Data is only data until it's analyzed and acted upon—then it becomes information. And the procurement function is learning this lesson in increments—as more companies begin collecting data, they realize that the biggest resource they require next is the knowledge and brainpower to analyze that data and turn it into actionable information.

Of course, first you need to know how to collect and analyze data. According to a recent Purchasing survey, 91% of buyers say the profession is more reliant on data analysis skills than it was a mere five years ago. Despite that clear indication, only two-thirds of buyers polled say they have taken steps to improve their data analysis skills to meet today's requirements.

Sharon Flanagan, a procurement professional at Washington-based Pepco Holdings, took an internal training class called "strategic cost management" that introduced her to the greater value that advanced data analysis skills can bring.

"Strengthening your data analysis skills will benefit your company as well as your suppliers because you will be better able to assist your internal clients in planning spend strategies and also better understand your supplier's cost proposals," she says.

Todd Kratzer, a supply manager at Alstom Power in Windsor, Conn., says there are basically four levels of knowledge when it comes to data analysis and database skills. "First would be no skills. Next, they can run some simple reports. Third, they can program and run most existing reports. And at the top are the people who can create and run these reports all the time." Kratzer puts himself in the third category and has recently been trained on the Brio database reporting program, but "on an informal basis."

The line between data analysis skills and advanced knowledge of technology to help analyze data has blurred. Many buyers said the most important training they've received has been on database and spreadsheet tools like Microsoft Access and Excel. Many companies offer training internally or will pay for external training.

Jon Martin, a purchasing manager at Celerity in Milpitas, Calif., says buyers need to learn how to manipulate data out of large databases because, "Most canned reports do not give you the information that is needed in the daily purchasing, or planning activities. The data is in the systems but you need to be able to access the data and use commonplace tools to get what you need out of the data."

Eddie Cedano, a senior sourcing specialist for the Walt Disney Co. based in Burbank, Calif., says his company funds live classroom instructions on intermediate and advanced Excel and Access training. Cedano has learned to write formulas and developed pricing synopses on his own.

He says setting up templates for much-used data analysis projects has been very effective. "By creating standard templates, I have demonstrated a consistency in how the data is analyzed and presented. The time saved in not creating a spreadsheet or analysis for each project can be spent in other areas of my responsibilities."

The Purchasing survey also found that almost half (48%) of buyers polled said data analysis skills are a pre-requisite for hire into their procurement organization.

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But while most respondents focused on the tools of the trade like Excel and Access, Don Moak, director of purchasing at Chattem in Chattanooga, Tenn. reminds buyers not to neglect the skill sets that are required to analyze what's being done by those tools.

"Buyers must be able to select the important data from the large amount we are exposed to daily, rather than expect someone to hand us a list of numbers to stick into a spreadsheet," Moak tells Purchasing. "And once the data analysis is complete, we must understand what the output means and how to employ it in a real world application. Thinking is still the most critical skill we bring to the party."

Kim Clark is in the purchasing organization at Iowa-based wheel and tire maker Thombert. Clark acknowledges the value of data analysis tools. She feels that, "Occasionally there is too much emphasis put on charting, graphing and spreadsheet of data rather than on common-sense thinking in business today."

Clark emphasizes that businesses sometimes neglect to value people who are organized, detailed and are able to think through problems with structure and common sense. "These are the people that will in the end really fix a problem or an organizational system."

Chris Paul at Canadian firm Alu'die took some courses in quality assurance and statistics at a local college, which taught him the value of process analysis. "And that is basically what purchasing is—a process."

Paul says learning how to extract spend data and put it into graphs in Excel lets buyers then apply that knowledge to their spend areas. "They can look for trends, sort highest to lowest and try to make improvements in spend habits," he says. "Statistics courses give a good insight to analyzing this type of information as well."

Moak points out that experience with a given commodity is a big plus and is the necessary complement to data analysis skills. With experience, buyers develop an instinct for outliers among the data points, Moak says, and without the experience the data doesn't mean as much.

"If you generally deal with single digit dollars per item and you get an answer of $15/unit, that should jump out as something worth revisiting," he says. "In short, keep exercising your mind and you'll be surprised how much more effectively you use the other tools available."