7 Best Tail Spend Management Solutions

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Does a lack of tail spend management solutions cause a significant portion of your organization's budget to vanish into thin air? Tail spend, the category of numerous, low-value purchases from a vast network of suppliers, might be the root cause.

While each tail transaction seems insignificant, collectively, they can represent a surprisingly large chunk of your spending. The good news is that you don't have to settle for this hidden drain on resources.

Effective tail spend management helps you take control, and you can use tools that provide the visibility, control, and automation needed to optimize your tail spend. You will find significant cost savings opportunities and streamline your procurement processes.

This article will explore what tail spend management is and its benefits. We will also highlight 7 of the best tail spend management solutions available, helping you choose the perfect one.

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What Does Tail Spend Mean?

Tail spend refers to your organization's annual expenditures consisting of numerous, frequent, and relatively low-value transactions from many non-strategic suppliers. It can represent a surprisingly large percentage of total spending—often around 80% of transactions but only 20% of total expenditure.

Here are some key characteristics of tail spend:

• High volume, low value: Many individual purchases, each with a relatively small dollar amount.
• Decentralized: Purchases occur across various departments and often bypass formal procurement processes.
• Uncategorized: Tail spend can include a diverse range of items, making it difficult to track and analyze.
• Limited visibility: Due to its decentralized nature, tail spend can be difficult for procurement teams to monitor and control.

Despite its insignificance, tail spend can be inefficient and lead to missed cost savings. Tail spend management solutions enhance the visibility and control of these purchases, ultimately saving money and streamlining procurement processes.

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What is Tail Spend Management?

Tail spend management is the strategic approach to controlling your organization's often overlooked rogue spending category: tail spend. It focuses on a set of strategies, tools, and processes designed to improve visibility, control, and efficiency in managing these numerous low-value purchases from a vast network of suppliers.

Here's a breakdown of the key aspects of tail spend management:

Visibility: The core objective is to bring transparency to tail spend by identifying and categorizing all these scattered purchases. This involves leveraging data analytics to gain insights into spending patterns, supplier trends, and potential areas for consolidation or cost reduction.

Control: Upon establishing visibility, tail spend management implements controls to optimize spending. This might involve establishing preferred supplier lists, negotiating better pricing with high-volume vendors, or automating procurement processes for frequently purchased items.

Efficiency: By streamlining the procurement process for tail spend, you can free up valuable procurement resources to focus on more strategic sourcing initiatives. This often involves implementing self-service portals for low-dollar value purchases or automating workflows for approvals.

Cost Savings: Effective tail spend management ultimately aims to reduce overall procurement costs. You can achieve this by eliminating maverick spending (unauthorized purchases), negotiating better pricing, and consolidating suppliers.

Tail spend management solutions provide your business with the necessary functionalities to achieve these objectives.

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Why Do We Use Tail Spend Management?

Your business's tail spend may remain unmanaged due to its decentralized nature and the perception that it's not worth the effort. However, this lack of control can lead to inefficiencies and missed opportunities for significant cost savings.

This is where tail spend management comes in. Here are some compelling reasons to utilize tail spend management solutions:

Hidden Costs: Unmanaged tail spend can include hidden costs beyond the purchase price. Inefficient processes, duplicate orders, and maverick spending can drain resources and contribute to overall procurement overhead. Tail spend management solutions highlight these hidden costs, allowing for targeted optimization.

Missed Savings Opportunities: Without proper visibility into tail spend patterns, your business can miss opportunities to consolidate suppliers, negotiate better pricing, or leverage volume discounts. Tail spend management provides the data and insights to identify these savings opportunities.

Compliance Risks: Uncontrolled tail spending can expose your organization to compliance risks associated with unauthorized purchases, vendor non-compliance, or potential fraud. Tail spend management enforces purchasing controls, streamlines approvals, and improves software procurement practices, mitigating these risks.

Procurement Bottlenecks: The sheer volume of tail spend transactions can overwhelm procurement teams, leading to bottlenecks and delays in more strategic sourcing activities.

Tail spend management solutions automate workflows, implement self-service portals, and simplify supplier onboarding, freeing up resources for higher-impact tasks.

