SpendInsight and GreenInsight (KTP)

Knowledge Transfer Partnerships (KTP) support the partnership between business and universities or research organisations. A Knowledge Transfer Partnership between the Department of Computing at Goldsmiths College, Reading University and @UK plc was established in September 2006 and completed in September 2009.

I was the research supervisor on a KTP Partnership (Collaboration with @UK PLC )

@UK plc is a listed company with 34 employees. The main business of the company is an e-Commerce system integrating business, government and Internet. The core of the system is an online virtual marketplace; providing the infrastructure necessary for commerce on the web. They also run an e-Procurement system which allows organisations to fully integrate their financial systems with the web providing the required facilities for requesting quotes, placing orders and imposing their budgetary and security constraints.

This 3 year KTP project was set up to use the particular expertise of Mark Bishop and Sebastian Danicic at Goldsmiths and academics at Reading to research and develop software which could improve and supplement @UK plc's e-Procurement system. One of the main research problems was to devise a means of bringing together product information that had been coded in one of the three different classification systems United Nations Standard Products and Services Code (UNSPSC), eClass (commonly used within the NHS), and NSV. Artificial Intelligence, other classification algorithms were investigated in order producing a means of `de-mystifying' product information.

The main output of this project was a spend-analysis system called SpendInsight. In simple terms, SpendInsight is a software system which enables organisations to efficiently re-order basic supplies based on analysis of what they already use. It employs new artificial intelligence algorithms developed during the KTP project, that automate the previously manual spend analysis process, enabling analysis to be performed with unprecedented speed and detail which have been used to highlight potentially huge savings in the organisations. It identifies seven key areas of savings opportunities.

• The same product bought from the same supplier at various prices (price variance).
• The same product from the same supplier from differing parts of the company (price bench marking).
• The same product bought from differing suppliers at various prices (price comparison).
• Differing products with the same functional role (product consolidation).
• Same product bought frequently in small amounts (order consolidation).
• Products bought off contract when one exists (contract adherence).
• Framework/Hub contracts available but not used (contract opportunities).

The System takes raw data (inputs) from various sources, accounts payable, purchase order, supplier files and contact information. They are then processed through the technical system (Axiascope) which cleanses and classifies the data. Once this is completed the data is enriched and the result is collated under the seven key areas above. The final stage (output) presents this information in a choice of format which presents clearly trends and opportunities.

Current Impact of Project: £500 million savings for NHS SpendInsight is already being deployed at a number of organisations, bringing essential revenue to @UK. In particular, the service has already been sold to Basingstoke and North Hants NHS Foundation Trust and the NHS Share Business Service (with 128 NHS Trusts).

However the most striking and significant impact of our research has resulted from its use by the National Audit Office. The National Audit Office is a government organisation which audits most public-sector bodies in the UK and produces value for money reports into the implementation of Government policies. It noted in a recent report that the procurement of medical and other supplies consumables by NHS hospitals is essential to the quality of patient care and successful treatment outcomes. (National Audit Office Link) Using SpendInsight the National Audit Office have estimated that if hospital trusts were to amalgamate small, ad-hoc orders into larger, less frequent ones, rationalise and standardise product choices and strike committed volume deals across multiple trusts, they could make overall savings of at least £500 million, around 10 per cent of the total NHS consumables expenditure of £4.6 billion.

In particular @UK PLC performed quantitative analysis of the purchasing data of 61 NHS trusts. The enabled procurement patterns and prices paid by trusts to be investigated, and potential savings to be calculated. Furthermore the National Audit Office has recommended that the NHS use buying solutions such as SpendInsight in order to secure better value in procurement. Few other university research projects can ever have contributed to such a large potential change to the economic health of the nation.

Future Impact of the SpendInsight KTP Project

This is one of the largest and most innovative KTP projects ever undertaken and its impact is ground-breaking. Its output, SpendInsight, has come at exactly the right time to help public and private sector organisations achieve savings. SpendInsight is very generic and is thus expected to find future similar savings in other areas of National and Local Government; Education and Higher Education Spending etc.