FORM-2
THE PATENTS ACT, 1970 (39 of 1970)
COMPLETE SPECIFICATION
(Section 10, rule 13)
A system containing an integration of iSave & iCost for calculating actual effective savings,
Zycus Infotech Pvt. Ltd
an Indian Company registered under the provisions of the Companies Act, 1956,
with our Corporate office at GJ-07, SEEPZ++, SEEPZ SEZ, Andheri (East), Mumbai -
400096., Maharashtra, India.
THE FOLLOWING SPECIFICATION PARTICULARLY DESCRIBES THE NATURE OF THE INVENTION AND THE MANNER IN WHICH IT IS TO BE PERFORMED: -

FIELD OF THE INVENTION
This invention relates to the field of information and computation systems.
Particularly, this invention relates to the field of information and computation systems in relation to procurement cost savings.
Particularly, this invention relates to procurement system and method to facilitate calculation of actual effective savings of a spend category and optimization of procurement cost.
BACKGROUND OF THE INVENTION
Present invention is related to the procurement of goods and services. The present invention provides a system containing an integration of iSave & iCost which is meant for calculating actual effective cost savings of a spend category in a procurement cycle.
"Cost Saving" achieved while procuring the goods is an indication of performance/ effectiveness of the procurement department of an organization. It is very important for procurement department to keep track of savings across each stage of procurement process till the time of actual purchasing of goods and/ or services.
In a traditional way of computing cost saving, cost savings are tracked in the excel sheet and there is no system to capture the savings from multiple sources.

In the present invention, this important task of computing cost savings and tracking of cost savings is done by iSave module of the system.
While optimization of the procurement costs in the light of market dynamics of underlying commodities is facilitated by iCost module of the present system. Market information of the spend category for which cost savings are to be calculated, is received from the Cost Component Model of said iCost module of the said system. This Cost Component Model of said iCost module is based on market indices for key spend categories and analyzing customer spend data with it.
Separate patent applications have been filed for iSave module (IN201102032) as well as iCost module (IN201103680).
OBJECTS OF THE INVENTION
An object of the present invention is to provide a system containing an integration of iSave 8c iCost module to calculate actual effective savings of a spend category in a procurement cycle.
Further object of the present invention is to provide a system containing an integration of iSave & iCost module to determine market trend of a spend category based on Cost Component Model of iCost module.

SUMMARY OF THE INVENTION
The present invention is related to a system containing an integration of iSave and iCost for calculating actual effective savings, of a spend category in a procurement cycle. In the present invention, said iSave module of said system is meant for calculating different types of savings of a spend category done by the procurement department in a procurement cycle, based upon the baseline cost information, the purchase cost information of the spend category and receiving average price change market information of that spend category. This market information of a spend category is received from the Cost Component Model of said iCost module of said system associating indication of the plurality of the components for the cost saving which are computed for the spend category with the average price change market information of that spend category derived from the cost component model of iCost; outputting an analysis of effective savings of that spend category based upon pre configured formula
iSave module of the present system facilitates computation of actual effective cost savings of a spend category and thus facilitates tracking of cost savings of a spend category.
Cost Component Model of said iCost module of the present system is meant for spend analysis which facilitates analysis of the procurement cost in relation to market indices of the underlying commodities.

BRIEF DESCRIPTION
The invention will now be described in relation to the accompanying drawings in which:
Figure 1 illustrates the data flow in the general procurement cycle.
Figure 2 illustrates a schematic of iSave Module and iCost Module of the present System for calculating actual effective cost savings of a spend category in the procurement cycle.
Figure 3 illustrates Cost Component Model for Ball Bearings
DETAILED DESCRIPTION
Figure 1 illustrates data flow of procurement process in the iSave module of the present system. As shown in fig. 1, at the initial stages of new project, procurement professionals forecast the procurement cost savings of the new project. These procurement cost savings are generally determined as (Baseline Spend - New Spend). This Baseline Spend is a reference spend, which is defined by the buyer and it is the average of last "n" months of price of that spend category defined by commodity index. iSave module of the present system provides this information of the spend category to the user from its spend analysis, if baseline spend is calculated using historical data. Whereas, if the baseline spend is determined by commodity index, iCost module of the present invention provides commodity related information.

