Spend Under Management (SUM) refers to the portion of an organization’s total spend that is actively governed, influenced, or controlled by the procurement function. This includes spend that flows through approved procurement processes, preferred suppliers, negotiated contracts, and policy-compliant purchasing channels.
In simple terms, SUM measures how much of an organization’s spend procurement can see, influence, and optimize—as opposed to unmanaged or maverick spend that occurs outside formal controls.
Read more: Why Should You Maximize Spend Under Management with Procurement?
Why Spend Under Management Matters
An organization may have strong sourcing strategies and contracts, but if spending bypasses procurement, those strategies deliver limited value. Spend Under Management is therefore a foundational indicator of procurement maturity and effectiveness.
Higher SUM enables procurement to:
- Enforce negotiated pricing and contract terms
- Improve compliance with policies and regulations
- Reduce maverick and off-contract spend
- Strengthen supplier governance and risk oversight
- Convert procurement strategy into realized value
Without sufficient spend under management, procurement impact remains theoretical rather than measurable.
Spend Under Management Framework
Spend Under Management is not achieved through a single action—it is built progressively across multiple procurement disciplines.
| Area | Objective | Outcome |
| Visibility | Capture total organizational spend | Transparency |
| Governance | Route spend through procurement | Policy adherence |
| Control | Apply contracts and suppliers | Cost consistency |
| Enablement | Simplify compliant buying | User adoption |
| Automation | Reduce manual work | Scalable management |
| Optimization | Expand managed coverage | Sustained value |
The Core Spend Under Management Lifecycle
1. Spend Visibility and Classification
The journey toward higher SUM begins with understanding total spend. Procurement analyzes financial and transactional data to classify spend by category, supplier, business unit, and purchasing channel.
This stage reveals which portions of spend are already managed and which operate outside procurement oversight.
2. Policy Definition and Spend Governance
Once visibility is established, procurement defines clear policies outlining which purchases must flow through approved channels, contracts, or suppliers.
Governance frameworks set thresholds, approval requirements, and sourcing rules—creating a structured boundary between managed and unmanaged spend.
3. Channeling Spend Through Procurement
To increase SUM, organizations must actively route spend through procurement-controlled processes. This includes requisitions, sourcing workflows, catalogs, or approved buying paths.
The easier it is for users to follow compliant routes, the more spend naturally moves under management.
4. Contract and Supplier Alignment
Spend under management is closely tied to contract coverage. When purchases are linked to negotiated agreements and preferred suppliers, procurement gains pricing control, compliance assurance, and leverage.
Aligning demand with contract availability is critical to expanding SUM.
5. Automation and Process Integration
Manual processes limit the scale of spend procurement can manage. Automation enables procurement to oversee large volumes of transactions without increasing effort.
By standardizing approvals, validations, and workflows, procurement can manage more spend with fewer resources.
6. Behavior Enablement and Adoption
Spend under management is not only a process challenge—it is a behavioral one. Users must understand where and how to buy compliantly.
Training, communication, and intuitive buying experiences play a key role in encouraging adoption and reducing bypass behavior.
7. Continuous Expansion and Optimization
SUM is not static. Over time, recurring unmanaged spend is identified, consolidated, sourced, or brought under contract.
Procurement continuously expands managed coverage, shrinking unmanaged spend and increasing overall influence.
Core Components of Spend Under Management
Effective SUM relies on several interconnected components:
- Spend Analytics and Classification to identify unmanaged spend
- Procurement Policies defining compliant buying behavior
- Sourcing and Contract Coverage to govern purchases
- Guided Buying and Requisition Controls to route demand
- Supplier Management to enforce preferred vendors
- Automation and Workflow Controls to scale oversight
Together, these components determine how much spend procurement truly manages.
Key Concepts in Spend Under Management
Several principles define successful SUM programs:
- Influence Over Ownership: Procurement need not execute every purchase to manage it
- Coverage Over Perfection: Expanding managed spend matters more than controlling edge cases
- Enablement Over Enforcement: Simplifying compliant buying drives adoption
- Integration Across Lifecycle: SUM depends on sourcing, P2P, and supplier management working together
- Value Realization: Managed spend enables savings, compliance, and risk mitigation
These concepts ensure SUM reflects real control rather than nominal involvement.
KPIs for Spend Under Management
| Dimension | Sample KPIs |
| Coverage | % spend under management |
| Compliance | Off-contract spend %, policy adherence |
| Cost | Savings realized on managed spend |
| Efficiency | Cost per transaction |
| Risk | Spend with unvetted suppliers |
Tracking these metrics links procurement activity directly to business outcomes.
Spend Under Management and Procurement Maturity
Spend Under Management is often used as a benchmark for procurement maturity. Organizations with high SUM typically demonstrate:
- Strong governance and process adoption
- Integrated sourcing and purchasing workflows
- Lower maverick spend and higher compliance
- Greater realized savings and risk control
As SUM increases, procurement transitions from a transactional support function to a strategic business partner.
Key Terms in Spend Under Management
- Unmanaged Spend: Purchases made outside procurement oversight or approved buying channels.
- Off-Contract Spend: Spend that bypasses negotiated supplier agreements.
- Spend Visibility: The ability to track and classify spending across categories, suppliers, and business units.
- Procurement Governance: Policies and controls that define how purchasing decisions are made.
- Contract Coverage: The percentage of spend linked to formal supplier contracts.
- Preferred Suppliers: Vendors approved by procurement for compliant purchasing.
- Guided Buying: User enablement that directs employees to approved purchasing paths.
- Maverick Spend: Non-compliant purchases made outside established procurement processes.
- Procurement Maturity: The level at which procurement effectively influences spend, value, and risk.
FAQs
Q1. What is spend under management?
Spend under management is the share of an organization’s total spend that procurement can see, influence, and optimize through governed processes.
Q2. Why is spend under management important?
Higher spend under management allows procurement to enforce contracts, control costs, reduce risk, and deliver measurable value.
Q3. How can organizations increase spend under management?
By improving spend visibility, simplifying compliant buying, expanding contract coverage, and reducing maverick purchasing.
Q4. What is the difference between spend under management and total spend?
Total spend includes all purchases, while spend under management includes only those governed by procurement policies and controls.
References
Explore Zycus resources to learn more about Spend Under Management:
- Five Ways to take Control of Maverick Spend!
- Working Capital Management: How can procurement help?
- 7 Key Considerations to More Effective Supplier Risk Management
- Westfield’s Success in Supplier Management with Zycus
- Pulse of Procurement & Spend Management – UK
- Procurement Contracts – Real Value, Real Returns
