Councils are being charged 11 times too much for IT purchases due to excessive margins by suppliers, a new study has shown.
The annual IT Margins Benchmarking Study, published by KnowledgeBus, found the average margin paid by local councils last year was 19%, even though best practice states the markup should be no higher than 3%.
Shockingly the study found that in one instance, a council was charged a margin of 1,095% for an order of SD cards.
Al Nagar, head of benchmarking at KnowledgeBus, said: ‘The most extreme example of excessive margins are regularly found on those lower volume, spontaneous, “as and when” purchases. These are typically unplanned purchases consisting of items such as memory sticks, power adapters and cables.
‘All procurement officers need to be aware of this trend. Although this type of purchase may be perceived to be of a lesser value, compared to major pieces of IT infrastructure, they can make up a good 25% of the IT budget. By the end of the year, this can easily add up to a six figure difference to the overall IT budget.’
