Spend management technology is advancing rapidly to streamline and automate how companies delegate, track, and report on non-payroll spending. In most procurement functions, spend management technology underpins efforts to streamline the source-to-pay process and improve compliance. However, too many companies are still dependent on a patchwork of solutions to manage spending data from areas like corporate cards, travel management, bill pay, reimbursements, and others.

Most of the respondents (67%) say they use four different solutions or pieces of software for this purpose, while another 7% say they use more than five.

This type of complex ecosystem of SaaS providers across procurement and T&E spend makes automation more challenging. Using multiple point solutions creates data silos because they don’t necessarily communicate with one another. Thus, reconciliation requires additional manual work to calculate data and slows down finance and procurement teams. Additionally, downtime in one system can break financial reporting business-wide, causing further disruption.

Indeed, 86% of the respondents say the automation of manual workflows and tasks is a very significant or somewhat significant challenge.

This state of spend management technology is also leading to other challenges, according to the respondents. These include issues with compliance and risk management, which 58% say is somewhat of a challenge, and leveraging data and analytics to improve decision-making, which 42% say is somewhat of a challenge.

The one spend category almost all the respondents struggle with most is out-of-pocket expenses and reimbursements—92% say they struggle to obtain visibility and rein in excess spend in this category. This suggests there is a disconnect between the company’s policies for out-of-pocket expenses and employees’ understanding of those policies. It could also mean there is a lack of automation on the reimbursement side.

If reimbursements are handled using a separate system or process from corporate cards, bills, and regular expenses, for example, this could result in low visibility and out-of-control spend.

For procurement-related spend, out-of-pocket expenses tend to occur when employees circumvent the PO process by using their personal credit cards to purchase time-sensitive items like office supplies or event materials. Organizations typically deploy purchasing cards (p-cards) to better control that type of spend.

AI and automation will drive spend management results

Spend management technologies are important to finance and procurement leaders because they provide the tools, data, and insights needed to effectively monitor and manage budgets and expenditures. The right technologies and automations can enable companies to monitor and analyze spend patterns in real time and over time to optimize their spending. This helps companies leverage innovations like AI to identify potential savings opportunities, automatically detect unplanned or unsanctioned spend, and accelerate workflows.

However, despite this incredible potential, most of the respondents (51%) are underwhelmed by their current spend management platforms. This result includes 10% of the respondents who say they are wholly unsatisfied with their technologies.

So, researchers asked what was driving this dissatisfaction and what the survey respondents view as priorities for improvement.

What’s causing the frustration?

Having a patchwork of systems is one of the most significant causes of these organizations’ spend management challenges and technology frustrations.

As we’ve learned, 74% of the respondents currently pull data from four or more pieces of software to accurately manage spend. Notably, further analysis of the data reveals that 80% of respondents who are unsatisfied with their solution providers also use four different solutions or pieces of software to accurately manage spend.

Meanwhile, 92% of those using 3 or fewer solutions are neutral or satisfied. This suggests that user satisfaction tends to increase with fewer tools.

Researchers asked these unsatisfied respondents to describe why they aren’t currently happy with their solution providers. Due to a lack of connectivity between their systems, these respondents say they are struggling with issues like poor communication, low accountability, and poorly coordinated processes among their providers.

For example, one finance director at an education company says it takes a lot of work to resolve issues spanning multiple systems, “Due to [having multiple technologies], the accountability of the process decreases, making it far more difficult to manage in the event of challenges.”

A C-level accounting executive from an energy company says their service providers’ processes are “not well-coordinated with [each other or] our larger business demands.”

The automation opportunities

As discussed earlier in this report, many respondents believe that automating processes is a challenge. This result is supported by the fact that 61% of the respondents say they have adopted automation for spend management only somewhat effectively. They have been able to automate some of their tasks and processes, but not all of them.

Usability is often a barrier to technology adoption and thus, automation. When employees find a system difficult to use, they go outside of the typical workflows and end up creating manual processes.

Another 31% say they have not been very effective in adopting automation. In other words, they are only beginning to automate their processes.

At 69%, most of the respondents agree that expense approvals and reimbursements are the most important spend management workflows to automate. This result aligns with the previous result that indicated almost all the respondents struggle with the reimbursement of out-of-pocket expenses.

This is perhaps the most critical area where finance and procurement leaders can use AI-driven spend management and automation to obtain better results.

How to get there

Organizations have many technology options to drive future spend management results, but there are clear signs in this study that technology integration and automation improvements will be central to their progress.

