Companies paying too much for IT equipment

Gurjit Degun
18 March 2014

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18 March 2014 | Gurjit Degun

Businesses are still paying too much for IT equipment, according to a benchmarking survey by technology firm Mercato Solutions.

The research found average margins to be between 11 per cent and 39 per cent, against the recommended industry standard of just 3 per cent. Mercato surveyed 200 IT managers with annual budgets of more than £50,000.  

The study revealed the banking sector pays the highest margins on IT equipment at an average of 39 per cent. This is followed closely by the leisure sector at 33 per cent, insurance at 25 per cent and education at 19 per cent. The highest margin paid on a single IT purchase within the public sector was made by the NHS at 673 per cent.

Buyers working for councils reduced their margins by more than half to 12 per cent in 2013, compared with 29 per cent in 2012.

The study added eight out of 10 businesses are failing to secure best value when it comes to IT investments. “This is partly due to volatility in the market which makes it difficult for buyers to obtain, manage and compare like-for-like trade level IT product data,” the report said.

Mercato’s head of benchmarking, Al Nagar, said: “On the whole, average margins paid on IT have diminished, but banks, leisure, insurance and education sectors have all increased their overspend year-on-year and we have seen some surprisingly high margins on certain purchases. Compared with the recommended 3 per cent, the average overspend is still extremely high across the board, so all sectors need to maintain their focus on this issue. Clearly action needs to be taken to drive greater transparency into supplier relationships.” 

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