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Is your organization losing a significant portion of its SaaS budget without realizing it? The lack of a proper tail spend management solution could be the reason.
Tail spend refers to small, low-value purchases made across a wide range of suppliers. While each transaction might seem minor, together they can add up to a large and often overlooked part of your budget.
The good news? You don’t have to let this hidden spending go unchecked. With the right tail spend management solutions, you can gain visibility, control, and automation, unlocking cost-saving opportunities and making your procurement process more efficient.
Let’s discover what tail spend management is, why it matters, and explore 7 top tail spend management solutions to help you manage it effectively.
TL;DR
- Tail spend consists of low-value, decentralized purchases that account for ~80% of transactions but often go unmanaged, resulting in hidden costs, inefficiencies, and compliance risks.
- Tail spend management tools centralize, automate, and bring visibility to small purchases, cutting waste, improving compliance, and optimizing vendor relationships.
- Key features of these tools include AI-based spend categorization, smart dashboards, contract management, and real-time analytics to spot duplication and savings opportunities.
- With AI-powered classification, Slack integration, and outsourced procurement support, CloudEagle.ai is ideal for organizations drowning in SaaS tail spend.
- From broad procurement tools like Coupa and Zycus to SaaS-focused platforms like Zluri and corporate spend tools like Brex and Spendesk, there’s a fit for every tail spend challenge.
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.
Tail spend often makes up 80% of purchase transactions but only 20% of total spend. However, when unmanaged, it can raise procurement costs by up to 15% due to inefficiencies, maverick buying, and missed discounts.
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 tools enhance the visibility and control of these purchases, ultimately saving money and streamlining procurement processes.
What is The Difference Between Tail Spend And Maverick Spend?
While both tail spend and maverick spend can create challenges for organizations, they are not the same:
How Can You Reduce Tail Spend?
Enterprises can reduce their tail spend and its negative impact by taking these steps:
- Centralized Procurement: Encourage all departments to use approved suppliers and follow set processes.
- Implement Spend Management Tools: Use software to track, analyze, and consolidate purchases for better visibility and control.
- Set Clear Policies: Make sure everyone understands the rules for making purchases, including preferred suppliers and approval workflows.
- Automate Approvals: Use automated systems to flag or block unnecessary or duplicate purchases before they happen.
- Regularly Review Spend Data: Analyze purchase data to find trends, combine similar orders, and negotiate better deals with suppliers.
- Educate Employees: Train staff on the importance of following procurement processes and how it helps the company save money and reduce risk.
By focusing on these strategies, companies can cut down on waste, uncover hidden savings, and ensure that even small purchases are well managed.
“Tail spend is often the blind spot in procurement, but with the right tools, it becomes a strategic opportunity for cost savings and risk mitigation.” — John Kindervag, Chief Evangelist at Illumio
What is Tail Spend Management Software?
Tail spend management software is a specialized tool that helps organizations gain control over their tail spend—the portion of procurement that includes small, low-value, and often unmanaged purchases. These purchases, while individually minor, collectively add up to a significant portion of the company's spend and frequently go unnoticed by traditional procurement systems.
In many organizations, tail spend includes things like office supplies, one-off services, last-minute purchases, or items sourced outside of preferred supplier agreements. These purchases are typically made across various departments without proper oversight, leading to inefficiencies, hidden costs, and compliance risks.
Tail spend management solutions address these challenges by bringing structure, automation, and intelligence to an otherwise disorganized area of spend.
“Automating tail spend management with AI not only cuts costs but also enhances compliance and vendor relationships, turning a traditionally neglected area into a competitive advantage.” — Emily Chen, Procurement Analyst at McKinsey
Key Capabilities of Tail Spend Management Solutions
Tail spend management solutions bring visibility, control, and efficiency to unmanaged, low-value purchases. Below are the key capabilities that make these systems effective in optimizing tail spend.
Improved Spend Visibility: Tail spend management solutions uncover small, unmanaged purchases. This helps you spot patterns, cut waste, and make smarter decisions.
Stronger Procurement Control: With centralized control, it’s easier to enforce policies. This reduces off-contract spending and keeps purchases aligned with budgets.
Enhanced Operational Efficiency: Automation reduces manual work and repetitive tasks. Teams save time and can focus on more strategic sourcing.
Significant Cost Savings: Small purchases add up fast. Tail spend management tools helps consolidate buying and reduce duplicate or wasteful spending.
Strategic Vendor Management: You can spot underused suppliers and cut down vendor count. This improves deals and simplifies procurement.
Increased Procurement Automation: Automation reduces paperwork and manual approvals. It speeds up buying and ensures compliance with rules.
Better Internal Compliance: Tail spend management solutions ensure all purchases follow company policies. This helps with audits and avoids compliance issues.
Streamlined Departmental Purchasing: With pre-approved catalogs and guided buying, teams purchase faster. This avoids delays and frees up procurement.
Why Do Companies Use Tail Spend Management Tools?