All of this data suggests that companies are likely to focus on technologies and innovations like AI to improve automation and improve efficiency. Consolidation onto a single, unified spend management platform with AI capabilities can solve many of the automation challenges these leaders struggle with. That’s because the orchestration and coordination are built in when procurement, travel, reimbursements, and other types of spend can be managed in one place.

It’s no surprise then that the technologies and tech-driven opportunities that have yielded the most significant results for the respondents include automation, as well as globalization and digitization. When it comes to impact, 84% of survey respondents say globalization has driven some results.

With just 13% saying that globalization has driven significant results, there is an opportunity to embrace additional capabilities—including supporting multiple currencies, offering local-currency cards and budgets, VAT tracking, and more—to automate spend management processes as business becomes more globalized.

More specifically, the top-three technologies the respondents will continue to prioritize for spend management results over the next 12 months include digitization (97%), automation (78%), and artificial intelligence (71%).

These results are significant because only 27% of the respondents say AI has driven results, while 33% don’t report that digitization has driven results. However, digitization and technologies like AI are relatively new and still evolving. AI and digitization have immense potential and are likely to drive significant spend management results as companies make investments, pilot new programs, and implement new solutions.

Spend management platforms that invested early in artificial intelligence can help businesses realize benefits immediately with things like auto-receipt capture, merchant categorization, fraud detection, and more, versus those solutions that only recently jumped on the AI train and are working to catch up.

The fact that those surveyed have deployed technologies over the years to better manage their spend is encouraging. However, the results of the study suggest some companies still haven’t achieved the level of visibility they need to rein in unnecessary costs. They are also struggling with outdated processes, especially when it comes to reimbursements. Many survey respondents are simply getting by with what they have and haven’t fully experienced a quality spend management program.

Moving forward, most organizations will need to set priorities to make substantive changes, which includes identifying specific processes to update. They’ll also want to evaluate any new automation solutions for ease of implementation because technology is only as useful as it is usable.

The top-three processes the respondents want to prioritize to improve spend management at their companies are automation (86%), spend visibility (82%), and analytical capabilities (74%). All three of these processes are technology-driven, suggesting that integration of AI-led spend management technologies will be paramount to achieving their goals in the coming months.

We’ve established that 78% of the respondents consider automation to be one of the top three areas driving future spend management results, while 86% consider it one of the top-three areas they’d prioritize to improve spend management. Similarly, 79% say that the automation and digitization of procurement and spend management processes is the most significant trend at their company in terms of spending. The second-most popular trend, the use of AI and machine learning, was selected by only 17% of the respondents.

Although AI will likely be an important technology investment for procurement in the future, it is highly effective as a supplement to automation today. These results suggest most companies are focusing on automation before they invest in more advanced solutions.

The respondents also say they are taking targeted approaches to improve employee adoption and the user experience of new spend management technologies and automation. Almost all the respondents (98%) say they are piloting new technologies with small groups of employees. This strategy enables the company to identify use cases for new technologies, encourage iterative adoption, and create champions for new technology implementations. Such active engagement with the latest spend management technologies is a testament to finance leaders’ commitment—and the urgency—to solve these problems.

Most of the respondents also say they are providing employees with personalized training sessions (86%), selecting technologies that meet set UI or UX requirements (76%), and creating formal processes for employee feedback and collaboration (68%). These processes can be combined to ensure employees have a smooth transition into the use of new spend management technologies, and these results suggest most companies are being highly selective and formal in their approach to new technology adoption.

In their final line of questioning, researchers asked the respondents to describe what they would like to improve about their spend management processes. The respondents overwhelmingly agree that automation, or improvements to automation, are the most critical improvements to pursue.

“Policy and contract management automation would be an ideal improvement,” says a senior supply chain director at a professional services firm.

Similarly, a category management director at a healthcare company wants to “reduce the number of steps involved through automation. This will also provide the accuracy necessary in the process to drive results.”

Among C-suite respondents, there is more focus on data quality and intelligence. For example, one C-level procurement executive at a SaaS company says, “The data collection process needs improvement,” as they have experienced data authentication issues in the past.

Other respondents agree that data quality and analytical capabilities will be key to achieving visibility. Through the digitization of their procurement processes, they can get more control over their spend and introduce advanced solutions like automation or even AI.

For example, one category management director at a manufacturing company says, “The process of collecting, categorizing, and analyzing spend information through digitization would be helpful, and so would the quality of results that would help in making a range of decisions.”

Two key themes that emerged from the responses are “visibility” and “predictability.” In the coming years, companies will implement unified, AI-powered technology solutions and introduce automation into their processes to achieve these goals. This will require proactive change management as well as strategic partnerships with key solution providers.