Spend Management Tips From Procurement Expert Tom Mills

When you boil down everything a procurement team is in charge of, it comes down to one important role: Spend management.

Procurement teams have to weigh each new purchase—but they also can’t ignore sneaky ways that costs add up. WorldCC research reveals that organizations lose an average of 11% of contract value, which comes from multiple failure points throughout the contract lifecycle, such as:

• Unmanaged obligations from the gaps between procurement and other internal stakeholders after a contract is signed
• Inflexible contract and structure design that leaves you on the hook for more spend than you planned (hello, autorenewals.)
• Systems that don’t give you enough data into the entire process, leaving procurement teams scrambling to figure out their overall spend

We sat down with Tom Mills from Procure Bites to talk about his spend management strategy, why automatic renewals keep him up at night, and how to set your procurement team up for success with the right commercial philosophy.

Visibility is the #1 difference between success and failure

Tom Mills’ philosophy on spend management comes down to visibility. “You need to know what you’re spending on, but also what’s coming up,” he says. “Where I think most leverage is lost is that most businesses start looking at a contract renewal or their spend when there’s not enough time to actually be able to move without risk or impact on the business. They’ll think 90 days is enough, but that’s actually a really tight timeline to run an effective benchmarking study, choose an alternative solution, and plan your negotiations.”

Procurement teams are often stuck doing more with less. But if you get too focused on what’s coming up this week or next month, you’ll get surprised. (And not in a good way.)

The average contracting process in procurement, according to our research, takes 23 days to execute. But that clock starts after all the internal work is done.

Tom recalls negotiating with SAP around the Concur Expense tool in the next year.

Tom could only tell that story because of the visibility he had into their existing renewal dates and contracts.

Think holistically about the Total Cost of Ownership (TCO)

When you’re negotiating a new or renewed contract, your calculations about spend management must include the total cost of ownership (TCO), not just the short-term spend. “The spend line doesn’t always tell the full story,” advises Tom. “We have to take into account the workload that goes into switching to a new tool, what needs to be done in-house, and the ongoing costs associated with that.”

Otherwise, you’re not accurately capturing the total spend of the organization, making it impossible to track your spend, including:

• Maintenance costs or storage fees
• Training and/or downtime for a new service or tool
• Additional risk your business might be taking on
• The administrative workload to manage an account/vendor

This goes for your existing contracts, but also the cost of changing from one to another—in additional fees, cancellation fees, training downtime, or start-up costs. Tom recalls a time where they needed to change their financial services platform. “One looked much cheaper on paper, but what we didn’t account for was that the client onboarding tool within that new service wasn’t sufficient, so we needed to build out a bigger team to deploy that system and make it actually work,” he says. “The point is, if you just looked at the cost line, it would have been a win. Instead, we missed the bigger picture of the overall impact to the business.”

Root your forecasting numbers in reality

Focusing too much on spend can take your business decisions out of reality, warns Tom. From a spend management point of view, you can create a great picture of better profit margins or cost-savings. But that may be overly optimistic if it’s not grounded in consumer or stakeholder behavior.

In one of Tom’s first buying roles, he brushed off losing a major supplier because of false assumptions. “I was in charge of the sodas and drinks case for a convenience store chain,” he explains, “and I figured that if we lost Red Bull, for example, we could just bring in a competitor with better profit margins, like Monster Energy. I didn’t factor in the reality that the people that want to drink Red Bull aren’t going to switch. They’re going to go elsewhere to get their drinks.”

Instead of making one forecast, Tom recommends scenario planning with your spend management as much as possible.

To do this well requires a great procurement analyst on your team. Says Tom, “You need to be on top of your data on a much more granular level, not just on the spend but, in a software example, usage, number of licenses we have and what are being used, down to what parts of the license you use the most. That sounds like a lot of work, but that’s what it takes to make sure you’re getting the most out of your line items.”

Watch out for auto-renewals

Auto-renewals are one of the clauses that keeps Tom up at night, literally. “I have woken up in the middle of the night, logged on to my laptop, and double checked an upcoming renewal date in a panic,” he laughs. “I recognize that this is unhealthy, but once you make a mistake around auto-renewals, you never forget it.”

Most subscription and services contracts come with an auto-renewal built in, making this an important clause to negotiate up front. It may seem like a great thing—set it and forget it—but that’s the kind of mentality that costs the business. Says Tom, “Where they get you is that the first year might be one rate to hook you in, but if you read the fine print, the cost goes up in subsequent years. The supplier is banking on spend inertia, and it’s where spend management can go sideways.”

To protect your organization against auto-renewals starts with visibility, as we discussed above. But it also comes back to confidence to push back against what’s viewed as standard. “The only reason I’d accept an auto-renewal is if I felt it would benefit us as an organization, and even then, I would make sure it would guarantee pricing at the current level, and that it’s not tied to any kind of increase,” he says. 

If they really won’t budge, Tom will sign the contract, and the next day send the termination, even if that’s due in three years or more. (It’s the same idea as when you sign up for a 30 day free trial and cancel it the next day to keep yourself from accidentally purchasing the service.) That way, you’ll be able to re-negotiate before getting dinged by an auto-renewal.

The point is: Procurement should be active for successful spend management.

Relationships matter the most

Spend management may seem like a numbers game, but for Tom, it’s really about the people making those decisions. “You need a good relationship with your stakeholders because once you start understanding what lies within the spend, that’s where you start to understand the opportunities,” he says. “It’s easy to make the mistake of, oh, it’s just a 3% increase in price, but when you look deeper, you can understand why the organization needs it.”

What may look like waste to you on paper is actually an essential part of how a team gets their work done. Or vice-versa—a team may have no idea they’re paying for features they’re not using. Don’t neglect your qualitative data about customer or employee behavior as you optimize. “As a team, you need to be aligned on your objectives. Where procurement can go wrong is having conversations with suppliers without understanding the why behind a given tool or product, and then you lose control over the entire situation,” he says.

Your supplier relationships matter, too. Switching to a new supplier because they’re cheaper on paper, only to find they’re so difficult to work with it saps a ton of your time and energy isn’t really doing the organization a service. 

“It’s definitely subjective,” says Tom. “Human touch points are what give you a real indication of how procurement is embedded in the process, and whether or not your team is living up to their promise of adding value.”

Read the whole series with procurement expert Tom Mills below:

• The 3 Biggest Challenges Procurement Professionals Faced in 2025—and How to Address Them in 2026
• How to Maximize Your First 90 Days in a New Procurement Org
• Process Before Tech: Why the Fundamentals Matter for Procurement Teams
• Why Procurement Professionals Get Burnout—And What to Do About It
• The Top 7 Negotiation Mistakes Procurement Professionals Make—And How to Fix Them
• People You Meet in Procurement
• These Procurement Horror Stories Could Happen to Anyone
• How Procurement Influencer Tom Mills Went from Buyer to Head of Procurement to Coach

Ironclad is not a law firm, and this post does not constitute or contain legal advice. To evaluate the accuracy, sufficiency, or reliability of the ideas and guidance reflected here, or the applicability of these materials to your business, you should consult with a licensed attorney.