When Big is Really Small: The Dangers of Selecting a Cross-Industry Spend Solution

Power Advocate, Inc. Confidential 11

When Big is Really Small

The Dangers of Selecting a Cross-Industry Spend Solution


Today’s top energy executives recognize the huge value in effective third-party spend analysis…

Millions inCost Savings

OperationalEfficiencies

OptimizedSRM


…but often overlook the most important criteria when considering vendors

!!!


Many variables seem important; others actually are important

Total Spend Analyzed

Speed of Data Cleansing

Number of Features

Number of Rules

Energy Spend Analyzed

Usability for Energy Professionals

Energy-Specific Rules

Quality of Data Cleansing

vs

vs

vs

vs

Most Important!

Integration w/ Transactional Platforms Integration w/ Strategic Platformsvs


And when executives prioritize the wrong variables, they end up with cross-industry solutions that pose meaningful risks

Millions inLost Savings

Bad Data

InaccurateReporting

Total Spend Analyzed

Speed of Data Cleansing

Number of Features

Number of Rules

Integration w/ Transactional Platforms


But what makes cross-industry vendors so risky?

Well, it’s pretty simple…


The things these companies buy…


…are VERY different from the things these companies buy


Different suppliers

Different products

Different services

Different data

And…


Complexity of Spend Data High

Plus, data from some industries is more complex

Commodities Engineered products

Specialized vendors Vendors providing many products & services

Centralized purchasing Distributed purchasing

Basic services Highly-Technical Services

Products purchased

Services purchased

Suppliers

Organization

Data ComplexityLow High


Complexity of Spend Data HighData Complexity HighData ComplexityLow High

Turns out, energy company data is especially complex


And we’re not talking about a small difference

Vs.


7IN 26.00# 0.362W P-110 HC ERW R3 LTC-HYUNDAI-REG MIL(175 JT)

Accurately classifying cryptic, energy-specific items like thisrequires highly specialized rules and schemas…

Learn More (or read on…)

http://unbouncepages.com/request-spend-intelligence-demo/


…which cross-industry vendors cannot profitably develop

Energy

Consumer Goods

Automobiles

Airlines

Beverages

Fast Food

= Cross-Industry Vendors’ Profitability Threshold

Complexity of Spend Data High

Data ComplexityData ComplexityLow High


After all, items like this need to be decoded piece-by-piece, and even then – hundreds of permutations are possible

Material Group

Shape Steel

Wire Rod

Tubing

Piping

Casing

Alloy Ingot

Manufacturer

Hyundai Automobile

Hyundai Railway

Hyundai Steel

Hyundai Ship

Hyundai Plant

Hyundai Electric

Outside Diameter

12 Inches

7 Inches

5 Inches

Thickness

0.250 Inches

0.362 Inches



Now imagine this 1 transaction…

…multiplied by millions



But if cross-industry vendors lack the assets and expertiseto tackle energy data, how do they sell to energy firms?


They spend billions of dollars on sales & marketing…

2013 Sales & Marketing Spend:

$7.328 Billion2013 Sales & Marketing Spend:

$5.164 Billion


…which they use to hold lavish parties and conferences…

SAP Sapphire Now 2014

Keynote Speakers

• Clayton ChristensenProfessor, Harvard Business School

• Brad RencherSVP / General Manager, Adobe

• Mark BarrenecheaPresident / CEO, OpenText

Oracle Open World 2014

Featured Artists

• Aerosmith

• Macklemore & Ryan Lewis

• Spacehog

• Capital Cities

• Empire of the Sun


…and to showcase features that mask the quality of the data they deliver and detract from the user experience

“Poor”Ease-of-Use

- Gartner

“Adequate”Ease-of-Use

- Gartner


Ever heard this story before?


Perhaps this version resonates more with you

Garbage In Garbage Out


Curious to see an energy-specific interface that allows you to…

…with “exceptional”ease-of-use

…to a 98+% degreeof accuracy?

Create reportsin minutes…

- Gartner

Click Here (or read on…)



Now let’s cover what happens when energy firms actually buy cross-industry spend solutions


They’re left with shocking (real-life) examples like this:

HVAC Mechanical Construction Service

Cross-Industry Vendor Classification: Correct Classification:

Cooling Tower Maintenance✓

Line Item: Cooling Tower Maintenance

Price: $38,300,000

Supplier: Bunneys Inc.