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: Small purchases may seem harmless, but they often come with hidden costs like duplicate orders, slow approvals, or manual errors. Tail spend management tools address these issues so they can be fixed, reducing waste and improving efficiency.
Missed Savings Opportunities: Without a clear view of tail spend, your business might miss chances to combine orders, negotiate better deals, or use fewer suppliers. Tail spend tools give you insights to spot and act on these saving opportunities.
Compliance Risks: Uncontrolled spending can lead to policy violations, unapproved vendors, or even fraud. Tail spend management helps enforce rules, automate approvals, and improve software procurement practices, mitigating these risks.
Procurement Bottlenecks: Managing many small purchases manually can slow down procurement teams. Tail spend solutions automate tasks, allow easy self-service for departments, and streamline supplier onboarding—freeing up time for strategic work.
Improve Vendor Visibility and Consolidation: Tail spend management software reveals all the vendors you're using, many of which may be unnecessary. With this visibility, you can consolidate vendors, build better relationships, and reduce complexity in your supply base.
7 Best Tail Spend Management Solutions
1. CloudEagle
CloudEagle.ai 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.ai 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.
Features of CloudEagle.ai
AI-Powered Spend Classification & Vendor Insights
CloudEagle.ai uses AI to automatically organize and classify your tail spend transactions, giving you a clear view of where your money goes. This tail spend automation helps you control costs and make smarter decisions with the help of advanced tail spend solutions.
It also analyzes vendor data to spot duplicate purchases across departments. As a leading tail spend management provider, CloudEagle.ai makes it easy to consolidate vendors and negotiate better deals.
For example, RingCentral used CloudEagle.ai’s tail spend management services to manage their tail spend apps, avoid missed renewals, and cut rising costs.
Real-Time Spend Visibility & Smart Analytics
CloudEagle.ai gives you real-time visibility into all tail spend activity with a single dashboard, making it easy to track small, frequent purchases. With smart analytics, you can filter by department, vendor, or category to spot inefficiencies—key features of modern tail spend solutions.
The system flags duplicate tools bought by different teams, helping you consolidate vendors and control costs. These tail spend management services ensure you catch rising spend trends early for better budget management.
Discover Armory's inspiring success story of how they used CloudEagle.ai to analyze usage data, optimize licenses, and secure vendor discounts to cut costs and boost savings.
Supplier Risk Management & Performance Monitoring
Vendor relationships can make or break your procurement strategy. CloudEagle.ai goes beyond spend tracking by offering tools to monitor supplier risk and performance. It evaluates vendors on key metrics like delivery times, service quality, contract compliance, and pricing consistency.
If a vendor consistently underperforms or poses a compliance risk, CloudEagle.ai’s tail spend management services give you the data to quickly renegotiate or replace them. This keeps your vendor ecosystem strong and your tail spend solutions effective.
AI-Powered Vendor Research
Finding the right vendor isn’t always easy, especially when time is limited. CloudEagle.ai uses AI to scan your needs and suggest alternative vendors that offer similar products or services. It compares pricing, contract terms, and service levels to help you make the most cost-effective choice without hours of manual research.
Centralized Procurement with Automated Workflows
CloudEagle.ai brings all purchases, even small ones, into a single, automated process—no more ad hoc or inconsistent tail spend. This tail spend automation ensures every request follows efficient, compliant workflows, making it a trusted tail spend management provider.
Approvals and validations happen automatically behind the scenes, so employees get what they need quickly while policies are enforced. Teams stay independent, but all purchases flow through unified tail spend management services, improving transparency and collaboration while reducing friction.
Contract Lifecycle Management & Renewal Alerts
Managing vendor contracts can be overwhelming, especially when each department has its agreements. CloudEagle.ai centralizes contract storage and tracks key dates, ensuring that nothing slips through the cracks.
You’ll receive automatic alerts well before a contract is set to expire, giving you time to review, renegotiate, or cancel if needed. This proactive approach prevents missed renewals and surprise charges.
It also helps you stay on top of contractual obligations and service level agreements (SLAs). With a clear view of all active and upcoming contracts, your procurement team can operate more strategically and avoid last-minute decisions that could cost you.
Slack Integration for Easy Procurement
CloudEagle.ai integrates directly with Slack, allowing your teams to manage procurement tasks without switching platforms. Users can request approvals, get contract status updates, and interact with procurement workflows—all from within Slack. This reduces communication gaps and makes it easy for everyone to stay aligned.
Outsourced Procurement Support
If you don’t have a large internal procurement team, CloudEagle.ai offers on-demand access to experienced procurement professionals who can support vendor negotiations, sourcing strategies, and contract evaluations. It’s like having an extension of your team, without the added headcount.
Real-Time Price Benchmarking
With CloudEagle.ai’s real-time price benchmarking, you’ll always know whether you're getting a competitive deal. The platform aggregates pricing data across vendors and industries, giving you the insights needed to negotiate better terms and avoid overpaying for goods or services.
Self-Service App Catalog
CloudEagle.ai provides employees with a curated catalog of pre-approved tools, apps, and vendors. This self-service option allows departments to purchase what they need quickly while staying within the boundaries of procurement policies.
