Spend Analytics Market

Market Overview

The global spend analytics market is valued at 1,921 million in 2019 and is estimated to grow at a CAGR of 19.0% during the forecast period 2019-2026.

Spend analytics is the process of aggregating, classifying, and leveraging spend data with the intention of reducing costs, improving operational performance, and ensuring compliance. It is a crucial tool used by organizations from different sectors to proactively identify savings opportunities, manage risks, and optimize the organization’s buying power.

Market Dynamics

Some of the key benefits of spend analytics include,

• Full visibility on procurement spend,
• Identifying savings opportunities and realizing incremental savings,
• Aligning and streamlining procurement processes across business units,
• Managing risk and maverick spending to ensure compliance, and
• Evaluating supplier performance for better relationship management.

According to the APQC (American Productivity & Quality Center), a training and development program involving spend analysis can significantly enhance an organization’s competitive edge. Moreover, enhancing employees’ knowledge and skills can reflect positively on productivity. Cost-effectiveness is one of the utmost priorities for any organization and implementing spend analysis can help achieve this goal by facilitating cost reductions and ultimately, driving profitability.

Segmental Analysis

Need to Predict & Control Future Spending Among Organizations Drives Growth of Predictive Analytics Segment by Type

Growing awareness about the competitive landscape and benefits of analytics will compel businesses to adopt predictive analytics for effective decision-making and money management beforehand. Not only does predictive analytics help companies predict and control their future spending, but also enables them to solve their previous spend disasters and complicated business problems.

Need to Understand Spend Problems Drives Growth of Prescriptive Analytics Segment by Type

Prescriptive analytics incorporate inbuilt features such as Business Process Management (BPM) and Inventory Management (IM). Growing demand for cloud-based platforms, Software-as-a-Service (SaaS), and Platform-as-a-Service (PaaS) is anticipated to augment the demand for prescriptive analytics in packaged applications. Prescriptive analytics is greatly allowing businesses to understand spend problems themselves without depending on data scientists and experts.

Need to Identify Spending by Division & Region Drives Growth of Descriptive Analytics Segment by Type

Descriptive Analytics is the most commonly used spend analysis technique, and this segment is anticipated to dominate the global market during the forecast period. It is a more categorized approach as it identifies spending by a particular division of the company in a particular geographic region. Descriptive spend analysis entails a user-dependent approach in which credible information is provided based on the data collected by the user. Rising demand for discrete data and accurate figures at each level of an organization is expected to bolster the segment’s growth.

Financial Management Segment to Dominate the Spend Analytics Market by Application

The financial management segment is expected to dominate the market during the forecast period. Businesses are expected to significantly invest in predictive tools and analytical software solutions that provide forecasts and insights on how to manage expenditures and help improve financial performance. Rising adoption in procurement is expected to drive the financial management segment in years to come.

Need to Curb Secutiry Breaches & Minimize Risks Drives Growth of Risk Management Segment by Application

The risk management segment is anticipated to witness significant growth in the near future. Growing incidents of crucial data breaches, information loss, and cyber hacks have compelled businesses to rethink their technological implementations and protect sensitive data. Businesses around the world face various risks related to security, finance, and operations. These risks depend on the sector that the business operates in and may pose short term or long-term threats. They create vagaries in operational processes, paving the way for financial, workforce, and asset losses.

Need to Understand Faults & Gain Effective Recommendations Drives Governance and Compliance Management Segment by Application

The governance and compliance management segment is expected to register significant growth during the forecast period. Organizations are highly dependent on different technological platforms for various activities. Incorrect operations and faulty data can lead to financial losses, which has promoted enterprises to opt for disaster recovery solutions. Spend analytics provide the ideal solution to comprehend faulty scenarios and recommend options for the companies to spend on, helping them reduce mounting risks by enabling them to take pre-empt measures by systematically discerning hazards and associated risks for smooth governance. Rising cyber-attacks are compelling companies to adhere to compliance management and administrative mandates to keep their operating systems safe and secure.

Need to Optimize Deals & Partnerships & Identify the Ones Incurring Losses Drive Growth of Supplier Sourcing and Performance Management Segment

The supplier sourcing and performance management segment is anticipated to significantly propel the demand for spend analytics in the near future. The need to collect performance data from multiple sources and harmonize them is driving the segment’s growth. Businesses are frequently engaged in numerous deals and partnerships with various dealers and suppliers. The unused or pre-mature ending of contracts often causes companies to incur losses, which is recognized as indirect spend. Various spend analytical approaches help companies minimize purchases under such agreements and vendors and also ensure legal and CSR compliance through the use of approved suppliers.

Improvements in Operational & Performance Costs Drive Applications in Demand and Supply Forecasting

Another rapidly advancing application segment is demand and supply forecasting. Spend analytics provides insights into the increase in the demand of a particular segment, which the company should target spends on. At the same time, they also alert organizations of declining demand-supply margins in particular locations. Organizations can then improve supply/delivery performance according to customer demand after taking the systematic measurement process into use. Spend analytics allows organizations to share delivery performance data with their suppliers on a transaction data level, which facilitates improvements in operational and performance costs.

