Deriving Insights from Data
Drawing insights from procurement organization data provides leadership the ability to enhance its strategic decision-making capabilities and facilitate identification of operational efficiency and cost saving opportunities.
In this case, insights are defined as evaluations of procurement category utilizing data — historical organizational data, internal factors, external market factors, and advanced analytics techniques — that culminate in a detailed report to stakeholders with the input of a category subject matter expert. These insights are vetted for application in the organization and provide actionable next steps and defined opportunity.
An insight will recognize and communicate a pattern, trend or relationship within organizational data, cognitive knowledge collection, procurement analytics and any other organizational knowledge-based content. For an insight to be reported and actional by an organization, it must:
- Communicate a specific idea, project or initiative that can be actioned by the organization
- Have tangible value that can be measured in units of commonly recognized procurement value, like cost reduction, cost avoidance or other such best practice that the organization will recognize and count as a benefit
- Cannot be something the organization can demonstrate has (1) executed recently and (2) recorded tangible value from as an outcome.
Essentially, an insight is anything a procurement professional could take immediate action on to drive value for the organization. This encompasses but isn’t limited to cost savings, data governance, compliance, consolidation, standardization and category optimization opportunities.
Data Insight Q&A
Question: What types of data are analyzed to produce effective insights?
Answer: When evaluating a category, several data types are used: historical organizational data, internal factors, external market factors and advanced analytics techniques. By combining internal data sources with industry benchmarks, organizations can gauge how they’re performing against competitors to influence future strategic decision-making.
Q: What does an insight deliverable look like?
A: Insights and recommendations can be shared in numerous formats, but an effective strategy is to use interactive data-visualization software so that insight leads can (1) walk stakeholders through key findings and (2) facilitate additional reviews of category-specific data. Insights should also be communicated to leadership through a detailed report outlining next steps to implement the category-specific recommendations.
Q: Do insights have to be procurement category-specific?
A: While such insights tend to provide organizations with more direct recommendations, data governance-specific insights can be impactful across industries based on an organization’s communicated strategic needs. It is critical to align these needs across organizational leadership to ensure that additional analysis aligns with the future direction of the procurement organization. Some examples of insights that target non-category specific opportunities are supplier diversity, data quality and sustainability.
Q: How do you determine which insights to propose?
A: It is crucial to understand the strategic goals of an organization when evaluating which insights to pursue. A list of insight topics can be evaluated by two fundamental aspects: ease of implementation and potential savings.
When appraising ease of implementation, consider:
- Organizational complexity
- Data availability
- Data maturity/ease of ingestion (structured versus unstructured data sources)
- Sourcing effort
- Sourcing maturity for category.
When evaluating potential savings, consider
- Current category spend relative to historical category spend
- Industry success patterns.
Q: What are the most common blockers to successful insights delivery?
A: Some factors can hinder a professional’s ability to deliver a successful insight. Among the most common internal controllable blockers are (1) failure to create/follow the timeline, (2) not involving the proper stakeholders (like appropriate commodity managers or management) early in the insights process and (3) not socializing the insight value with the proper stakeholders throughout the insight process. Other factors include not incorporating subject matter expert or leadership feedback, being combative during insights delivery, and failure to practice the insights presentation, talking points and overall messaging.
Additionally, there can be external blockers that aren’t controllable. These include (1) unavailable category-specific data required to execute insight at the most granular or actionable level and (2) a procurement team that has low sourcing maturity and is unable to act on provided insights. Other such blockers are stakeholders who are slow to select desired insights and requested data, thus delaying timelines, and a failure to identify procurement stakeholders to assist the insight lead.
Q: How can insights benefit your organization?
A: By evaluating procurement categories and strategically directed data-governance areas through insights, an organization can realize such benefits as cost savings, cost avoidance, data governance, compliance, process standardization/optimization, consolidation, risk mitigation, category optimization and contract best-in-class recommendations.