Small business can often be disadvantaged when purchasing IT goods and services. Without the buying power and procurement departments of the corporates, small businesses often pay retail prices which tend to be much higher than those negotiated by large companies. But there are bargains to be had, you just need to know where to look. When it comes to IT procurement, are you getting the best deal?
The challenges
One of the main issues for SMEs when it comes to procurement is time. It takes time to do and sometimes, it might seem more convenient to just fulfill your IT needs in any of the big national retailers. But, as they say, time is money. If you devote some of your time to better purchasing you will reap the benefits.
Misplaced loyalty and bundling
Another issue that stems from being a time-poor business operator is the temptation to deal with one supplier because they have been cheap in the past, or through a sense of loyalty. Just because they may have been cheap in the past doesn’t mean they will continue to be so. They might have offered a cheap deal to get the initial sale and then increase their prices.
Another of the common ways for IT suppliers to ‘hide’ margins on their products is in bundled deals. If you’re looking for a specific piece of hardware or software, just get a quote for that item alone. The same rule applies if you’re looking for after-sales service and support from your IT supplier.
It pays to shop around
Now to the nitty gritty. The old adage that it pays to shop around is a salient one. In times of economic turmoil it makes sense to be frugal, providing, of course, it doesn’t cost you more time and money searching for a better price than the discount itself. Having worked for IT vendors for the past 10 years, I can say it is most definitely worth doing your due diligence on price before you buy. As a rule of thumb, I estimate that by shopping around the average small business could save $100 per employee, per year.
Strike while the discounts are hot
It’s also a great time to put your IT needs under the microscope because of the investment incentives announced in the Federal Budget in May. The Government announced a boost to its capital investment tax incentive by which, in addition to the existing tax incentive, small businesses can claim an additional 50 percent tax deduction for eligible assets costing more than $1,000 and purchased before December 31. This is up from the 30 percent announced earlier this year and extends the period of eligibility by six months.
These days, every business needs some information technology capacity, even if it’s one laptop with basic accounting software on it. And if you’re paying retail prices for any of your IT needs, because you perceive it as convenient, then you’re paying too much.Coupled with the discounts you can negotiate yourself (and there are plenty of retailers offering great prices now), you can literally save thousands of dollars.
Start saving: the basics
There are a few basics I like to look at before I even embark on any new procurement. You must ask yourself if you have a good understanding of which products or services have the biggest effect on your IT budget? If you don’t know, you can use a simple calculator to figure it out. There’s a free online calculator at www.powerbuy.com.au/calculator/
Web robots are an excellent way to benchmark for pricing. Robots such as shopbot (www.shopbot.com.au), staticice (www.staticice.com.au) and pricespy (www.pricespy.com.au) take feeds from online stores across Australia. But remember, the cheaper stores might not necessarily be better unless they are reputable because some may not provide good post-sales support or may source product from overseas which may not be supported or covered by warranty in Australia. Reputable, good value stores like TechBuy (www.techbuy.com.au) and Harris Technology (www.ht.com.au) are my favourites.
You should also figure out the total lifetime cost of your pending purchase. Some technologies cost you significantly more to run over their life compared to the upfront outlay. Roughly 80 percent of the total three-year cost of running a laser printer comes from ongoing consumables (toner) so finding a printer that can print black-and-white for even one cent cheaper than the other brands, can save you thousands of dollars.
Another simple way to save is on your software fees, even if you’re a micro-business. Microsoft runs an Open License Program that offers better pricing if you require five or more copies. Security vendors like PC Tools (www.pctools.com) and Trend Micro (www.trendmicro.com.au) allow you to install their internet security software on up to three computers for the same price as one.
Consider leasing
Leasing your IT products or paying a monthly subscription fee can free up your cashflow and save you money. Flexirent (www.flexirent.com.au) and Rentsmart (www.rentsmart.com.au) are two reputable leasing companies. Both sites provide an online quote so you can calculate your monthly payment and total saving. Salesforce.com (www.salesforce.com) offers a very popular online service that lets you pay for customer relationship management (CRM) software on a per-user, per-month basis. And if you’re really looking for ways to cut costs, check out Google aps (www.google.com/a/) – it’s free!
If you’re able to spend some time researching your options, you can make a big positive change to your bottom line and enjoy the benefits much larger companies get on their IT purchases.
—Joel Montgomery is founder of Powerbuy (www.powerbuy.com.au), an online buyers’ group for small businesses to help them buy IT equipment at the best prices.
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