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7 Best Tail Spend Management Solutions

1. CloudEagle

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CloudEagle is a popular SaaS management and procurement platform with all the necessary features to optimize tail spending. This innovative tail spending management solution leverages powerful analytics to help you take control.

With powerful automation and artificial intelligence, CloudEagle can help you categorize and track every tail spend transaction.

Thanks to real-time spend visibility, you can identify trends and potential areas for consolidation. On the other hand, the automated workflows streamline the procurement process for low-dollar value purchases.

Let’s take RingCentral as an example. RingCentral's procurement team faced huge problems managing their tail spend apps. They often missed out on renewals and had to chase the stakeholders for purchase approvals.

This is where CloudEagle came in. Our SaaS buying experts helped them manage tail spend apps and vendor negotiations. Our automated workflows provided more robust transparency over SaaS buying. Check out their customer success story.

CloudEagle Features:

AI-powered Spend Classification & Supplier Insights

CloudEagle leverages artificial intelligence (AI) to automate the classification and categorization of tail spend transactions. This not only provides a clear picture of your spending patterns but also identifies opportunities for vendor consolidation.

The insights can reveal your suppliers for similar products or services across different departments. This allows you to consolidate vendors and leverage your buying power for better pricing.

For example, take the success story of RingCentral. They encountered challenges managing tail spend apps, missed renewals, and rising costs. CloudEagle assisted in managing these apps, and our expert negotiators handled vendor negotiations.

Automated workflows ensured transparency and timely renewals, saving time and enabling the team to focus on more productive tasks, boosting revenue and reducing costs.

Automated Workflows & Centralized Procurement

CloudEagle automates routine tasks associated with tail spend, including purchase order generation, approvals based on pre-defined rules, and invoice processing.

This streamlines the procurement process for low-dollar value purchases, centralizing control within your procurement team and reducing reliance on decentralized purchasing practices often associated with tail spend.

Real-time Spend Visibility & Analytics for Consolidation Strategies

CloudEagle provides a centralized platform with real-time visibility into all tail spend transactions. Its robust analytics capabilities allow you to drill down into spending data by supplier, category, and department.

This allows you to identify opportunities for vendor consolidation by pinpointing areas with high spending volume across multiple vendors for similar items.

This feature has helped various companies transform their operations. When Armory sought to streamline spending and enhance investment strategies by adjusting license numbers, they turned to CloudEagle.

The tool effectively analyzed usage data, enabling Armory to optimize licenses and negotiate discounts with vendors like Salesforce and New Relic. As a result, Armory successfully reduced costs and maximized savings.

Read the detailed success story here.

Supplier Risk Management & Performance Monitoring

CloudEagle incorporates supplier risk management features beyond basic spend analysis. This can include functionalities like supplier verification, performance monitoring, and automated risk assessments.

CloudEagle helps you consolidate with reliable vendors who meet your quality and service standards by streamlining supplier onboarding and monitoring performance.

Here's Iffi Wallah, Co-Founder and CEO of Edge talking about how, as a fast-growing company using many SaaS apps, they had little insight into spending, no license usage tracking, and spent too much time negotiating with vendors.

When he chose CloudEagle, the tool offered comprehensive insights, facilitated cost optimization, and enhanced team collaboration seamlessly through Slack. This not only saved time and effort but also ensured increased efficiency.

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Pros

• Automatic spend classification and categorization of tail spend transactions. This eliminates manual effort and ensures accurate data.
• Customizable dashboards allow you to focus on the most critical metrics relevant to your organization's specific tail spend control goals.
• CloudEagle also helps identify opportunities for vendor consolidation.
• It streamlines onboarding processes and ensures you're contracting with legitimate vendors.

Pricing

Now, let’s talk about the pricing structure. CloudEagle has three transparent pricing plans.

• Starter: Starting at $2000/month
• Growth: Starting at $3000/month
• Enterprise: Starting at $4000/month

Make sure you choose the one most suitable to your business’s needs.

2. Coupa

Coupa is a leading cloud-based Business Spend Management (BSM) platform that offers a comprehensive suite of tools to tackle tail spend challenges.

