The cost of information technology can be a contentious issue between the IT department and those holding the purse strings of an organisation. The smooth running of IT systems is fundamental to business success, yet this cannot come with an open chequebook, or the business will not profit or flourish.
Balance is key, and the expertise of both sides needs to be acknowledged and respected. In so many companies, IT and Finance are at odds, yet this doesn’t have to be the case. Why not show your Finance compatriot this article, and allow them to see into your world? It might make your next infrastructure purchase a lot simpler.
WHAT IS IT MANAGEMENT ARE SEEKING WHEN THEY GO SHOPPING FOR HARDWARE?
- Good quality, reliable, high output products, manufactured by well-known and trusted companies.
- A fair price on all products and services sold by a reputable, known and trusted supplier who is knowledgeable, responsive and resourceful.
- Ideally a strong relationship between the IT department and the supplier of these products, paving the way for a mutually fruitful long-term partnership.
In other words, IT is seeking VALUE. But what about cost?
The importance of striking a good deal in dollar terms for both buyer and supplier cannot be overstated.
A price, which squeezes the life out of a supplier is likely to,
- Make them wish they’d never sold the solution in the first place (ever wondered why they don’t always pick up your calls first time?)
- Steer them to look for other areas to save money in delivering your solution (ever noticed how lead times get longer after you’ve screwed them down on price?)
- Do little to create the goodwill required for ongoing support and communication (ever seen prices begin to creep back up and flexibility reduce?)
It also pays to remember that a high price does not always equate to highest quality, and the ultimate goal of an IT purchase should not be saving the company money, but improving the way it does business.
So ultimately, it’s about a balance between the two.
We believe there are at least five clear, ongoing benefits of a supplier decision based on an ideal combination of good value and sharp pricing:
A good supplier knows your success is their success. It’s their job to help you achieve your desired outcome. If it all goes well, he or she may earn the right to talk to you about future business opportunities or you may recommend them to others.
2. Top Priority
If a supplier is getting paid, he’ll work hard for you. However, the hard truth is, a customer who consistently yields very low profit for a supplier by consistently screwing them down on price, doesn’t get the best service. (We’ve seen the pain this causes time and time again, working closely with some of the largest suppliers and buyers in the country. Or, for example, the failed outsourcing deals you read about in the press.)
3. Long-term knowledge
When a supplier knows you and your technical environment, they’re better placed to pass on tips and recommendations for products they see in the market, making you better at your job and adding value to your business.
A good supplier will know where to go first. They’ll do all the ‘leg work’ and put the right solution in place fast, leaving you time to focus on running the IT department. IT Managers are rarely trained in procurement, yet they are tasked with it on a regular basis. Freeing up this time goes straight to the bottom line.
Good suppliers know Enterprise IT has to work first time, every time. They employ good staff who take time to thoroughly understand your requirements and pass their solution over to good technical staff to build, configure, test and deliver the right products on time.
Finance departments want all of the above, except they’d prefer not to pay much for it (which, unfortunately means they don’t get any of it!).
So next time you receive a message from Finance like:
“Company X is 5% more expensive than Company Y – buy it from Company Y”
“Can you, or one of your team, please go out and source the best price on the critical infrastructure you need to grow/maintain/support our business?”
“We have a supplier agreement with Company A, it doesn’t matter that Company B will provide better value for money, they haven’t filled in the correct forms.”
“We’re not paying that, it’s cheaper than that on EBay!”
Show them the five reasons we believe Good Value beats Lowest Cost, every time.
Then let us know if you know need a good supplier – we can recommend one!