Legal sector pays "almost eight times the recommended mark-up on tech products"
Technology services provider Probrand has released a study highlighting the scale of the margins on IT products such as cables, printer ribbon and USB sticks, with legal paying the highest average mark-up of any sector.
Probrand used the KnowledgeBus IT Benchmarking Tool to conduct a spend analysis on more than £12 million worth of tech spending across 20 sectors over a two-year period highlighted the “staggering” mark-ups organisations are paying to suppliers.
Industry best practice, suggested by SOCITM, is that organisations should not be paying more than a 3% margin to suppliers. However, Probrand’s study suggests that the average margin paid by the legal sector was 23.61% – almost eight times the recommended mark-up. We’d like to point out here that the report says that SOCITM is the Society of IT Managers but it’s the Society for Innovation, Technology and Modernisation. It was SOCITM’s Annual IT Trend survey that suggested a 3% margin paid for ICT products is a benchmark of good practice.
Ian Nethercot, MCIPS supply chain director at Probrand, said: “IT buyers are fundamentally not getting the deals they expect or deserve. The volatility and complexity of the market, with a dose of human intervention in between, is seeing IT budgets unknowingly wasted.
“Buyers are also consuming vast swathes of time doing their level best to manually get quotes, compare and negotiate discounts.
“We believe it is time for a change, buyers demand fair deals from an open and transparent market and that is exactly what the industry needs to deliver. Ultimately, it will help IT procurers save time and unlock more IT for their money.”
The report suggests that geopolitical factors, such as Brexit, are impacting prices in the IT market, and vendors were using the uncertainties around Britain’s departure from the EU to increase prices at the beginning of 2019.