizations should make exception-based changes with their supply base. But, to quote Aristotle, we must accept "Moderation in all things." When the exception becomes the rule, PO volatility can infest an entire supply chain with hidden costs and unnecessary complexity. Here are some common pitfalls and the potential ramifications on the supply chain.

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Spend Matters welcomes a guest post from Kurt Albertson, Associate Principal, Procurement Advisory at The Hackett Group.

The Hackett Group has long emphasized the need to balance risk and control within the P2P process, leveraging the "optimal" end-to-end channel rather than simply defaulting to the often overly controlled three-way match process. By doing so, organizations balance efficiency and effectiveness within the P2P process, freeing up resources to focus on higher value activities such as sourcing and supplier management.

And while Hackett has long published performance differences between world-class and peer organizations, recent analysis highlights some interesting perspectives when the P2P control environment is compared by geography. These insights come from Hackett's 2011 Purchase-to-Pay and Procurement benchmarks, in which we segmented performance by North American and Western European operations.

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Spend Matters welcomes a guest post from Ryan Graham, Director in Procurement Practice at Archstone Consulting.

The New Year is upon us and it is time to start making the January promises that we will most likely break in February. Not surprisingly, I found the same areas we focus on in our personal lives also need attention in our professional lives. Take a look at the list of resolutions I compiled below and use the comment section to weigh in (or add any resolutions I missed).

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