Research highlights telecom companies pay extortionate prices for ICT

Benchmarking organisation Mercato reveals firms have been paying margins up to 506%.

New research on the purchase price of ICT products has revealed companies in the Media and Telecoms sector have been paying exorbitant margins anywhere up to 506% when buying from suppliers.

A study by Mercato ITelligence, the only benchmarking tool approved for the government’s G-Cloud, found that although the industry is a fast adopter of technology it was not achieving best value on purchases.

The average margin paid for ICT products was 19% – considerably higher than the industry best practice rate of 3%

With Western European economies stuck with slow growth for the foreseeable future businesses are looking to increase their use of technology in order to provide efficiencies.

However, with £493bn¡¡ predicted to be spent on ICT in Western Europe this year, it is clear many millions are being wasted by purchasing products at excessive prices.

Mercato’s Head of Benchmarking, Al Nagar, said: “Organisations are overspending on their IT as a result of the radically fast moving market and this is hitting bottom lines at a time when many are fighting to become more efficient.

“Buyers need to monitor and benchmark prices to negotiate the best price with suppliers as ICT bought at better prices will enable budgets to be stretched.

“Businesses will gain more and better ICT for the same money. This means higher volume for the supplier and better fairer deals for the buyer.”

Mercato research shows that 81% of organisations do not secure best value when they make investments in ICT. Volatility in the market makes it difficult for buyers to gather data and find the optimum price.

Mercato ITelligence is helping IT buyers achieve this by allowing them to quickly undertake validated benchmarking activity online, comparing quotes secured before purchase with current trade guide prices and stock levels in the UK IT supply chain. It shows firms when margins are extortionate, so they can negotiate a better deal.

Nagar continues: “It is clear from our research that IT buyers are finding it difficult to obtain and manage comparative data on ICT product costs, particularly in such a highly volatile market where price and stock change daily.

“Without this comparative data to compare quotes against, buyers are struggling to achieve best practice best value of 3% margin. This is significantly hampering efforts to stretch the reach of every pound, which could be impacting efficiency and growth as organisations cannot get the level or volume of technology they demand.”

Mercato ITelligence has been proven to save organisations up to 24% on their IT spend. It is the only benchmarking tool approved for the government G-Cloud and is used by 30% of UK Police Forces, a number of Local Government organisations and an extensive amount of private sector businesses.

Mercato technology is accredited by CIPS for offering Procurement Excellence and the Institute of Chartered Accountants for its financial credibility, providing ‘Best Practice Best Value’

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