In one of the embodiment of the present invention, iSave module of the said system facilitate tracking of cost savings based on its different components in the procurement cycle i.e. 'benefit type component', 'impact type component', etc. It also facilitates to find out the component of cost saving which has impact on balance sheet and thus indication of performance of procurement department. It also facilitates to find out the component of cost saving which is indication of effective negotiation with the supplier.
In another embodiment of the present invention, market information of the spend category for which cost savings are to be calculated, is received from the Cost Component Model of said iCost module of the said system. This Cost Component Model of said iCost module is meant for spend analysis which facilitates analysis of the procurement cost in relation to market indices of the underlying commodities. Cost component model for a spend category provides relative significance of cost drivers based on these market indices. This in turn enables the purchasing professionals to take actions to optimize spend.
In still another embodiment of the present invention, pre-configured Cost Component Models are provided. The user is allowed to select the Cost Component Model from these which is appropriate for the spend category of interest. In this embodiment, the user can also modify the selected pre-configured cost model to better suit the spend category. In an alternative embodiment, the user can formulate the cost component model for the spend category by way of selecting individual cost contributors and assigning weightages to them

EXAMPLE 1

Unit price Quantity Total cost Savings Savings due to effective negotiation (Qty constant)
Year 2010 40 20 800 200 200
Year 2011 30 20 600

In the above example, Baseline Spend (800) is taken from historical database and after deducting actual spends for the year 2011, savings of 200 is arrived. To know whether this negotiated saving is actual effective saving or not, iCost is integrated with iSave and thus the trend of market price for this commodity compared to the price of that commodity in the year 2010 can be determined.
Suppose that in the year 2011, the price trend is decreased by 10% from the last year's price. So the Baseline Price would be 720 instead of 800 and actual effective saving would be 120 instead of 200.
This actual effective saving is calculated by the formula - B + (%C * B) - P 800 + (-10% of 800) - 600 = 120
EXAMPLE 2
Let's take an example of Cost Component Model for Ball bearings.

The cost contributors are Stainless Steel, Labor & Electricity and if their significance of contribution to the cost is 40%, 16% & 10%, respectively, the trend of individual cost component as well as cumulative trend, based on relative changes of contributing cost driver for one time period is shown in fig. 3.

CLAIMS
We claim,
1. A system containing an integration of iSave & iCost for calculating actual effective savings of a spend category in the procurement cycle, comprises of: iSave' cost saving computing means adapted for computing the plurality of the components for the cost saving for the spend category; the Cost Component Model of iCost module adapted for receiving average price change market information of the spend category; and means for outputting an analysis of effective savings of that spend category based upon pre-configured formula
2. A system containing an integration of iSave & iCost for calculating actual effective cost savings of a spend category in the procurement cycle as claimed in claim 1, wherein, the plurality of the components for cost saving include at least one benefit type component and at least one impact type component
3. A system containing an integration of iSave & iCost for calculating actual effective cost savings of a spend category in the procurement cycle as claimed in claim 1, wherein, the Cost Component Model of iCost module associated with the indication of the plurality of the components for cost savings which are computed for the spend category with the average price change market information of the cost drivers of that spend category derived from Cost Component Model of iCost module

4. A system containing an integration if iSave & iCost for calculating actual effective cost savings of a spend category in the procurement cycle as claimed in claim 1, wherein, the said Cost Component Model of said iCost module for a spend category provides relative significance of cost drivers based on market indices; the said iCost module tracks the top three cost drivers of a spend category
5. A system containing an integration of iSave & iCost for calculating actual effective savings of a spend category in the procurement cycle as claimed in claim 1, wherein, the said cost saving computing means of the said iSave module calculates the actual effective savings by the formula -
B + (%C * B) - P Where,
B = Baseline cost of a spend category
%C = % price change of the cost drivers of the spend category from the market information P = Purchase cost of a spend category
6. A system containing an integration of iSave & iCost for calculating actual effective savings of a spend category in the procurement cycle as claimed in claim 1, wherein, the said Baseline cost of a spend category is determined from iAnalyze or entered manually by the user
7. A system containing integration of iSave & iCost for calculating actual effective savings of a spend category in the procurement cycle as claimed in claim 5,