The single platform can consolidate and categorize all your spending data, including tail spend transactions. This allows you to identify spending patterns, track supplier performance, and pinpoint areas for optimization within your tail spend.

This tail spend management tool also automates workflows for low-dollar value purchases commonly associated with tail spend. This can include self-service portals for employees to request pre-approved items or automated approvals for recurring purchases.

Coupa helps manage your vast network of tail spend suppliers. Features like supplier onboarding automation and performance tracking can streamline supplier interactions. Thus, you can ensure compliance with your procurement policies.

Pros

• Coupa's robust analytics capabilities provide valuable insights into your tail spend data
• Automates workflows for low-dollar value tail spend purchases
• Automates supplier onboarding and facilitates performance tracking
• Coupa provides an open API for integration with other tools and applications relevant to your tail spend management strategy

Cons

• Setting up and configuring Coupa might require an initial investment in time and resources
• Coupa can be a significant investment, especially for smaller companies with less complex tail spend needs.
• While customizable, tailoring features to specific needs might require some learning and expertise

Pricing

Coupa provides 4 pricing plans along with a free plan. Let’s take a look at them:

• Registered: Free
• Verified: $549/year
• Premium Support: $499/year
• Advanced: $4,800/year

3. Procurify

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Procurify, a cloud-based procure-to-pay (P2P) platform, is another valuable tool for tail spend management.

Procurify automates manual tasks associated with tail-spend purchases. This reduces processing time and frees procurement teams to focus on strategic sourcing activities.

It helps employees with self-service portals to request pre-approved tail spend items. This reduces reliance on procurement for routine purchases and streamlines the process for employees and procurement teams.

Furthermore, it provides spend categorization tools to effectively classify tail spend. This allows you to identify trends, analyze supplier performance for specific tail spend categories, and make data-driven decisions for cost optimization.

Pros

• Automates manual tasks like requisitioning, approvals, and PO generation for tail spend purchases
• Provides tools for classifying tail spend effectively, enabling data-driven decisions for cost optimization
• Streamlines supplier onboarding for tail spend vendors and identifies opportunities for consolidation
• Known for its intuitive and user-friendly interface, making it easy for employees and procurement teams to adopt

Cons

• Procurify offers less customization compared to some competitors
• While user-friendly, Procurify might not cater to highly complex tail spend management needs
• Reporting functionalities might be less extensive compared to more comprehensive tail spend management solutions

Pricing

You need to request pricing, and the sales team will get back to you shortly.

4. Zycus

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Zycus, a recognized leader in procurement software, offers a comprehensive suite of tools for SaaS buyers under its Source-to-Pay (S2P) platform.

It leverages artificial intelligence (AI) to automate data extraction and categorization for tail spend transactions. This eliminates manual effort and ensures accurate spend classification. This approach will help you know tail spend patterns and potential savings opportunities.

Zycus offers a unique feature called "Autonomous Quick Source." It is designed explicitly to streamline tail spend sourcing. This functionality automates the sourcing process for low-value, frequently purchased items, saving procurement manager significant time and resources.

The Merlin suite offers AI-powered tools to address tail spend challenges. Merlin for Contracts helps identify potential risks within tail spend contracts. Meanwhile, Merlin for Risk provides a 360-degree view of supplier risks associated with your vast tail spend network.

Pros

• Provides a unique feature specifically designed to automate sourcing for frequently purchased tail spend items
• Streamlines invoice processing for tail spend purchases
• Manages tail spend across international operations with support for multiple currencies
• Highly customizable to cater to complex tail spend management requirements

Cons

• The extensive functionalities and advanced features require more training
• The dashboard is not user-friendly, with poor navigation to find the relevant features
• A steep learning curve, especially for beginners

Pricing

Request a free demo with the experts, and they will create a perfect pricing plan that fits your needs.

5. Zluri

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While Zluri isn't exclusively a tail spend management solution, it can help your organization with a significant portion of tail spend comprised of SaaS subscriptions.

Zluri excels at identifying and mapping all SaaS applications used within your organization, even those procured outside formal IT channels. This highlights hidden SaaS expenses often lurking within tail spend.

Zluri provides insights into usage patterns for all SaaS applications. This data can help you identify underutilized or unnecessary subscriptions.

