The fourth largest university in the UK, the University of Birmingham has more than 32,000 students and 7,200 staff. With five colleges, and its own feeder secondary school, it has an IT procurement spend of between £30m-£40m per annum.
In order to meet the university’s demands for up to date technology, the procurement team is constantly purchasing IT equipment. This also involves major projects, such as kitting out an entirely new building (or an entirely new secondary school in 2015) or a refresh a thousand PCs across a campus.
As these projects can involve huge investment, the university has set up a ‘procurement hub’ that examines the details of suppliers’ quotes. The hub’s analysis confirmed a long held suspicion of the procurement team, that when it came to IT equipment some suppliers were charging disproportionately high prices.
“The team identified that we were regularly being charged a lot for equipment within large contracts. These were contracts worth more than £500,000 and we were finding it would have been cheaper if we had just gone to Amazon,” said Jonathan Jones, Head of Procurement and Insurance at the University of Birmingham.
“When the university is investing so much in its facilities and services, it is really important to us to get value for money and we were not seeing that in many cases.”
To combat this issue, the university decided to implement online application KnowledgeBus alongside its procurement hub.
With CIPS corporate certification, KnowledgeBus automates the benchmarking of purchases against daily trade guide price and stock levels on over 150,000 ‘live’ products from more than 2,500 manufacturers.
Users simply input supplier product lists or conduct spot checks to see what margin their supplier is proposing. A range of spend analysis tools also help users identify, track and forecast market developments for more strategic procurement.
KnowledgeBus empowers IT buyers with market knowledge, so they can rapidly negotiate better deals with preferred suppliers to unlock more from their budgets. In so doing, it saves users’ time and helps to consistently achieve best value.
When the university tested KnowledgeBus, they were able to review historic purchases and see where they had paid margins higher than recommended rates. This enabled the procurement team to sit down with its suppliers, and the data, and discuss future pricing. As a result of these meetings, a number of suppliers are now providing hugely improved pricing on their products.
“Having this data to hand has really helped the conversations we have with suppliers. Some have responded positively and challenged their own internal organisations to do better. Those are the organisations that are now getting most of our business,” said Jonathan.
The university’s procurement team is now finding savings on most of the IT products when using KnowledgeBus. This has come as a result of reducing the average margins paid, which have come down from 20% to 8%.
Jonathan said: “During the first six months, KnowledgeBus helped the university save in excess of £70,000.”
Improved purchase process
The university has now introduced new procurement processes which aim to run as many IT purchases through KnowledgeBus as possible. This includes all purchases made by IT managers in all five colleges, which are now fed into a central procurement team.
“The plan is to embed KnowledgeBus further over the next year. We want to track our performance and see the saving we are making. By improving our processes further, we are aiming to reduce the margins being paid to less than 4% or even 3%.”