The Hidden Cost of Spreadsheets to Procurement – Lessons from Guy’s Hospital

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We are pleased to bring you another post from David Lawson, Procurement Director at Guy's and St Thomas' Foundation Trust, London, following a similar theme to his previous post "The Hidden Cost of NHS On-line Ordering – How Guy’s Hospital is Responding."

For Procurement the "world of spreadsheets" is a drab and dreary place. In the same way as clunky on-line ordering systems have hidden costs, so too does the way we work and interface with colleagues in Finance and directorate teams through spreadsheets. There are  four main problems that we have identified:

1.  Multiple Versions: We have a cost improvement plan which is a dynamic moving picture across over 400 initiatives. The position changes on a daily basis. New projects are identified, existing initiatives are delivered early or late, saving estimates are firmed up. In this context using spreadsheets that are sent at one point in time to the Finance team to factor into budget forecasting or into the business to inform directorate teams are already out of date within the day. You then have a situation in which different versions of the truth are circulating around the organisation with no one quite sure what the position is. This builds frustration and undermines credibility.

2.  Update Treadmill: A spreadsheet is one file. Who updates it? When can they update it? The limitations of spreadsheets create inefficient ways of working. For a large team it is difficult to manage multiple people accessing the same file. You have to either allocate exclusive time slots or incur additional overhead and employ a gatekeeper to administer updates. The gatekeeper will often be the procurement head as they are accountable for the CIP. A very expensive gatekeeper. The process becomes even more complicated when you need to provide more detailed information at a directorate level for initiatives that are organisation wide. As such initiatives change over time, the process of manually updating multiple spreadsheets creates a never-ending treadmill of manual updates that consume precious time and resource.

3.  No evidence: Spreadsheets are one-dimensional. They set out a list of information. However, increasingly the organisation expects ready access to the evidence supporting a saving assumption. Or for a contract register, we want a copy of the contract rather than simply a list of contracts. Without the back-up information time is then consumed finding and sending follow-up information to support a saving assumption or hunting down a copy of the contract that was let by someone who left the organisation two years ago. As with the point above, the lack of a database approach consumes precious time and resource and also potentially weakens credibility: how can the procurement team have a grip over expenditure if it can't find its own contracts?

Standalone: Spreadsheets do not speak to other systems. With a contract register for example you can have a great list of the contracts you know about, but does this cover total expenditure? Does estimated contract expenditure reflect actual expenditure over time? The only way to answer these questions is through a data feed from your Accounts Payable system to provide total visibility. If you do not have a total picture of all expenditure and visibility over all contracts throughout the organisation how can you ensure best value across non-pay spend?

To address these problems, we have moved to a cloud-based system which acts more as a database providing real-time visibility and a single version of the truth. The ability to cross-reference our contract register with total expenditure has enabled gaps to be identified and generated new initiatives.

The ability to provide total visibility and transparency to colleagues in Finance and directorates has improved the credibility of the team and confidence in the numbers. The main barrier to change was taking that leap of faith to stop using spreadsheets for CIP tracking and contract register. Now we have jumped forward we would never go back. The solutions are out there – it just needs a leap.

Voices (7)

  1. bitter and twisted:

    Of course the Contract Database will have a very flexible, powerful, and friendly custom report generator, so you will be able to extract and analyse the information that you dont even know you need yet….

    1. Sam Unkim:

      So perhaps two SME. flags ?
      Is this a Supplier a SME: Yes/No
      and a
      “Is this a Supplier a SME, under whatever fudge the present government is using, to appear to be achieving their welcome & ambitious new target of 30%” : Yes/No

      1. bitter and twisted:

        How very unambitious. Why not comb through line items and identify those which passed through the hands of a SME somewhere along the supply chain and count those? Everything is possible !

        1. Secret Squirrel:

          But don’t forget to keep in any spend that started with a small supplier and ended up with a mega-corp.

          Like that nice SME spend on travel which went to huge hotel chains, rail companies and airlines but was definitely spend with an SME.

  2. Mark Lainchbury:

    Give a man proprietary software, you keep him informed, till the next update.
    Teach a man to use a spreadsheet, you keep him informed, for life.

  3. Gordon Murray:

    Thanks David. I’ve seen the slavish use of spreadsheets so often I wonder if the name should be changed to spreadblankets. There seems to be a real resistance to shift from spreadsheets due to a belief in their infallibility even though you rarely have to dig very deep before you spot a human error. I wonder if part of the spreadsheet ‘lock-in’ is simply a fear to change and vulnerability – often when I dig I find those most resistant to the shift are those who designed the spreadsheet!

  4. Sam Unkim:

    Taking the “leap” to creating a Contract database is to be commended.

    I hope your finance staff & directorate managers are not resistant to being trained on your new system, as some can be, allegedly 🙂

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