As a result, you can consolidate licenses, negotiate better pricing with vendors, and eliminate wasteful SaaS spending within your tail spend.

Pros

• It ensures you get the most value out of every dollar spent on SaaS subscriptions within your tail spend
• Helps map application costs to their actual business value within your organization
• Integrates seamlessly with popular identity management and SSO (Single Sign-On) solutions
• Offers security features to ensure compliance and data protection for your SaaS application usage data.

Cons

• While valuable for SaaS spend management, Zluri might not offer the same level of functionality for other categories within your overall tail spend
• Zluri primarily focuses on identifying and managing SaaS spend, and might not offer advanced features for broader tail spend optimization strategies
• Zluri might have a higher cost compared to some general tail spend management solutions

Pricing

You need to schedule a customized discovery session with one of Zluri’s experts.

6. Brex

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Brex, known for its corporate credit cards and cash management solutions, also offers tail spend management features. These are perfect for startups and high-growth businesses.

Brex provides corporate cards with built-in spend thresholds and real-time expense tracking. This allows employees to make authorized purchases for common tail-spend items while adhering to your organization's spending limits.

Additionally, it automates manual tasks associated with tail spend, such as expense report creation and approval processes. This reduces administrative burdens for both employees and finance teams, freeing up valuable time and resources.

Brex seamlessly integrates with popular accounting software, allowing for automatic expense categorization and reconciliation of tail spend transactions. This streamlines financial processes and improves data accuracy within your accounting system.

Pros

• Provides corporate cards with built-in spending controls and real-time expense tracking
• Automates manual tasks like expense report creation and approval processes for tail spend transactions
• Enables creation and management of virtual cards with pre-loaded spending limits and restricted vendors specifically for tail spend purchases
• Integrates with popular accounting software for automatic expense categorization

Cons

• Brex primarily revolves around corporate card usage, which might not be suitable for all types of tail spend purchases
• Brex might offer less extensive reporting and analytics functionalities
• Integration with existing procurement systems might require additional setup

Pricing

Let’s take a look at the pricing structure of Brex

• Essentials: $0/user/month
• Premium: $12/user/month
• Enterprise: Custom pricing

7. Spendesk

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Spendesk is one of the most popular tail spend management solutions. Like Brex, Spendesk offers virtual card creation and management specifically for tail spend purchases.

These virtual cards can be customized with spending limits and vendor restrictions. This method will ensure control and prevent maverick, non-compliant spending within your tail spend category.

Spendesk automates manual tasks associated with tail spend, including purchase requests, approvals, and invoice processing. This streamlines the low-value procurement process, freeing procurement professionals to focus on strategic sourcing initiatives.

Pros

• Facilitates international payments for tail spend vendors, a valuable feature for your organization with a global supply chain and its subcategory.
• Provides a centralized platform for real-time tracking of all tail spend transactions
• Integrates with different systems for smooth data transfer
• A simple and intuitive interface particularly helpful for beginners

Cons

• Spendesk might have less robust functionalities for onboarding and managing a vast tail spend supplier network
• Less customization limits its suitability for highly complex tail spend management scenarios
• Spendesk's emphasis on virtual cards and automation might not be ideal for all tail spend categories

Pricing

Spendesk doesn’t provide pricing details on its website. You need to schedule a demo with the experts.

To learn about modern procurement best practices and vendor relationship management, listen to Nayive Martinez, Global Procurement Manager at Bolt. She shares valuable insights on negotiation tactics, spend categorization, and building trust with vendors for successful partnerships.

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Conclusion - Choosing the Right Tail Spend Management Solutions

Tail spend can significantly impact your organization's bottom line. You can gain control, optimize processes, and unlock hidden cost savings by implementing strategic tail spend management solutions.

Remember that the ideal digital platforms depend on your specific requirements. Consider factors like the volume and complexity of your tail spend, the desired level of automation, budget constraints, and user needs.

By taking control of your tail spend, you can streamline procurement management, optimize costs, and unlock valuable resources to focus on core business activities.

Do you want the best tail spend management solution to improve your continuous procurement process? Book a demo with CloudEagle's experts today.

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