Buying IT Hardware
Buying IT Hardware
Have you thought about the way you buy IT Hardware? With nearly £3billion spent on IT Hardware by the public sector in 2006-07 there are a number of considerations to take into account to ensure that the hardware is both fit for purpose and delivers value for money.
Considerations
1) Identify type of user and the work they will be carrying out
2) Identify the technical specifications required for users
3) Develop support and other requirements
- Do you have a clear idea of what services are required? (Installation, disposal, project management, etc)
- Do you have a clear idea of when you will want to take delivery? Not just for the initial batch but all others?
- Do you have a fixed number of units that you require?
- Have you developed your medium term (3-5 year) strategy with regards to IT hardware and identified the technological progression (road map) that you would like to see within your estate?
If you have answered YES to the questions above then you will be able to clearly define your requirements to the market and develop a strategy for IT hardware procurement for the next few years
4) Routes
Review the options for procurement vehicle
a) OJEU / ITT
b) Further competition under frameworks
c) Catalogue purchase (e.g. Great Deals)
Each route has its own merits and is more/less applicable depending on the circumstances of each individual procurement. Broadly speaking, if you are unclear of your medium/long term plans, have not fixed your specifications or technological roadmap or identified when you wish to take delivery, entering into a long term contract is likely to be counterproductive. If you have not defined your requirements you may be in a poor position to negotiate or develop a contract.
If you, like many organisations, are in this position, it would make sense to utilise one of the existing contracts via a framework agreement.
Again it will come down to the individual specifics of a particular procurement as to which route you use, but for IT hardware unless your requirement is exceedingly complicated (bespoke hardware, large amounts of ancillary services etc) or you wish to negotiate special terms with suppliers in addition to the standard terms, it should not be necessary to run a further competition. The market is inherently competitive and a time consuming ITT process is usually unnecessary. The potential extra savings are likely to be outweighed by the additional costs and time taken up running the process.
This leaves us with Invitation to Quote ITQ and catalogue purchasing. These are by far the quickest and most efficient routes to procure IT hardware as they utilise the fierce competition that exists between the suppliers in what is after all a dog eat dog market with margins of around 3-5% and manufacturing costs dropping every year.
Catalogue purchasing means buying in a similar way as you might through Amazon or Tesco.com. You simply select the product you wish to purchase and buy it then and there (spot purchase). This is becoming increasingly relevant to IT purchasing as IT hardware becomes more of a commodity and components and products become increasingly standardised.
Whether you are buying 3 mice or a couple of PCs of a specifically defined spec, you would be able to compare prices via other frameworks and services such as The IT Index in a similar way as you might use Kelkoo or Pricerunner at home. In this way you can identify who is offering the products at the most advantageous price.
Obviously IT hardware is not entirely commoditised and price alone is not the ultimate factor in identifying best value. In this case an ITQ might suit best. An ITQ is a slimmed down, stream-lined ITT process facilitated by the website which allows you to send your requirement directly to all capable suppliers.
In order to promote the prices and products available and the inherent competition within the supply base, Buying Solutions is marketing a series of 'Great Deals' from their IT hardware suppliers to showcase the savings possible (up to 45%) without running any further competition.
5) Evaluate offers/available prices
Regardless of the route that you choose as most relevant, you need a sound cost base to evaluate the offered prices against.
Financial
- Have you identified the Total Cost of Ownership (TCO) for your existing hardware platform? For example, how much does your current system cost, compared to what you wish to transfer to?
- Can you therefore accurately compare the difference between the status quo and the costs of using a different supplier over the course of a 3-5 year lifecycle?- Have you identified the initial costs of switching to an alternative make of PC?
- How does this compare to the costs of simply switching to a different model from your existing manufacturer?
(Note - The differences between new and previous models from the same manufacturer are often almost as large as the differences between manufacturers due to similarity in components etc. The main costs of switching are often almost the same, as new models may be built around different chip sets etc. and therefore require almost as much work to ‘image’ etc. as if you change to an alternative manufacturer)
- Have you considered the various financing options available? (Leasing etc.)
Technical
- Do the products meet the technical and operational requirements?
- Have you identified failure rates, MTBF spares/gold stock requirements etc and how these might affect the TCO of different makes and models?
Please email us at itfw@ogcbs.gsi.gov.uk if you have any feedback regarding this article.
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