It reduces reliance on the procurement team for everyday purchases, speeding up internal workflows while maintaining control and compliance. Employees get the flexibility they want, and procurement teams get the oversight they need—a win-win for the entire organization.
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.ai, 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.
2. Coupa
Coupa is a leading cloud-based Business Spend Management (BSM) platform recognized among top tail-spend management companies. The single platform acts as robust tail spend software by consolidating and categorizing all your spending data, including tail end spend transactions.
As a powerful tail end spend solution, Coupa automates workflows for low-dollar purchases that are common in tail spend. Features like self-service portals for employees to request pre-approved items and automated approvals for recurring purchases are part of its tail end spend management software capabilities.
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
Procurify is a cloud-based procure-to-pay (P2P) platform that serves as an effective tail spend solution. 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
Zycus, a recognized leader in procurement software, delivers a robust suite of tools for SaaS buyers within its Source-to-Pay (S2P) platform. As one of the top tail spend management providers and tail-spend management companies, Zycus leverages artificial intelligence (AI) to drive tail spend automation.
This automates data extraction and categorization for tail spend transactions, eliminating manual effort and ensuring accurate spend classification. With these capabilities, organizations can better understand tail spend patterns and uncover potential savings opportunities.
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
While Zluri isn't exclusively a tail spend management solution, it can help your organization address a significant portion of tail spend comprised of SaaS subscriptions. As one of the flexible tail spend management services on the market, Zluri is especially effective for managing the often-overlooked SaaS expenses that fall into the tail spend category.
Zluri excels at identifying and mapping all SaaS applications used within your organization, even those procured outside formal IT channels. This makes it a valuable tool among tail spend management providers and supports organizations looking for advanced tail spend software.
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 software
Pricing
You need to schedule a customized discovery session with one of Zluri’s experts.
6. Brex
Brex, known for its corporate credit cards and cash management solutions, also offers features found in leading tail spend management tools and is recognized among innovative tail spend management providers. These features make Brex a strong choice for startups and high-growth businesses seeking effective tail spend solutions.
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
Spendesk is one of the most popular tail spend management solutions and is widely recognized among leading tail end spend management services. Spendesk offers virtual card creation and management specifically for tail spend purchases, making it a go-to choice for organizations seeking efficient control over small, frequent expenses.
Spendesk also brings powerful tail spend automation to the procurement process by automating manual tasks such as purchase requests, approvals, and invoice processing.
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 is 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.
Considerations When Choosing A Tail Spend Management System
When selecting a tail spend management system, it’s important to evaluate several factors to ensure the solution fits your organization’s needs and delivers real value.
Spend Visibility: Ensure the system provides clear, real-time insights into all small purchases across departments.
Automation Capabilities: Look for tools that automate purchase orders, approvals, and invoice processing to save time and reduce errors.
“Centralized procurement and automated tail spend management reduce maverick buying and improve compliance, saving millions annually while freeing procurement teams to focus on strategic sourcing.” — Michael Lee, Supply Chain Consultant
Supplier Consolidation: The system should help identify duplicate vendors and opportunities to consolidate for better pricing.
Compliance Enforcement: It must enforce company purchasing policies to reduce rogue spending and support audits.
User-Friendly Interface: Easy adoption by employees is crucial—look for simple, guided buying experiences.
Integration: Check if it integrates smoothly with your existing ERP, accounting, and procurement tools.
Scalability: The system should grow with your business and handle increasing transaction volumes.
Vendor Risk Management: Features that monitor vendor performance and risks help maintain quality and reliability.
Contract Management: Automated tracking of contract renewals and alerts ensures no missed deadlines or surprises.
Cost Savings: Focus on how the system can identify waste, reduce duplicate purchases, and negotiate better deals.
Reporting & Analytics: Robust analytics and customizable reports help track progress and inform strategic decisions.
Support & Training: Consider the availability of vendor support and training to help your team succeed with the system.
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.
Conclusion - Choosing the Right Tail Spend Management Providers
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 spend management solutions 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.
Schedule a demo with CloudEagle.ai to streamline SaaS procurement and reduce tail spend.
FAQs
1. What is an example of a tail spend?
Tail spend is small, often overlooked purchases that make up a tiny part of your total spending. For example, buying office supplies, one-off software licenses, or ad-hoc services from lesser-known vendors.
2. What is an example of tail spend management?
Tail spend management is the process of tracking and controlling these small purchases. For example, using a spend management tool to find and combine similar small orders, or setting rules to avoid buying from unapproved vendors.
3. What is a spend management tool?
A spend management tool is software that helps businesses track, control, and optimize all their spending. It shows where money is going, helps set budgets, and finds ways to save costs.
4. What is a tail spend management company?
A tail spend management company offers services or software to help other businesses manage their expenses better. They provide tools, advice, and support to control costs and improve purchasing decisions.
5. What are tail vendors?
Tail vendors are suppliers that a company buys from only occasionally or in small amounts. They are usually not the main or preferred vendors and make up the “tail” of the company’s total spending.
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