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It's Year's End — Do You Know Where Your Money Went?

By Lauren Simonds
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Money &#151 it's the lifeblood of any business. Keeping close track of it as it comes in, circulates through your business and heads back into the world is a critical part of running a successful business.

Every SMB owner or manager understands the importance of keeping a firm grip on payables and billing, but for many, accurately tracking not only how much, but how, the company spends isn't always a front-burner concern.

Online Assessment
One company &#151 Santa Clara, Calif.-based Ketera&#151 aims to help SMBs reduce their spending through an online, on-demand suite of applications that includes spend analysis, e-procurement and contract management.

According to Vishal Sharma, Ketera's vice-president of products, spend management can seriously impact a company's bottom line. "Good spend management can make the difference between no profitability and sustained profitability," he said. "At a minimum, a company stands to be 10-to-15 percent more profitable if it does a good job managing its procurement."

Sharma went on to point out that managing spend is much harder than you might think. "When you break down your company's spending on a yearly basis, there are always revelations," he said. "For example, think about your home spending. You always find expenditures you forgot about or didn't realize you'd spent quite so much on eating out. In a corporate or SMB environment, that effect is magnified."

Ketera designed its Express family of online applications &#151 Spend Analysis Express, e-Procurement Express and Contract Management Express to help SMBs analyze, manage and improve their spending.

"We've streamlined all three products to make them inexpensive and easy to use," said Sharma. "You can see how much you spend throughout the company on each supplier &#151 quarterly or annually. The information lets you negotiate better pricing with vendors and helps avoid maverick spending &#151 employees that don't comply with mandated spending policies. You can also find the best prices available and manage contracts more efficiently."

Spend Analysis Express
Trying to get a simple overview of company expenditures can be a lot like herding cats. Companies often don't take advantage of their buying power simply because they don't realize that: different work groups often have separate contracts with the same vendor, three of their vendors are owned by the same company &#151 but no one has leveraged that relationship to negotiate a better price. Other barriers include poorly tracked expenditures such as travel, indirect goods and services or suppliers referencing the same part by different part numbers.

Sharma said Spend Analysis Express addresses these issues by:

  • Capturing 100 percent of your total spend
  • Reporting data that lets you negotiate better contracts
  • Decreasing the number of suppliers
  • Decreasing maverick spend

Since Spend Analysis Express is Web-based, you don't buy or install any software. You upload data from your accounts payable or purchase order system through the Web where Ketera's analytic engines calculate your company spend. Pricing for a comprehensive Spend Analysis report starts at $2,500 and includes the analysis of 15,000 financial records.

According to the company, Spend Analysis customers have experienced 150-to- 250 percent ROI.

e-Procurement Express
Ketera designed this online application to automate the buying and selling of services and supplies. According to Sharma, maverick spending is an expensive problem for many companies. "Employees frequently don't know which suppliers are under contract or listed as preferred vendors," he said. "Either that or they assume a preferred supplier can't provide unique items, so they buy on their own." Other common barriers to buying compliance include complex PO and approval processes and not knowing who sells a particular item.

Ketera aims to put an end to those problems by:

  • Eliminating non&#151compliance spending by controlling access to specific suppliers, catalogs and prices
  • Making it easy to enroll new suppliers on demand
  • Providing a rapid solution payback and ROI
  • Offering a low cost of ownership
  • Charging an all-inclusive price without hidden costs

Pricing for e-Procurement starts at $500 per user per month.

Contract Management Express
Designed as a single repository for all your company contracts, Contract Management Express also lets you negotiate new contracts online &#151collaboratively &#151 with suppliers and partners. "Companies face a number of challenges when it comes to managing contracts," said Sharma.

Some of those include employees not knowing about, or forgetting, the contracts and purchasing from a non-contracted vendor. "Most contracts are paper-based, and people tend to file and forget them &#151 so compliance isn't monitored or enforced," said Sharma. "The result is that five-to-ten percent of all contracts renew automatically without ever being reviewed or renegotiated. And that ends up costing the company money it didn't have to spend."

According to the company, Contract Management Express eliminates these problems by:

  • Providing company-wide contract visibility
  • Cutting contracting cycles in half
  • Monitoring time-sensitive contract events
  • Eliminating non-compliance
  • Standardizing processes and terms
  • Improving contract renewal rates
  • Reducing material and service costs

Pricing for Contract Management Express is $150 per user per month.

Lauren Simonds is the managing editor of SmallBusinessComputing.com

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This article was originally published on December 09, 2004
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