UK firms wasting billions on IT procurement

Research carried out by VAR Probrand's e-procurement arm reveals IT managers are spending far too much time and money sourcing IT equipment

Private and public sector organisations are wasting billions of pounds on mis-managing IT procurement, according to Birmingham-based VAR Probrand.

The research, carried out by Probrand’s own online procurement tool, theitindex.co.uk, found that IT buyers are spending a minimum of eight hours a week ringing suppliers and manually comparing individual product price and availability, and wasting over 10 per cent of their organisation’s IT budget through unstructured buying practices.

According to Probrand, the total wasted money amounts to over £2.7bn of IT budgets, £6.21m in unneeded phone calls and over £1bn in wages. Instead the VAR suggested firms should adopt a more strategic best practice approach to procurement from boardroom down to help maximise the bottom line.

The research also revealed that some organisations are paying up to 150 per cent over the odds for their IT when in fixed price, long-term agreements.

Stephen Bushell, marketing director at Probrand, said: “Public sector organisations are calling a minimum of three suppliers in line with European Union (EU) procurement guidelines, while in the private sector companies are calling anywhere between one and 10 suppliers.

“Many are now using internet web research as part of this process. In all cases vast amounts of time is being wasted on manual comparison before then using telephone negotiation to secure the best price and availability on the day.”

Peter Robbins, managing director of Probrand, added: “The IT market is highly dymanic and challenging for both buyers and sellers. Price, product spec, category and availability all change in realtime. But ringing round for prices and availability is perhaps the least equitable method of tackling these challenges as it is undoubtedly hitting the bottom line of UK organisations.

“Put simply, employees will often spend a significant amount of time on the phone to suppliers exchanging social niceties before even getting to price and availability,” he added. “Nine times out of ten they waste even more time haggling to get pennies off the price only to discover the product is on back order. Once they have done this several times they will conduct a manual price, availability and supplier comparison to find the best fit.”

John Oates, IT advisory partner with chartered accountancy firm Baker Tilly, said: “Many organisations are inefficient in their approaches to procurement and this affects the bottom line. It is well documented that one of the best ways of bringing IT spending under control is the use of e-procurement solutions, which structure and streamline internal processes while enhancing supplier relationships.

“It is disappointing that so many organisations are still adopting unstructured approaches given the technology driven business world within which we operate. User friendly best practice best value solutions are more accessible now than ever before.”