Business spending on new technology is rebounding, which is good
news for vendors-and entrepreneurs who move quickly to take
advantage of prices for PCs and other goods. A recent study of IT
purchasing by New York City consulting firm McKinsey & Co. says
timely purchases, clever negotiation and internal controls can help
businesses save megabucks. The catch: You have to do it soon, and
you have to do it right.
There's no doubt that vendors have slashed prices for
computers and other technology. "What you used to spend $2,000
for, you can get for $950 to $1,200," says Alan
Pearlman, a Northbrook, Illinois, attorney and computer
consultant. "I don't think there's a better time to
buy than right now."
Prices are probably going up. After PC sales to U.S. businesses
were down in 2002, and up just 9.1 percent last year, shipments to
businesses are growing 14.8 percent in 2004, according to market
research firm IDC.
Worldwide, the value of PCs shipped this year to businesses will
grow 6.5 percent, IDC says-money that will come from buyers'
pockets.
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Or not. The McKinsey team estimated that savings of 10 to 20
percent on IT outlays were possible using its recipe. That means
you could be paying less while everybody else pays more. Here's
how:
1. Renegotiate
existing contracts for services such as network support and
consulting. Telecom is especially ripe for bargains. Start
by setting bench marks for rates and auditing bills to ensure
you're not overpaying. And instead of buying all long-distance,
local phone and other telecom services from one vendor, dual-source
it. Vendors will treat you better and charge you less. McKinsey
says one firm saved 28 percent on telecom with these and other
tricks.
2. Make sure you need
whatever new technology you do buy. Inventory all PCs,
printers and software. Look for opportunities to consolidate
purchases, standardize configurations and root out duplication.
McKinsey's example company had 30 percent more printers than it
needed. It also reduced PC configurations from 10 to three.
3. Set up a system to
keep doing it. Pick a team of people from IT and other
departments, and meet with them regularly to discuss what they need
and how to save on it. That can save 3 to 7 percent on IT outlays.
In the last year, Chicago attorney and entrepreneur Joe Messer, 42,
has made major tech purchases for legal, manufacturing and real
estate ventures that together employ 26 people. A VoIP telephone
system costs $30,000 but allows no-cost communications among
offices across Chicago. "And we bought a Dell server for
$8,000," he adds. "We were impressed with the price on
that."
But consider the caveats. Messer's VoIP system requires
regular telephone service as a backup, since VoIP won't work if
the power goes out. And the new server was necessary because the
company was standardizing on a new $20,000 accounting software
package that wouldn't run on the old server. Remember, too,
that newer technology isn't always better. Messer eyeballed
VoIP systems for a long time before writing a check. "We
waited for stabilization because we'd heard there were some
problems with the earlier version," he says.
So assuming the technology you see is the technology you need,
waiting may not be the best strategy for the moment. Also, if the
McKinsey report is right, changing the way you buy IT may more than
make up for any savings realized by not buying any at all. Most
important, it's almost certain that prices have slowed or
stopped their years-long slide. As Pearlman says, "Get your
technology now, before these prices start going up."
Mark Henricks writes on business and technology for leading
publications and is author of Not Just a Living.