An Interview on the Dangers of Dirty Procurement Data
In our latest interview, we welcomed Susan Walsh, otherwise known as The Classification Guru, to talk to us about the dangers of dirty procurement data. Susan is an expert in spend data classification, taxonomies, normalization and steps for ensuring data accuracy.
The COAT framework
As Susan explains, COAT stands for Consistent, Organized, Accurate and Trustworthy, with trustworthiness being the outcome of consistency, good organization and accuracy. The framework is set within the context of making data available for all, rather than just data scientists, data analysts, coders or the IT department. In order for the wider organization to benefit, data needs to be user-friendly and easy to understand.
Consistency covers areas such as standards, terms and classifications – so data governance plays a major role here. ‘Organization of data’ speaks to the ability to be able to find the data that is required and ensuring that it is therefore available to any business user without the risk of it being partial or misleading – which in turn underlines the third aspect which is that it must be accurate at the point of its creation and for its lifetime. It is no good to discover inconsistencies at the point of use as this undermines the trust in the data.
This speaks to HICX’s philosophy, which emphasizes: there are only two points in a piece of data’s lifetime that matter – when it is created and when it is used.
The difficulties of creating trustworthy procurement data
In the interview, Susan provides first hand examples of where bad data has led to poor decisions or hidden costs. As Susan describes, enterprise data is used for a huge range of use cases, as she explains, “Senior managers use dashboards to make decisions on staffing, budgets, the direction of the company – whether it’s going to grow, whether it’s not – and that information has to be right, otherwise they could make catastrophic decisions that could severely impact the business.”
However, as Susan points out in the interview, despite the potential severe consequences, there are a number of reasons why a necessary level of trust in the data is not achieved. She believes the value to organizations is hugely underestimated. “People don’t see its value as an investment. They just see it as a cost that you don’t get any ROI from. But it’s a hidden ROI (or it’s the money that you don’t spend) because you have good data to start with.”
As an article based on a recent HICX survey reveals, supplier data is an area that is more prone than any other to creating hidden costs while ROI opportunities are missed. As the article clarifies, 66% of procurement leaders that participated in the survey agreed that data projects have stalled due to their relatively low priority when compared to other business initiatives. When asked what the key reason was for the low level of urgency, 61% pointed to a perceived lack of return on investment.
The future of Procurement Data
We end this discussion on a nod to the future. Susan believes that data will come under ever more scrutiny but for good reason: eventually Procurement will be in a much better position to justify a seat in the C-suite.
This is the subject of another debate that we took up with Giles Breault, Principal and Founder of The Beyond Group in a separate discussion – but whatever the outcome of this, all agree that technology adoption will be a foundational factor.
Supplier Experience Live from HICX is available on all major Podcast streaming platforms: