Dell: Gov's cost-cutting mania is driving away suppliers Dell believes the UK government has squeezed suppliers too hard on price - to the point where the PC giant, and others, are walking away from public sector business. Major IT vendors, including HP, have already questioned where the Cabinet Office will go next to ease its budget woes, having forced the biggest players to lose a …
“My preference is that we sit down more proactively with the government and talk about how can you step beyond commodity purchases because we've got a broad portfolio."
translation:
1) we want to be able to ignore procurement rules and lock in products and services without all this nasty bidding stuff
2) we have all these other high margin services that you're not buying. We want you to buy those too. maybe we'd be more flexible on pricing on the stuff you're buying if you'd buy some of that other stuff.
In other words, they want to go back to doing thing the old way where the big boys locked up all the juicy contracts with high profit margins. Having seen or heard some of the crap that used to be pulled under some of these contracts, I have no sympathy with the big vendors at all. They used to milk govt. procurement processes for insane amounts of money and didn't necessarily deliver anything at the end of it.
OK high margins are out this week, OK some suppliers want to walk away.
When I was purchasing I wanted some 'suppliers' to walk away.
They were the ones who wanted to rewrite specifications because they could not meet them and others could - and the compliant ones were cheaper, Oh Dear.
Now I am still paying, this time directly from my pocket so I am relatively happy if margins are tight because the pendulum has swung that way.
My personal margins are also very tight at the moment.
"They were the ones who wanted to rewrite specifications because they could not meet them"
And there were the ones who would do this in their tenders and hope we wouldn't notice.
It's interesting that for more-or-less the same functionality the most expensive option is over 20 times higher than the cheapest one. Admittedly I know that the cheapest one won't work, but the most expensive one isn't much better. It's the stuff in the middle of the pack which does it all and it's only 3 times the cheapest bidder.
Dell had better get used to this.The price of cloud product is way low as well, and after AWS and Google, governments are the biggest purchasers of IT, with banks in contention for that title.
They've all figured out that COTS is cheap, and they can buy really inexpensive gear, still achieve the mission, and perhaps get faster systems to boot.
Low-cost systems used to be Dell's claim to fame, and they should be in much better shape than HP or EMC to handle the crunch that is coming.
'Low-cost systems used to be Dell's claim to fame, and they should be in much better shape than HP or EMC to handle the crunch that is coming.'
That would rather depend on what Dell's strategy is if and when they go private. It appears to be a variant of the Surface RT gnome's one:
1. PC sales are declining. There's more margin in tablets and stuff.
2. ?
3. Profit!
"They've all figured out that COTS is cheap"
Unless you need oodles of storage or computing power, in which case it isn't (cloud computing gets very expensive very quickly and cloud storage appears cheap until you realise there's a charge for reading it.)
But the people with the funding authority don't realise that. Wilful blindness in most cases.
That means we have to turn to Dell (or whoiever) and tell them to give the best prices - and if the best prices aren't good enough the project gets shelved until costs come down far enough to make it viable. I'm not rally interested in the usual dance of Company Z giving a figure that's 5-6 times higher than it should be, then makes a huge song and dance about offering an 80% discount (I'm looking at YOU, BTinet) to a figure which is still higher than a competitor's retail figure (I'm STILL looking at you, BTinet).
The REAL budget blower in most projects is shifting goalposts. It's my job to try and ensure that people don't do it, or that things are designed to scale. In a lot of cases this precludes the cheapest option as upgrading from there can usually only be achieved with a forklift, but the "save 10% now, pay 100% more later" model prevails in most cases.
I find it mildly amusing that companies such as HP and Dell are complaining about the government using e-auctions and the like to drive rock bottom prices. These companies have been doing the same to their own suppliers for years.
HP in particular can be very difficult to work with, requiring annual 5% reductions from suppliers every year regardless of inflation and costs. Seems like they are just unhappy to be subject to the same pressures they have been applying themselves.
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2023
