# Spend Analysis: A Guide for Procurement and Finance > What spend analysis is, how it works step by step, the terms that matter, and how to move from analysis to decisions. A guide with links to every SpendCraft glossary entry. Source: https://www.spendcraft.com/spend-analysis/ Spend Analysis Guide # Spend analysis, explained. From messy data to decisions you own. Spend analysis is the practice of collecting, cleaning, classifying and analyzing supplier spend, so procurement and finance can see what is bought, from whom, at what price, and where there may be room to save. [Book a demo](https://outlook.office365.com/book/BookaDemo1@spendcraft.com/)[Start a Proof of Value](https://www.spendcraft.com/get-started/) How It Works ## Four steps, every time. Most of the effort sits in normalizing and classifying. Most of the value shows up once the data is trusted enough to act on. Step 1: Collect Bring spend in from every source: ERPs, AP systems, card programs and spreadsheets. [Integrations](https://www.spendcraft.com/product/integrations/) Step 2: Normalize Group supplier aliases into one vendor and line up items, so totals mean something. [What is vendor normalization?](https://www.spendcraft.com/blog/what-is-vendor-normalization/) Step 3: Classify Map every line into your own taxonomy, so you see spend by market, not by GL code. [What is spend classification?](https://www.spendcraft.com/blog/what-is-spend-classification/) Step 4: Analyze and act See spend by supplier, category, entity and time, then work each opportunity to a decision. [Caddies](https://www.spendcraft.com/product/caddie/) Glossary ## The terms that matter. Each entry opens with a plain definition, then covers why it matters and how to act on it. ### [Spend analytics](https://www.spendcraft.com/blog/what-is-spend-analytics/) The ongoing capability to see what you buy, from whom and at what price. ### [Spend classification](https://www.spendcraft.com/blog/what-is-spend-classification/) Mapping every transaction to a category in a taxonomy. ### [Vendor normalization](https://www.spendcraft.com/blog/what-is-vendor-normalization/) Grouping the many names of one supplier into a single identity. ### [Spend cube](https://www.spendcraft.com/blog/what-is-a-spend-cube/) Spend organized by supplier, category and business unit at once. ### [Tail spend](https://www.spendcraft.com/blog/what-is-tail-spend/) The long tail of small, fragmented purchases across many suppliers. ### [Price variance](https://www.spendcraft.com/blog/what-is-price-variance/) Paying different prices for the same or equivalent item. ### [Off-contract spend](https://www.spendcraft.com/blog/what-is-off-contract-spend/) Spend that happens outside the agreements you negotiated. ### [Supplier consolidation](https://www.spendcraft.com/blog/what-is-supplier-consolidation/) Buying a category from fewer suppliers for better terms. ### [Supplier rationalization](https://www.spendcraft.com/blog/what-is-supplier-rationalization/) Reviewing the whole supplier base to keep the right ones. From Analysis to Action ## Where analysis usually stops, and what comes next. A dashboard ends at the chart. These are the moments where spend analysis turns into a decision. ### [Renewal Prep](https://www.spendcraft.com/solutions/renewal-prep/) Every agreement by notice deadline, with the evidence to act. ### [Price Increase Response](https://www.spendcraft.com/solutions/price-increase-response/) Your own history, not the supplier's story. ### [Duplicate Invoice Recovery](https://www.spendcraft.com/solutions/duplicate-invoice-recovery/) Totals from actual invoices, not estimates. ### [Tail Spend Cleanup](https://www.spendcraft.com/solutions/tail-spend-cleanup/) Many suppliers, small amounts, real money. Choosing a Tool ## Weighing your options? ### [Software, consultants or BI?](https://www.spendcraft.com/spend-analysis/options/) Four ways to analyze spend, side by side. ### [How to choose spend analysis software](https://www.spendcraft.com/spend-analysis/how-to-choose-software/) What to evaluate, what to ask and how to prove it. ### [SpendCraft spend analysis software](https://www.spendcraft.com/spend-analysis-software/) How SpendCraft structures spend once and works it every day. In SpendCraft ## The Savings OS, piece by piece. ### [Classification and Normalization](https://www.spendcraft.com/product/classification-and-normalization/) Spend structured once, in your own taxonomy. ### [Ask Crafter](https://www.spendcraft.com/product/ask-crafter/) Ask your spend anything, in plain English. ### [Scans and Scouts](https://www.spendcraft.com/product/scans-and-scouts/) Surface opportunities on demand. Watch the data between runs. ### [Caddie](https://www.spendcraft.com/product/caddie/) Work one hard problem to a decision you own. ### [Spaces](https://www.spendcraft.com/product/spaces/) Keep the work and track it over time. ### [How the AI works](https://www.spendcraft.com/how-the-ai-works/) Deterministic code produces every number. Questions ## Common questions. ### Is spend analysis the same as spend analytics? Almost. The terms are used interchangeably. When people separate them, spend analysis is usually a project and spend analytics is the ongoing capability. ### What data does spend analysis need? Supplier invoices and purchases, from your ERP, AP system or files. Invoice documents help: SpendCraft's Invoice Augmentation reads invoice PDFs and scans to recover line detail ERPs drop. ### Do we need consultants to classify our spend? No. SpendCraft curates a concise representative set, your team reviews it, and proprietary AI plus rules classifies the full dataset into your taxonomy. You can reclassify on demand. ### How are savings opportunities shown? As Min to Max ranges scoped to Processed Spend, the annual supplier spend you bring into SpendCraft. Ranges are directional, not guaranteed. ## See it on your own data. A Proof of Value works one category or one moment end to end. [Book a demo](https://outlook.office365.com/book/BookaDemo1@spendcraft.com/)[Start a Proof of Value](https://www.spendcraft.com/get-started/)