Research Confirms Private and Public Sector Pay Extortionate Prices for ICT

New research on the purchase price of ICT products has revealed that organisations have been paying exorbitant margins anywhere up to 731% when buying from suppliers.

The five sectors that consistently achieve the poorest value when buying ICT products are Housing Associations, Retail, NHS, Pharmaceutical and Universities, according to a study by KnowledgeBus IT Edition, the only ICT product price benchmarking tool approved for the government’s G-Cloud.

The average margin paid by these sectors is considerably higher than the industry best practice rate of 3%¡ - Housing Associations (36%), Retail (35%), NHS (28%), Pharmaceutical (28%) and Universities (27%).

With Western European economies stuck with slow growth for the foreseeable future organisations are looking to increase their use of technology in order to provide efficiencies.

However, with £493bn¡¡ predicted to be spent on ICT in Western Europe this year, it is clear many millions are being wasted by purchasing products at excessive prices.

Mercato’s Head of Benchmarking, Al Nagar, said: “Organisations are overspending on their IT as a result of the radically fast moving market and this is hitting bottom lines at a time when many are fighting to become more efficient."

“Buyers need to monitor and benchmark prices to negotiate the best price with suppliers as ICT bought at better prices will enable budgets to be stretched."

“Organisations could gain more and better ICT for the same money. This means higher volume for the supplier and better fairer deals for the buyer.”

Benchmarking organisation Mercato reveals organisations have been paying margins up to 731%.

Mercato research shows that 81% of organisations do not secure best value when they make investments in ICT. Volatility in the market makes it difficult for buyers to gather data and find the optimum price.

IT Edition is helping IT buyers achieve this by allowing them to quickly undertake validated benchmarking activity online, comparing quotes secured before purchase with current trade guide prices and stock levels in the UK IT supply chain. It shows firms when margins are extortionate, so they can negotiate a better deal.

Nagar continues: “It is clear from our research that IT buyers are finding it difficult to obtain and manage comparative data on ICT product costs, particularly in such a highly volatile market where price and stock change daily."

“Without this comparative data to compare quotes against, buyers are struggling to achieve best practice best value of 3% margin. This is significantly hampering efforts to stretch the reach of every pound, which could be impacting efficiency and growth as organisations cannot get the level or volume of technology they demand.”

IT Edition has been proven to save organisations up to 24% on their IT spend. It is the only benchmarking tool approved for the government G-Cloud and is used by 30% of UK Police Forces, a number of Local Government organisations and an extensive amount of private sector businesses.

Mercato technology is accredited by CIPS for offering Procurement Excellence and the Institute of Chartered Accountants for its financial credibility, providing ‘Best Practice Best Value’.


Release date: 01/05/2012

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