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Rein In Rogue Purchases With Shadow Spend Detection

Heather Quitos
June 20, 2023
2 min read

We all know them, those sneaky costs that stack up although they're hiding in plain sight: streaming services, news subscriptions, gym memberships. Or, for parents, those app fees that racked up after your kids hit "OK" on the remote.

Businesses deal with these types of problems—but on a massive scale. Subscriptions that once flowed through IT are now left to any employee or department head with an internet browser. It leaves IT in the dark and finance teams on edge.

No matter how solid your purchasing process, it will fail if employees don’t follow it. This phenomenon is known as Shadow Spend and it is costing businesses billions every year. 

How can you stop the leaks before they sink your bottom line?

Shining a light on Shadow Spend 

Tropic's latest feature is here to eradicate Shadow Spend so you can eliminate waste (save money), increase efficiency (save time), and ensure compliance (reduce risks).

The foundation of Tropic’s spend management platform is built around your company’s suppliers, contracts, and employees. When a purchase goes through our approval workflows, a supplier is created and contracts are attached to the supplier. I.e. you can have multiple contracts and subscriptions with any given supplier. 

Shadow Spend detection is powered by our SSO and accounting integrations that map usage and transactions back to every supplier. This creates a central source of truth—with one place to view and compare expected spend, actual spend, usage, and much more.

Our latest features monitor the data to identify when an undocumented or unapproved purchase or usage is detected.

shadow spend

With visibility into the shadows, your team can take action:

  • Determine your long-term strategy with the supplier, and decide whether you will continue to use the tool or remove it from the tech stack
  • Create a supplier and upload a contract directly to Tropic so you can track spend and usage going forward
  • Perform legal and compliance reviews for tools that didn’t go through the proper processes from the start
  • Identify opportunities to consolidate tools or negotiate contracts on your own or with our expert Assisted Purchasing team 
  • Receive notifications about upcoming renewals so you aren’t caught off guard again
Shadow IT

Steer clear of the downstream impacts

Shadow Spend and Shadow IT is an epidemic that plagues almost every business, and the problems run deeper than inefficient spend:

  • Wasted time: Adds hidden costs to organizations, not just in additional software that may not be needed, but by staff trying to track down and sort out various unauthorized spend sources and compliance protocols 
  • Wasted investments: Rogue purchases prevent a company from maximizing ROI from investments in systems already in place 
  • Inefficiencies: Derails innovation by blocking the establishment of more efficient work processes  
  • Organizational dysfunction: Creates a dysfunctional environment leading to animosity between IT and non-IT-related groups within an organization 
  • Compliance issues: Increases the likelihood of uncontrolled data flows, making it more difficult to comply with various legal requirements

Ready to get out of the shadows?

Unaccounted spend is often a result of a broken procurement process. Using Tropic to manage your entire purchasing process makes procurement proactive, not reactive. And for anything that slips through the cracks, Shadow Spend Detection will help you quickly correct your course. 

As economic environments continue to fluctuate, what remains constant is tech spending: 73% of CFOs anticipate an overall increase in IT/tech spending over the next 12 months. That’s why staying on top of spend is important. 

If you’re an existing customer, you can reach out to your Customer Success Manager about taking advantage of Shadow Spend Detection. 

Just learning about Tropic? Schedule a demo to see what Procurement Paradise is all about. 

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Heather Quitos
Heather Quitos is the Customer Marketing Manager at Tropic.

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We all know them, those sneaky costs that stack up although they're hiding in plain sight: streaming services, news subscriptions, gym memberships. Or, for parents, those app fees that racked up after your kids hit "OK" on the remote.

Businesses deal with these types of problems—but on a massive scale. Subscriptions that once flowed through IT are now left to any employee or department head with an internet browser. It leaves IT in the dark and finance teams on edge.

No matter how solid your purchasing process, it will fail if employees don’t follow it. This phenomenon is known as Shadow Spend and it is costing businesses billions every year. 

How can you stop the leaks before they sink your bottom line?

Shining a light on Shadow Spend 

Tropic's latest feature is here to eradicate Shadow Spend so you can eliminate waste (save money), increase efficiency (save time), and ensure compliance (reduce risks).

The foundation of Tropic’s spend management platform is built around your company’s suppliers, contracts, and employees. When a purchase goes through our approval workflows, a supplier is created and contracts are attached to the supplier. I.e. you can have multiple contracts and subscriptions with any given supplier. 

Shadow Spend detection is powered by our SSO and accounting integrations that map usage and transactions back to every supplier. This creates a central source of truth—with one place to view and compare expected spend, actual spend, usage, and much more.

Our latest features monitor the data to identify when an undocumented or unapproved purchase or usage is detected.

shadow spend

With visibility into the shadows, your team can take action:

  • Determine your long-term strategy with the supplier, and decide whether you will continue to use the tool or remove it from the tech stack
  • Create a supplier and upload a contract directly to Tropic so you can track spend and usage going forward
  • Perform legal and compliance reviews for tools that didn’t go through the proper processes from the start
  • Identify opportunities to consolidate tools or negotiate contracts on your own or with our expert Assisted Purchasing team 
  • Receive notifications about upcoming renewals so you aren’t caught off guard again
Shadow IT

Steer clear of the downstream impacts

Shadow Spend and Shadow IT is an epidemic that plagues almost every business, and the problems run deeper than inefficient spend:

  • Wasted time: Adds hidden costs to organizations, not just in additional software that may not be needed, but by staff trying to track down and sort out various unauthorized spend sources and compliance protocols 
  • Wasted investments: Rogue purchases prevent a company from maximizing ROI from investments in systems already in place 
  • Inefficiencies: Derails innovation by blocking the establishment of more efficient work processes  
  • Organizational dysfunction: Creates a dysfunctional environment leading to animosity between IT and non-IT-related groups within an organization 
  • Compliance issues: Increases the likelihood of uncontrolled data flows, making it more difficult to comply with various legal requirements

Ready to get out of the shadows?

Unaccounted spend is often a result of a broken procurement process. Using Tropic to manage your entire purchasing process makes procurement proactive, not reactive. And for anything that slips through the cracks, Shadow Spend Detection will help you quickly correct your course. 

As economic environments continue to fluctuate, what remains constant is tech spending: 73% of CFOs anticipate an overall increase in IT/tech spending over the next 12 months. That’s why staying on top of spend is important. 

If you’re an existing customer, you can reach out to your Customer Success Manager about taking advantage of Shadow Spend Detection. 

Just learning about Tropic? Schedule a demo to see what Procurement Paradise is all about. 

Share this post
Heather Quitos
Heather Quitos is the Customer Marketing Manager at Tropic.
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