wherein, the % price change of the cost drivers of spend category from the market information is received from the Cost Component Model of the iCost module
8. A system containing integration of iSave & iCost for calculating actual effective savings of a spend category in the procurement cycle as claimed in claim 1, wherein, the said Cost Component Model of the said iCost module meant to show the market trend for the cost drivers for the Spend category
9. A system containing integration of iSave & iCost for calculating actual effective savings of a spend category in the procurement cycle as claimed in claim 8, wherein, the said Cost Component Model of the said iCost module further meant to show the market trend of cost drivers for both direct and indirect spend categories
10. A system containing integration of iSave & iCost for calculating actual effective savings of a spend category in the procurement cycle as claimed in claim 1, wherein, the said Cost Component Model of the said iCost module meant to show the trend of individual cost driver of a spend category
11. A system containing integration of iSave & iCost for calculating actual effective savings of a spend category in the procurement cycle as claimed in claim 1, wherein, the said Cost Component Model of the said iCost module meant to calculate cumulative trend of cost drivers based on relative changes of contributing cost drivers for a specified time period

12. A system containing integration of iSave & iCost for calculating actual effective savings of a spend category in the procurement cycle as claimed in claim 1, wherein, the said Cost Component Model of the said iCost module meant to show the affect of individual cost driver on the cumulative market trend of a spend category
13. A system containing integration of iSave & iCost for calculating actual effective savings of a spend category in the procurement cycle as claimed in claim 1, wherein, the said system provides flexibility to user such that allowing the user to tweak/ modify the already available cost models and also further allowing the user to create new cost model
14. A method for calculating actual effective savings in the procurement cycle, comprising steps of:
computing the plurality of the components for the cost saving for the
spend category
receiving average price change market information of that spend category
from the said Cost Component Model of said iCost module
outputting an analysis of effective savings of that spend category based
upon pre-configured formula
15. A method for calculating actual effective savings in the procurement cycle, as
claimed in claim 14, wherein, the plurality of the components for cost saving

include at least one benefit type component and at least one impact type component
16. A method for calculating actual effective savings in the procurement cycle, as claimed in claim 14, wherein, the said method involved in the said Cost Component Model of said iCost module associated with the indication of the plurality of the components for cost savings which are computed for the spend category with the average price change market information of the cost drivers of that spend category derived from Cost Component Model of iCost module
17. A method for calculating actual effective savings in the procurement cycle, as claimed in claim 14, wherein, the said method involved in the said Cost Component Model of said iCost module for a spend category provides relative significance of cost drivers based on market indices; and method for tracking the top three cost drivers of a spend category
18. A method for calculating actual effective savings in the procurement cycle, as claimed in claim 14, wherein, the said method comprises of calculating the said actual effective savings by the formula -
B + (%C*B)-P Where,
B = Baseline cost of a spend category
%C = % price change of the cost drivers of the spend category from the market information P = Purchase cost of a spend category

19. A method for calculating actual effective savings in the procurement cycle, as claimed in claim 14, wherein, the said method involves determining the cost of a spend category from iAnalyze or entering manually by the user
20. A method for calculating actual effective savings in the procurement cycle, as claimed in claim 18, wherein, the said method involves receiving the value of the % price change of the cost drivers of spend category from the market information from the Cost Component Model of the iCost module
21. A method for calculating actual effective savings in the procurement cycle, as claimed in claim 14, wherein, the said method involved in the said Cost Component Model of said iCost module meant to show the market trend for the cost drivers for Spend category
22. A method for calculating actual effective savings in the procurement cycle, as claimed in claim 21, wherein, the said method involved in the Cost Component Model of said iCost module meant to show the market trend of the cost drivers for both direct and indirect categories
23. A method for calculating actual effective savings in the procurement cycle, as claimed in claim 14, wherein, the said method involved in the said Cost Component Model of said iCost module meant to show the trend of individual cost drivers of a spend category

24. A method for calculating actual effective savings in the procurement cycle, as claimed in claim 14, wherein, the said method involved in the said Cost Component Model of said iCost module meant to calculate cumulative trend of cost drivers based on relative changes of contributing cost drivers for a specified time period
25. A method for calculating actual effective savings in the procurement cycle, as claimed in claim 14, wherein, the said method involved in the said Cost Component Model of said iCost module meant to show the affect of individual cost drivers on the cumulative market trend of a spend category
26. A method for calculating actual effective savings in the procurement cycle, as claimed in claim 14, wherein, the said method meant to provide flexibility to user such that allowing the user to tweak/ modify the already available cost models and also further allowing the user to create new cost model