Spend Analysis
Analytical examination of an organisation's historical procurement spend to inform category strategy and procurement design.
Definition
Spend Analysis is the analytical examination of an organisation's historical procurement spend to inform category strategy and procurement design. Spend Analysis typically identifies: total spend by category, spend by supplier, spend by buyer or business unit, contract maturity and renewal timelines, off-contract spend (purchases outside framework arrangements), and demand patterns. Strong Spend Analysis supports rationalisation (consolidating fragmented spend with fewer strategic suppliers), value capture (negotiating better terms based on aggregated volume), and risk management (identifying over-concentration with specific suppliers).
How it works in practice
Spend Analysis depends on data availability and quality. Mature public sector buyers maintain structured spend data through their finance systems, procurement portals, and contract management systems; analysis runs through specialist tooling or analytics teams. Less mature buyers struggle with spend visibility, particularly for off-contract spend (purchases made outside framework arrangements often through procurement cards or low-value direct purchases). Common Spend Analysis outputs include: top supplier list by total spend across the organisation, spend concentration in specific categories (where rationalisation might be possible), maverick spend (off-contract purchases that should have gone through approved frameworks), and contract maturity analysis (upcoming renewals supporting pipeline planning). For suppliers Spend Analysis at the buyer side translates into procurement implications: rationalisation programmes consolidating multiple suppliers into framework arrangements; value capture initiatives renegotiating existing supplier terms; and pipeline visibility from upcoming contract renewals. Under PA 2023 the supplier conduct record adds external transparency: spend analysis at sector level becomes possible through aggregated published data, with platforms like Tussell providing market intelligence layer.
Common questions
Does the buyer share Spend Analysis with suppliers?
Generally not in detail; spend analysis is internal to the buyer. The implications appear through procurement design (which suppliers are favoured, which framework arrangements are renewed, which categories get strategic procurement). Some authorities share aggregate spend patterns with suppliers as part of supplier engagement events.
What is maverick spend?
Maverick spend (or off-contract spend) refers to purchases made outside approved framework arrangements or established supplier panels. Common drivers include lack of awareness of approved channels, urgent operational need exceeding framework lead times, or supplier-side capability not covered by existing frameworks. Mature buyers actively measure and reduce maverick spend through education, framework expansion, and procurement card controls.
Can I access spend data on buyers I target?
Aggregate data yes through Contracts Finder Award Notices and the broader transparency framework. Detailed per-buyer per-category spend analysis at strategic depth is increasingly available through commercial intelligence platforms like Tussell. PA 2023 transparency regime improves data availability over time.