What Is Spend Under Management?

Quick Answer: Spend under management is the percentage of a company's total external spend that procurement actively oversees, from the initial request through sourcing, contracting, and payment. You calculate it by dividing managed spend by total spend. A higher percentage means fewer surprise renewals, better negotiated rates, and more accurate budget forecasts.

Spend under management is the share of a company's total third-party spend that flows through procurement's processes rather than around them. If your company spends £50m a year with suppliers and procurement is involved in £30m of it, your spend under management is 60%. The remaining £20m is spend that someone bought without a competitive process, a contract review, or a negotiation, which usually means the company paid more than it needed to — this is often known as maverick spend.

The metric matters because procurement can only impact the spend it can see. A marketing manager who signs a £40k services contract has created spend, a supplier relationship, and a renewal date that procurement knows nothing about until the first invoice arrives.

How do you calculate spend under management?

The formula is straightforward:

Spend under management = (managed spend ÷ total addressable spend) × 100

The difficult part is agreeing on the definitions. Two questions decide the outcome:

• What counts as total addressable spend? Most teams include all external supplier spend and exclude things procurement cannot influence, such as payroll, taxes, and intercompany transfers. Some also exclude regulated categories like legal settlements.
• What counts as managed? This is where organisations diverge, and where some organisations game the metric. A generous definition counts any spend with a purchase order attached. A strict definition only counts spend where procurement influenced the decision before the contract was signed.

The strict definition is the honest one. Retroactively raising a purchase order for a contract someone already signed does not make that spend managed. Procurement had no chance to negotiate the price, check the supplier's security posture, or consolidate it with an existing vendor. Counting it inflates the number without improving anything.

Why does spend under management matter?

Managed spend costs less than unmanaged spend, for a specific reason: someone negotiated it. When procurement runs a competitive process or benchmarks a renewal against market rates, prices drop. When an employee buys directly from a vendor's list price, they don't. The Hackett Group's procurement benchmarks consistently show that top-performing organisations manage over 90% of addressable spend, while typical organisations sit closer to 60-70%.

Beyond price, three practical benefits follow from a higher percentage:

• Fewer missed renewals. Managed contracts sit in a system with renewal dates and owners. Unmanaged contracts auto-renew quietly, often at a price increase, because nobody knew the deadline existed.
• Lower supplier risk. Managed spend goes through vendor due diligence, so security, compliance, and financial checks happen before data or money changes hands. Unmanaged spend skips all of it. Nobody knows whether that £40k services contract from marketing processes customer data..
• Accurate forecasting. Finance can only forecast spend it knows about. When 40% of spend bypasses procurement, finance builds budget forecasts on incomplete data, and the gaps show up as unpleasant surprises at quarter end.

What is a good spend under management percentage?

Above 80% is strong for most companies. Above 90% puts you in the top tier of procurement organisations. Below 60% means the company spends a large share of its money without negotiation, risk checks, or visibility.

Context matters, though. A 500-person software company with heavy SaaS spend faces a different challenge than a manufacturer with a stable supplier base. SaaS is easy to buy without procurement, since any manager with a company card can sign up for a tool in five minutes. That makes high spend under management harder to achieve in software-heavy businesses, and more valuable when you get there.

How to increase spend under management

Companies with low spend under management usually share the same root cause: the official buying process is slower and more painful than going around it. If raising a purchase request takes two weeks of chasing approvals over email, employees will keep signing contracts directly and apologising later.

The fix is to make the sanctioned route the easiest route:

1. Put intake somewhere people already work. If employees can raise a purchase request from Slack or Teams in two minutes, they will. If they have to find an intranet page, log in, remember cost center details, and spend an hour filling out forms, they won't.
2. Route approvals automatically. Send each request to the right approvers based on amount, category, and risk, in parallel where possible, so a £5k renewal doesn't wait behind the same five sign-offs as a £500k contract.
3. Find the spend that already escaped. Card transactions and accounts payable data reveal suppliers that never went through procurement. Each one is a contract to bring under management at its next renewal.
4. Track renewals centrally. Every contract that auto-renews unmanaged stays unmanaged for another year. A renewal calendar with owners and lead times turns each renewal date into a chance to negotiate.

This is the problem Omnea exists to solve. When intake, approvals, and renewals run through one system that employees actually use, spend under management rises because the compliant path stops being the slow path.

The most useful way to treat this metric is as a measure of process design rather than policy enforcement. Companies rarely raise spend under management by writing sterner purchasing policies. They raise it by making the official route faster than the workaround, at which point the percentage climbs on its own.