Development Environment Software Real Estate✓

…and many, many (real-life) examples like this:

Line Item: Improvement Allowance

Price: $3,200,000

Supplier: Red Hat Software


Chemicals

Not Chemicals

9%

91%

$51.5M

CHEMICALS, GENERAL


…which combine to form (real-life) categories like this:

Production Chemicals $2,641,910

Painting and Coatings $1,487,143

Nitrogen Services $443,150

Pumps $10,088,197

Motors $9,037,047

Electric Submersible Pumping (ESP) Lift Services $3,704,851

Variable Frequency Drives $3,165,546

Pump Seals $3,034,483

Drill Bits $2,691,688

Valves $2,641,910

Separators $1,487,143

Wire and Cable $1,390,791

Casing and Tubing Services $882,221

Coil Tubing services $822,310

Motor Maintenance $708,009


Their analysts spend days fulfilling simple requests…

…and have no choice but to circulate incomplete reports

?


Meanwhile, unactionable categories like this one…

Engineering SpendMisclassified Elsewhere

+$32.6 M

$58.9 MSpend Classifiedas “Engineering”

Portion that Wasn’tActually Engineering

-$11M

…cost them millions in lost savings every year


But why listen to us?


Well, because when it comes to energy spend…

$1.7+ Trillion Energy Spend

Cleansed $320 Billion Energy Spend

Cleansed

“Largest” Cross-Industry Vendor in the World

…we’re the big kids on the block


And, our industry focus allows us to do thingsthat others simply can’t…


(an investment that isn’t cost-effective for cross-industry vendors)

…like perfecting a rules engine that exclusively parses and classifies Power, Oil, and Gas data

50+ engineers, analysts, developers Millions of energy-specific rules


Remember that line item example from earlier?

Material Group

Shape Steel

Wire Rod

Tubing

Piping

Casing

Alloy Ingot

Manufacturer

Hyundai Automobile

Hyundai Railway

Hyundai Steel

Hyundai Ship

Hyundai Plant

Hyundai Electric

Outside Diameter

12 Inches

7 Inches

5 Inches

Thickness

0.250 Inches

0.362 Inches



Material Group

Shape Steel

Wire Rod

Tubing

Piping

Casing

Alloy Ingot

Manufacturer

Hyundai Automobile

Hyundai Railway

Hyundai Steel

Hyundai Ship

Hyundai Plant

Hyundai Electric

Outside Diameter

12 Inches

7 Inches

5 Inches

Thickness

0.250 Inches

0.362 Inches

OCTG Casing ✓


Our rules deconstructed and classified it in seconds


(cross-industry vendors often claim the whole process can be automated, but to achieve 98+% accuracy, human expertise is required)

Raw Spend Data Rules Engine Expert Analyst Cleansed Data

And just to be sure, our energy experts verify all classifications


Best of all, our industry focus allows us to conduct analyses that no one else can – like precise, per-unit benchmarking

$0

$400

$800

$1,200

$1,600

$2,000

PS1 PS2 PS3 PS4 PS5 PS6 PS7 PS8 PS9 PS10 PS11 PS12 PS13

Pump Station $/HP

6 pumps5 pumps4 pumps


“Experience in analyzing spend in your industry”

What to Look For in a Spend Analysis Solution

“To succeed at spend intelligence, it would help if you were to hook up…a solution provider that has familiarity with your industry”

Steps to Success for All Enterprises

Still not convinced an energy-specific solution is the route to success? Let’s hear from some industry experts:


So what does all this mean for YOU?


It means you can expect things from us…

…that you could never get from a cross-industry vendor…


…like no more time wasted on “data janitor work”…

…and no more anxiety over inaccurate reporting

Clean DataAnalyze

✓


Plus, you’ll finally be able to manage all of your spend…

“For every dollar of spend under management, Aberdeen has historically quantified 5% to 20% cost savings”

…and save millions of dollars for your organization


Ready to see what Best-in-Class Data can do for you?

Complete

All of your enterprise data…

Accurate

…classified to a 98+%degree of accuracy…

Repeatable

…kept up-to-date with regular refreshes

Granular

…organized in useable, natural buying groups…

We’ll show you!

Request a Demo
