PracticeConsultingCompanies urged to barter over IT contracts

Companies urged to barter over IT contracts

Analyst Meta Group claims more than half of hardware and software contracts are too expensive, and is advising customers to renegotiate their largest deals.

Large companies in the UK are typically paying 10 to 15% over the odds, according to the analyst.

Rakesh Kumar, vice president of international enterprise data centre strategies, said that he predicted widespread renegotiation of IT contracts over the coming year.

‘What’s surprising is that a lot of these organisations are supposed to have good financial controls in place. Six out of ten companies are paying too much for their hardware and software,’ Kumar said. ‘Vendors will resist but companies have a financial responsibility to do this and they still have the upper hand.’

Meta advises companies to look at their major IT contracts and aim to review and potentially renegotiate one each quarter. ‘Focus on the 20% of contracts where the 80% of your costs are going. I’ll pretty much guarantee they will save more than it costs them to do that.

‘It’s difficult to renegotiate on the basis of return on investment from software but you can benchmark what you are paying compared to other companies – there are statistics out there,’ Kumar added.

  • More at www.metagroup.com.

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