How to choose analytics software for procurement: questions, data and traps

Most buying decisions for analytics start from a feature list. For procurement teams the better start is the questions that come back every month, the files already on hand, and the traps that make a tool look right in a demonstration and wrong in the first board meeting.

Start from the questions

Any tool you consider should answer these from your data, not from a sample. Ask to see it.

The data you already hold

• Payables ledger
• Contract file
• Purchase orders
• Invoice lines
• Sourcing records
• Contract terms
• Receipts
• Quality file

If a vendor needs a warehouse built before it can read these, count that in the cost and the time.

Ten questions to ask any vendor

1. What does it need in place before the first answer? A warehouse, a data model, a modelling language, a partner? Ask for the list and the typical weeks.
2. Who does the setup, and who maintains it? Your team, the vendor, or a partner, and what that costs after year one.
3. Does the AI calculate figures, or choose from computed ones? A language model that writes queries or code can produce a plausible wrong number. Ask what it is allowed to do.
4. Does every total reconcile to a control figure? Ask to see a bridge that does not sum and what the product does about it.
5. Can every figure be opened to its rows? An answer nobody can check becomes a debate in the meeting.
6. What does it cost in the first year, all in? Licences, consumption, implementation, modelling and training, not only the seat price.
7. How does data arrive, and who holds credentials? A file your systems already export, a scheduled drop, or a live connection with the vendor holding keys.
8. What happens to the data, and where is it stored? Residency, retention, deletion, and whether names can be replaced with identifiers.
9. Can we see it on our own data before we sign? A demonstration on a sample dataset tells you little about your own.
10. What does the tool do when it cannot answer? It should say so. A confident guess does more harm than no answer.

Checks specific to procurement

Ask whether the tool enforces these, and what it does when they fail:

• Spend: Total spend = addressable + excluded; addressable = managed + unmanaged
• Categories: Category spend sums to addressable spend; every supplier in one primary category
• Savings: Volume forecast = bought at new price + bought at old price + bought elsewhere + not bought
• Contracts: Contracts = in force + expired + no end date recorded

The traps

Savings realised. Savings are reported at contract signature and seldom revisited against invoices.

Invoices paid early. Terms are negotiated by procurement and ignored by the payment run.

Maverick spend by requester. Reported as a percentage, which prompts a policy. As a list of names it prompts ten conversations.

Measures to leave out

Savings claimed. Only realised savings, from invoice lines.

Number of suppliers, firm-wide. By category, with the tail costed.

Purchase orders processed. Activity, not outcome.

A scorecard

Where Covirage fits

Covirage reads the exports above, answers the questions with figures our tools compute and check, and is set up for you within a week. See analytics software for procurement compared, AI analytics for procurement and Covirage for Procurement.

For the measures in full, with formulas and exports, read KPIs for procurement teams.