In spend analysis, skills to do with data analysis are extremely important. However, experts in related fields question the use of a software application to automatically generate the required data. In most cases, automated application does not necessarily give the accurate data as some processes require practical skills needed in the respective field. In everyday life, individuals come across a lot of information and data that is less likely important in decision making. This implies that an individual must possess data analysis skills to identify the information that is required and the less vital. In decision making, some major characteristics of vital information are; consistency, having a pattern and without errors.

“Spend analysis is referred to as the systematic review of historical purchase data” (Pandit & Marmanis, 2008). One of the major reasons why spend analysis is carried out is to be able to identify savings opportunities. Despite the fact that there are several indicators used to identify such opportunities, an automated software application would be incapable of successfully identifying such opportunities depending on the order of accuracy and precision.

Some of the key indicators in spending analysis require analytical skills such as in price and applying best practice in various processes in an organization or household setting. If there is a consistent increment of prices of goods and services with time, it would be prudent for an individual or an organization to pay more attention to the purchases in specific categories and ensure that the factors leading to the rise in prices is well addressed. Such a process would require data analysis skills with specific attention to identifying a pattern of price increase.

The application of best practice has over the years not been fully adopted by businesses. This is because, this technique is considered as simplified and less likely to come up with a saving opportunity. However, there is always the likelihood that an organization or an individual is overpaying for goods and services. Best practice requires data analysis skills which are applied to areas that provide the best cost saving strategy. Other indicators in spending analysis, such as the purchase price variance (PPV) can use software application to identify patterns or any irregularities from the data collected.