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NHS ‘overpaying’ for ICT products

New research on the purchase price of ICT products has revealed that organisations have been paying exorbitant margins anywhere up to 731% when buying from suppliers.

The five sectors that consistently achieve the poorest value when buying ICT products are NHS, Housing Associations, Retail, Pharmaceutical and Universities, according to a study by Mercato ITelligence, the only ICT product price benchmarking tool approved for the government’s G-Cloud.

The average margin paid by these sectors is considerably higher than the industry best practice rate of 3% - with the average rate in the NHS at 28%.

With Western European economies stuck with slow growth for the foreseeable future organisations 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 that millions of pounds 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.

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

Nagar said: “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.”

Mercatosurveyed 150 ICT managers with annual budgets of over £50,000 in its study of ICT purchases.  For the NHS it found that the average margin was 28%, with the highest margin in this sector at 231%.