Mercato ITelligence surveyed over 1,000 organisations with a budget over £50,000 and perceived industry standard supplier relationships of between cost +3-5%.
The survey took regular purchase product prices from each organisation and compared them with the actual mainline UK IT supply chain cost.
The survey found that 81% of organisations aren’t getting the deal they thought they were and some are paying up to 447% over their agreed cost plus arrangement.
Organisations are unwittingly wasting considerable amounts of money.
Sector findings:
- Large UK brewery paying an average margin of cost +35% on a £500k budget
- A large charity paying fluctuating margins between +10% and +100%
- Major Hospital an average of cost +27%
- A Midlands Council up to 54% above cost on a budget of £6M
- One financial services PLC paid a margin of +41% on its top 150 standard purchases. On one bulk purchase of Hypertec memory it paid £11,000 over their pre-agreed margin
- A big brand Insurance company was found to have paid £125,000 over its agreed margin in a year
- A leading airport cost +20% on many consumable items
- In retail, a top sports fashion house paid an average cost +76% and cost +447% on some very specific, high value rare purchase items
- North East utility company found they were overpaying by £25-£35K per month
Conclusions
The research demonstrates that buying IT in a highly volatile market where price and stock rise and fall radically each day is testing buyers to the limit. Equally, it is always best to operate in an open and transparent manner with suppliers through a regular process of price and contract review.