Calculating Procurement Savings: Secrets Every Leader Should Know

Procurement isn’t just about buying things cheaper. It’s about making smart, sustainable, and scalable decisions that deliver value across the enterprise. For procurement professionals—especially those responsible for telecom, cloud, and mobility—the challenge isn’t just spending less. It’s proving the savings.

If you’ve ever been asked, “How are we measuring procurement savings?” or “What’s our most cost effective procurement strategy?”—this one’s for you. 

Let’s break down the strategies, formulas, and tactics to make you a procurement savings pro, with less guesswork and more credibility.

Why Calculating Procurement Savings Isn’t Straightforward

Let’s clear the air—calculating procurement savings isn’t always as easy as comparing two price tags.

Sure, you can show a 15% discount on a renewal or a reduced unit cost on a new mobile plan. But what about when you optimize service tiers, renegotiate multi-year contracts, or reduce usage through automation? Those savings don’t always show up in a traditional spreadsheet.

Savings can be real, hard, soft, or even avoided costs. And the methods to quantify each type require clarity, consistency, and—a lot of spreadsheet sanity.

Three Core Categories of Procurement Savings

To build a rock-solid savings story, you need to understand the different types of procurement savings.

Hard Savings

These are the easiest to validate. Think unit cost reductions, price negotiations, and vendor consolidation. If you were paying $100, now you’re paying $80—that’s a hard savings of $20.

Soft Savings

These are indirect but still valuable. Examples include process efficiencies, faster cycle times, or reduced internal labor. Maybe your team saved 10 hours a week by automating invoice audits. That time can be converted into cost equivalents, but it’s trickier to validate.

Avoided Costs

This is where the real nuance begins. Say a provider proposes a 10% price hike, and you negotiate it down to 2%. You didn’t reduce your current cost, but you avoided a future cost increase. Still a win—and it counts.

5 Proven Methods for Calculating Procurement Savings

Let’s talk tools in the toolbox. These are the most common and accepted ways of calculating procurement savings across technology categories:

1. Baseline vs. Actual Spend
   This is the simplest method. You compare what you would’ve spent (based on the previous rate or contract) to what you’re actually spending now.

   Formula:
   (Baseline Spend – Actual Spend) ÷ Baseline Spend × 100 = % Savings

2. Cost Avoidance Metrics
   Document price increases or scope expansions that were avoided through negotiation or optimization. These don’t hit the budget but they would have if you hadn’t intervened.

3. Market Benchmarking
   If you negotiate a rate better than the market average, that differential is your savings. This is especially relevant in mobility and cloud services, where rates fluctuate often.

4. Total Cost of Ownership (TCO) Reduction
   Look beyond unit prices. Factor in lifecycle costs, maintenance, support, and usage trends. A contract with a higher upfront cost but lower downstream expenses can generate significant TCO savings.

5. Process Improvement Savings
   Automating a manual process, like invoice review or dispute management, frees up human capital. These time savings can be translated into FTE cost equivalents or productivity gains.

Measuring Procurement Savings in a Changing Landscape

Here’s the truth: measuring procurement savings is getting harder, not easier.

Telecom bills are sprawling. Mobility programs are decentralized. Cloud costs shift by the hour. Without automated tools, you’re left trying to manually consolidate invoices, map charges to contracts, and identify anomalies.

This is where procurement leaders need more than Excel—they need visibility.

A centralized platform like Veroxos gives you that visibility. With built-in analytics across TEM, MMS, and Cloud Expense Management, it doesn’t just track savings—it makes them repeatable.

Imagine measuring procurement savings not just quarterly, but in real-time. That’s the power of proactive cost governance.

Common Pitfalls to Avoid in Procurement Savings Calculations

Even seasoned procurement pros can fall into traps. Here are a few to dodge:

• Double-counting savings. Don’t count the same avoided cost in multiple quarters.

• Ignoring usage trends. A lower unit rate doesn’t save money if your usage spikes.

• Under-documenting the baseline. Without a clear "before" picture, your "after" is meaningless.

• Forgetting soft savings. Just because it's not on the ledger doesn't mean it’s not real.

Stay sharp, keep receipts, and document everything.

The Role of Technology in Sustaining Procurement Value

This is the part where spreadsheets tap out.

When managing hundreds (or thousands) of mobile lines, cloud licenses, and telecom circuits—manual tools can’t keep up. You need automation and intelligence.

Platforms like Veroxos not only help in calculating procurement savings but also prevent overspending before it happens. Whether it's flagging redundant services, identifying underused assets, or enforcing policy compliance, the right tech stack gives procurement teams an edge.

Final Thoughts: From One-Offs to a Savings Culture

Savings isn’t a single event. It’s a culture.

When procurement leaders move from chasing one-time wins to building scalable, data-driven strategies, they unlock long-term enterprise value. That’s where your influence grows—and where your results speak volumes.

Want to see how your procurement savings could go from static to strategic?

Request a demo of Veroxos today. We’ll show you how our TEM, Managed Mobility Services, and Cloud Expense Management platforms help you automate, validate, and scale savings like a pro.

Let’s make calculating procurement savings more than just a reporting exercise. Let’s make it a competitive advantage.