Education providers have faced a series of challenges in recent years when sourcing the right technology for students and staff. The Covid-19 pandemic created disruption that meant schools had to scramble to source equipment that could facilitate learning outside of the classroom. The sheer demand meant many products simply weren’t available – or if they were, they came at a premium. Three years on and the rise in food, energy and wage bills means budgets are being squeezed even further. As such, it’s never been more important to maximise every penny spent on IT and enable digital education.
Even without these added pressures, browsing and buying multiple IT products and services has always been incredibly tough. In the first of a series of articles, Ian Nethercot, supply chain director at Probrand, explores some of the challenges holding back the education sector.
Learn how volatility affects IT budgets in How Volatility of the IT Market Costs You Time and Money.
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A complex market – The IT sector has to navigate a complex supply chain, often involving distributors, suppliers, and manufacturers. The pace and speed of change is also volatile, with up to 30,000 product prices changing every day, along with thousands of new items and stock fluctuations. Too often, buyers will spend hours manually searching for the right item, at what they believe is a trade price to compare against, only to discover that it’s out of stock, the listing is outdated, and the price is far from trade level. We carried out research that highlighted the huge drain this is having on buyers’ time, with a quarter of organisations spending the equivalent of one day each week just researching IT purchases.
A volatile market – if buyers are going to identify opportunities and manage their budgets better, easy access to accurate product, stock and price information is critical. Anyone that is working with yesterday’s information will simply lose out - the IT market is just too volatile. Given that a lack of accurate data severely inhibits the ability to acquire the best equipment quickly and at the lowest prices, it’s little wonder that 81% of organisations fail to achieve value for money on their IT purchases.
When manual processes are combined with rapid price fluctuations, it can be hard to police the prices suppliers are quoting. It’s little wonder that, on average, companies pay a 9% margin above the trade price on all IT products – three times higher than the industry best practice level set by the Society of IT Managers (SOCITM). We’ve found examples of educational institutions paying margins as high as 1266.3% on their purchases – that’s more than four hundred times higher than the recommended mark-up.
Lack of visibility – manual approaches and a lack of visibility is also causing schools to miss out on extra discounts they are entitled to. Vendors will often create pre-approved pricing catalogues for specific sectors, including education. There can be in excess of 50 of these catalogues from different major vendors available, all of which will offer aggressive discounts of 5 – 50%. And yet schools will regularly miss out for two main reasons.
The first is that these catalogues are often poorly communicated. They might be shared as an attachment or spreadsheet in an email and will get lost. Added to this, they aren’t published or made visible on frameworks like Crown Commercial Services (CCS) – simply because those types of platforms don’t have the technical functionality to compare and present multi-catalogue pricing and data streams. Secondly, buyers must rely on the fact that these discounts are being passed through the supply chain to reach them. So, there is an element of trust involved too. If buyers aren’t seeing the added value that these discounts offer, then it’s highly likely that they are paying over the odds for products and effectively throttling budgets.
Given the complex set of challenges, it’s easy to see why researching the right products (and, most importantly, identifying which are worth buying) is difficult. But there is light at the end of the tunnel. In next month’s edition, we’ll explore how buyers can overcome this stormy landscape and share tips to ensure you’re getting the best value.
Discover how marketplaces simplify procurement in The Rise of B2B Marketplaces and Why That’s Changing How You Buy IT