Spend under management is the share of total third party spend that procurement actively governs through contracts, preferred suppliers and a defined channel.
Spend under management, often shortened to SUM, is the proportion of a company's external spend that the procurement function actually influences: it sits under a negotiated contract, goes to a supplier that was deliberately selected, and flows through an agreed buying process. It is expressed as a percentage of addressable spend, meaning total third party spend minus categories procurement cannot realistically govern, typically taxes, payroll, intercompany charges and often rent. Definitions vary between companies, which is why the number is only meaningful against its own definition.
The metric exists because savings can only be negotiated on spend you can see and control. Spend outside the perimeter is bought at whatever price the requester found, contributes nothing to volume commitments, and cannot be included in a tender because nobody knows it exists until the invoice arrives. It also determines where procurement should spend its own limited time: a category with high value and low coverage is where a buyer's week produces a return, while pushing coverage from 88 to 92 percent in an already governed category rarely does.
Business Central holds the raw data but does not compute this metric out of the box. Vendor ledger entries give you what was actually paid to each vendor, dimensions attribute spend to cost centres and projects, item categories and vendor posting groups allow grouping, and financial reports or an export to Power BI produce the arithmetic. The classification itself is the work, and BC has no standard field marking a vendor as contracted or a category as addressable. Teams usually add a dimension or a custom field on the vendor card to carry that flag, then build the report on top. Expect the first version of the number to be wrong until the exclusions are agreed in writing.
A company with CHF 12,400,000 of total third party spend removes CHF 3,100,000 of payroll, taxes and intercompany charges, leaving CHF 9,300,000 addressable. Of that, CHF 6,000,000 goes to 42 vendors under a current contract and through purchase orders. Spend under management is 6,000,000 divided by 9,300,000, or 65 percent. The remaining CHF 3,300,000 is spread across 380 vendors, which is where the next contract negotiations and vendor consolidation will come from.
The most common distortion is counting spend as managed simply because a purchase order exists. A purchase order proves the transaction was recorded, not that the price was negotiated or the supplier was chosen on purpose. The other frequent errors are moving the exclusion boundary between periods so the trend flatters itself, and double counting intercompany flows. A stable definition written down once, applied to the same denominator every quarter, is worth more than a sophisticated one that changes.
Total third party spend minus the categories procurement cannot influence, usually payroll, taxes, statutory charges and intercompany transfers. Rent, insurance and utilities sit on the boundary and each company decides explicitly whether to include them.
Not on its own. It measures coverage, not outcome, and can be inflated by a loose definition. It is useful as a trend against a fixed definition and as a map of where uncontrolled spend still sits.
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