Spend Under Management (SUM) is the share of an organization's total external spend that is actively managed by procurement through contracts, structured processes, and category strategy. Higher SUM typically correlates with better cost control and value capture.
How SUM is measured
Typically as the ratio of contracted, category-managed spend to total addressable spend, excluding wages, taxes, and other non-managed categories. Benchmarks vary by industry but 70-85% is a common target for mature procurement functions.
The gap to close
The remainder is maverick spend (bought outside contracts) and tail spend (small purchases without formal sourcing). Contract-aware spend analytics is what makes both visible - and helps convert them into managed spend over time.
