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What is Business Spend Management?

01 August 2024

John Schouten, Director Product Management | ISPnext

Business Spend Management (BSM) is a strategic approach to managing and optimising all business spend. It includes processes such as Procure-to-pay (P2P), Source-to-pay (S2P) including contract management and supplier management. A BSM platform helps organisations control costs, minimise risks and ensure regulatory compliance.

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Why is BSM important?

Finance and Procurement teams are experiencing increasing pressure to manage cost, risk and compliance effectively. Laws and regulations, such as the CSRD directive and the DORA legislation, are forcing organisations to better understand their supply chain and IT risks. John Schouten, Director of Product Management at ISPnext, emphasises: "Making the supplier chain transparent is primarily the responsibility of Procurement. But reporting becomes part of the financial statements, so Finance also plays a big role in this. This calls for a single uniform solution."

What are the benefits of a BSM platform?

With a BSM solution, organisations get a grip on their entire procurement process. Bundling all procurement data in one central place improves cooperation between Finance and Procurement and creates new opportunities for cost savings and risk management.

One of the biggest benefits is the automation of procurement and invoice processing, eliminating manual errors and making processes more efficient. In addition, a BSM platform contributes to better supplier relations by seamlessly linking contract management and sourcing.

What are the phases of Business Spend Management?

BSM includes several phases that together ensure a streamlined procurement process:

Sourcing & supplier management: Finding and monitoring the right suppliers.
Procure-to-pay (P2P): From ordering and approval to payment.
Source-to-pay (S2P): A broader approach that includes sourcing and contract management.
Contract management: Establishing and monitoring contract terms.

John explains: "Information that you gather through one part, you want to be able to share with the rest of the organisation. That way you avoid working with suppliers who do not meet the conditions."
John Schouten ISPnext
"With BSM, you can increase your organisation's financial impact, reduce risks and improve efficiency."

- John Schouten, Director Product Management | ISPnext

When does your organisation need a BSM platform?

Organisations struggling with fragmented data, inefficient processes or limited control over suppliers and spending benefit greatly from a Business Spend Management platform. With a BSM platform, you integrate all parts of the procurement process-from sourcing to payment-within one central application.

By bringing together processes such as Source-to-pay (S2P) and Procure-to-pay (P2P), you realise significant cost savings, reduce risks and comply more easily with laws and regulations such as the CSRD and DORA.

John Schouten, Director Product Management at ISPnext, explains why more and more companies are switching to a BSM solution: "Organisations increasingly feel the need to make their supply chain transparent and actively manage risks. If you manage processes and data centrally in one suite, you prevent problems before they arise. Moreover, it helps you get a real grip on costs and compliance."

How does BSM save costs?

Besides risk management, cost reduction is one of the main reasons to invest in a BSM platform. Real-time insight into expenses allows companies to optimise their procurement strategies and negotiate better price agreements with suppliers.

"At the end of the day, a CFO just wants to make money for the organisation," states John. "By combining insights from different processes, you discover savings opportunities you would never see otherwise."

What should you look out for in a BSM platform?

Not every BSM solution is the same. When choosing the right software, it is important to pay attention to:
  • Integration capabilities with ERP and other systems.
  • User-friendliness and flexibility.
  • Functionalities such as contract management and spend analytics.
  • Cloud-based technology for scalability.

Trends and future of BSM

The future of Business Spend Management lies in AI and automation. Machine learning makes it possible to automate invoice processing, and predictive analytics helps companies predict and optimise costs. In addition, real-time dashboards are becoming more sophisticated, allowing organisations to better anticipate trends in their spending.

With these developments, Business Spend Management will play an increasingly strategic role within organisations in the coming years.

Want to know more? Contact us to discover how Business Spend Management can transform your organisation.

Business Spend Management in 6 steps

Download our white paper Business Spend Management in 6 Steps and discover how to get more control over spending and realise savings. Get started immediately with practical steps and improve your spend management!
Mockup_Preview_BSM in 6 stappen (ENG)
John Schouten ISPnext

About the author

John Schouten

Director Product Management

John Schouten is a leading expert in Business Spend Management with more than 15 years of experience. As Director Product Management at ISPnext, he sets the tone in the product strategy, roadmap and execution of our innovative cloud-based BSM platform. With his vision of innovation and efficiency, John helps organisations not only transform their financial & procurement processes, but also embed risk management into their operations.

FAQ

Did you already know this?

Data analytics within BSM helps organisations identify spending patterns, detect inefficiencies and make strategic decisions for cost savings and process optimisation.
BSM enables companies to monitor and improve supplier sustainability performance, contributing to environmentally and socially responsible business practices.
Challenges may include resistance to change, integration with existing systems and ensuring data quality. A thoughtful change approach and stakeholder engagement are crucial for success.
By increasing transparency and efficiency in the procurement process, BSM strengthens cooperation with suppliers, leading to better conditions and long-term partnerships.
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