Applications in Product & Process Management, Inventory Management, & Category Analysis

The others segment covers product and process management, inventory management, and category analysis. Product and process management is anticipated to grow significantly, followed by inventory management and category analysis. A company’s profit margins are dependent on its spending on products through raw material purchase, asset allocation, product development, marketing, and reverse logistics, among others. Therefore, it is important for them to have clear insights into the areas that they need to invest more in and cut down unnecessary spends that lead to financial losses.

Regional Analysis

North America’s IT BFSI market to Drive Market Growth

North America’s spend analytics market was valued at USD 578 million in 2018 and is expected to grow at a CAGR of 17.5% during the forecast period of 2019-2024. The high concentration of large multinationals is pegged to supplement the regional market’s already substantial revenue share. SAS Institute, Inc., IBM Corporation, Oracle Corporation, Coupa Software Inc., Zycus Inc., JAGGAER, Ivalua Inc., and BravoSolution SPA are among the leading market players in the region. North America is the largest contributor to the global IT BFSI market — a key sector for spending analytics. Spending analytics software providers in the U.S. are expected to make significant contributions to numerous local retailers that plan to use online platforms to expand their business. Rating of vendors, assessment of acquisition costs, discount offers’ optimization, and predicted spending rates are some of the advantages that retailers can leverage with spending analytics.

The U.K. to Drive Market Growth in Europe

Europe’s spend analytics market was valued at USD 474 million in 2018 and is expected to grow at a CAGR of 18.3% during the forecast period of 2019-2024. SAP SE, Proactis, and Rosslyn Analytics, Ltd are among the leading players in the regional market. In the U.K.’s retail supply chain, big data analytics is expected to grow considerably over the forecast period, following the manufacturing and energy sectors, as U.K. and Irish retailers are ahead of their Continental European counterparts and drive the spend analytics market.

China & India — Key Growth Contributors in Asia-Pacific

Asia-Pacific’s spend analytics market was valued at USD 455 million in 2018 and is expected to grow at a CAGR of 21.2% during the forecast period of 2019-2024. Empronc Solutions Pvt. Ltd. is one of the leading spend analytics market players from India. Asia-Pacific is expected to provide lucrative opportunities for analytics software providers due to the growing adoption of the technology in countries such as China and India, and the demand for cost-effective analytical software among SMEs.

The exponentially increasing availability of open, low-cost data centers provided by cloud vendors and the reduced cost of upfront investment for small and medium-sized are also facilitating the adoption of spend analytics solutions. Adding to this, banking, telecommunications, distinct manufacturing, federal/central government, and professional services are the five potential and leading industries in Asia-Pacific attracting the most significant investments in big data and analytics solutions. Chubb, the world's largest publicly traded property and casualty insurance company, has established a small commercial division in Asia-Pacific dedicated to the risk management needs of Small, Medium Enterprises (SMEs).

Brazil, Followed by Argentina & Columbia, to Drive Growth in South America

South America’s spend analytics market was valued at USD 60 million in 2018 and is expected to grow at a CAGR of 19.3% during the forecast period of 2019-2024. South America is on the cusp of technological advancement on account of the increasing penetration of SMEs in countries such as Brazil and Argentina, among others. Brazil holds the largest market share in the regional market, bolstered by an increasing number of market players offering to spend analytics solutions, high incomes, and changing lifestyles. Argentina and Colombia are the next key contributors to market growth in the region.

Recent Developments

• In 2019, Coupa Software Inc. acquired Exari, a leading provider of Contract Life Cycle Management (CLM), to cement its position in Business Spend Management (BSM) and deliver measurable business value
• In 2018, Proactis Holdings Plc. acquired Esize Holdings BV, a leader in cloud-based spend management solutions
• In 2018, Oracle acquired DataFox, a leading provider of cloud-based artificial intelligence data engine, to enhance its cloud application, enabling customers to reach better decisions and even business outcomes
• In 2017, Rosslyn Data Technologies acquired Integritie (UK) Limited, a leading company of capturing and organizing unstructured data
• In 2017, JAGGAER acquired BravoSolution, a spend management solution provider, through this acquisition the former aims to become the vertically focused spend management solutions

Spend Analytics Market Segmentation

By Type

• Predictive analytics
• Prescriptive analytics
• Descriptive analytics

By Application

• Financial management
• Risk management
• Governance and compliance management
• Supplier sourcing and performance management
• Demand and supply forecasting
• Others

By Region

North America

• U.S.
• Canada
• Mexico

Europe

• U.K.
• Germany
• France
• Italy
• Spain
• Rest of Europe

Asia-Pacific

• China
• India
• Japan
• South Korea
• Australia
• Rest of Asia-Pacific

LATAM

• Brazil
• Argentina
• Columbia
• Rest of LATAM

Middle East

• Saudi Arabia
• Oman
• Qatar
• Bahrain
• UAE
• Rest of Middle East

Africa

• Nigeria
• Tanzania
• South Africa
• Ghana
• Rest of Africa