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Why Spendesk is defining Spend Planning and Analysis as a new category in the Finance function
Finance teams have never been more operationally efficient.
Modern spend management tools have made it faster than ever to close the books, reconcile transactions and keep a clean audit trail.
But even as the close has accelerated, the pace of decision-making for spend decisions is still surprisingly slow. The finance controls that once were designed to protect the business now often end up creating bottlenecks, silos and delays in well-informed decisions.
For example, a company’s labour budget might be spread across several different pools: a payroll budget for full-time staff, a budget for contractors, a budget for agencies and possibly a budget for labour-saving software tools as well.
Adding a new contractor or software tool might mean your business doesn’t have to spend as much on permanent roles – but making an informed decision is difficult because each budget lives in a different database.
These budgets are often attributed to departments in a top-down manner, with very little tracking. Take a Chief Marketing Officer or a Chief Technology Officer, as an example. If you ask them, “Where do you stand versus your budget today?” either they’ll have no clue – because the Finance team is extremely protective of that data – or they will only have data from the last period close, which is one month or even one quarter out of date. They will never, in my experience, be able to tell you, “Here is where I stand, and here’s what I was told I could spend.”
If you ask a CMO or CTO, “What's your cost of payroll for November?” they will go looking in the HR system. But that system probably doesn't know that they just brought on lots of new contractors. That data lives in another silo.
We live in a world where more and more people are employed as contractors, more work is assigned to agencies, and the number of software tools is exploding month by month.
However, despite this, our finance systems and processes don’t yet allow for fast, smart and well-informed decision-making. Which brings us to the future.
What changes? Introducing SP&A
Last year, I sat down with my Strategy team at Spendesk to plot out the product areas where we could most add value to our clients.
Spendesk’s core offering has always been spend management, where we are a market leader. For our future offering, we wanted to take a step up Maslow’s hierarchy of needs, to build on that foundation of spend management and then tackle more complex business challenges.
If Maslow’s hierarchy defines the psychological needs of individuals, what would a similar hierarchy look like for finance teams in the business world?
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At the base of the pyramid, you have the fundamentals: setting up an accounting system or an enterprise resource planning (ERP) system to record the numbers reliably. A level up is building a user-friendly and reliable spend management tool – the layer where Spendesk has historically focused and where we are a market leader.
But to move higher up the pyramid – to tackle more sophisticated problems, enable decentralised decisions and create greater strategic value – we’ve had to start defining a new area within the Finance function.
This is what we call Spend Planning and Analysis, or SP&A.
It’s the layer that fundamentally changes finance roles: from gatekeepers of historical data and approvals to orchestrators of intelligent, real-time spending decisions across the business.
So what is Spend Planning & Analysis?
Classic spend management allows staff to spend easily, within clear constraints. Spendesk’s suite of tools liberates employees to make the purchases they need without onerous bureaucracy, while also giving the Finance team peace of mind.
SP&A brings together this classic spend management with Financial Planning and Analysis (FP&A), a forecasting function that’s historically only been affordable for the biggest enterprises.
If spend management gives clarity on the present, SP&A opens up both the past and the future.
Looking to the future, the planning part of SP&A brings intelligence to every spending decision. It uses data to help a business understand whether it will regret taking on a new member of staff, committing to a new software subscription or increasing its marketing budget. Looking to the past, the analysis part of SP&A helps warn where a business may already be in danger of overspending in certain areas, even using data to make comparisons with peers in similar sectors.
More than that, Spendesk’s SP&A suite can mine billions of data points across thousands of companies to give insights into your spending versus peers. It can flag where you’re spending more than comparable companies in a certain area.
It can say, “Are you sure you want to get this software tool? Your German subsidiary already has a similar tool you’re paying for.” In short, it helps give you as a business leader the confidence that the spending decision you’re about to make is a good one.
SP&A also reshapes what finance roles actually do day to day. For CFOs, it shifts the focus from explaining yesterday’s variance to steering tomorrow’s allocation of capital.
Controllers move from manual reconciliations and gatekeeping approvals to designing smart controls that run continuously in the background.
FP&A leaders go from building static budgets and quarterly re-forecasts to orchestrating live scenarios with budget owners, where every hiring plan, software purchase or marketing campaign is evaluated against real-time spend and forecast data.
In other words, SP&A turns finance from a retrospective reporting function into the operating system for how a company decides to spend.
And in turn, it will not just reshape the future of company spend but finance’s role for years to come.
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