Birmingham-chamber.com - TOP STORY on Wednesday 26 February 2014
A new benchmarking survey from Mercato Solutions shows that councils are still paying an average of three times more than the industry standard, a year after research revealed local authorities were paying too much for IT products. And the highest margin paid for a single IT purchase is an astounding 327 per cent. The new study benchmarked a variety of purchases made by councils against trade guide prices using Mercato’s KnowledgeBus IT application. Results showed that the average margin on these purchases was 12 per cent percent. This is an improvement on the previous year’s figure of 29 per cent but is still much higher than the recommended industry standard of just three per cent *.
The dedicated IT edition of KnowledgeBus provides automated online benchmarking of quotes against a daily trade guide price of over 150,000 products from more than 2,500 manufacturers. It enables users to quickly spot when margins are too high and negotiate accordingly. It is accredited by the Chartered Institute of Purchasing & Supply (CIPS).
The survey covered a range of sectors, from insurance and finance to retail and leisure. Local Authorities have reduced average margins paid to 12 per cent which takes the sector from 4th to 14th place in a league table of those securing poorest value on IT product purchases.
Mercato’s head of benchmarking, Al Nagar, (pictured) commented: “The latest results show that Councils have clearly taken significant steps to halve the margins they pay to secure better value on IT product purchases. However, in a sector of public scrutiny where every penny counts, margins of 12 per cent are still well adrift of 3 per cent best practice.”
Mercato’s research shows that the problem is widespread; 8 out of 10 organisations are failing to secure best value when it comes to ICT investments. This is partly due to volatility in the market which makes it difficult for buyers to obtain, manage and compare like-for-like trade level IT product data.
Nagar continues: “Without validated comparative data, buyers are struggling to achieve a three per cent margin. Data is the key and with access to up-to-date information, procurers can gather the knowledge they need to negotiate better deals with IT suppliers and get more from their IT budgets in 2014.”