Supply-Chain Complexities Reshape IT Procurement for Integrators
Sales can be a time-consuming and complicated process, with deals often requiring weeks, if not months, to close for even the most skilled professionals. Those timelines may be difficult to swallow for integrators looking to drive new sources of revenue and boost their cash flow. Getting the hardware, software and supplies required to complete prospective and current clients’ projects can be a real challenge today. This, in large part, is due to the global disruptions that occurred over the past three years.
The technology industry was significantly impacted by the pandemic and rapid shifts in demand and supply chain constraints. What began as a temporary move to work from home environments, is now driving more fluid (if not permanent) remote/hybrid HR policies in many organizations. As a result, it has forced many IT specialists to adapt their strategies and speed up critical project timelines.
With demand high and supply chains in flux (but improving), pricing has been, and in all likelihood, will continue to be a challenge, especially with inflation factored into the equation. According to Gartner, businesses are expected to increase their IT budgets 5.5% in 2023. However, that boost will barely keep pace with the annual rise in the Consumer price index (4.9% as of the April 2023 report). Inflation erodes spending power and limits purchases. As the prices of components go up, clients with inflexible budgets may have to delay projects and upgrades, constraining revenue opportunities for integrators.
The impact on profits can be even more concerning. To ensure project costs remain within budget, integrators might take the path of least resistance to close the deal and give up part of their margins, essentially leaving a larger percentage of the sale price for suppliers. Integrators need to take action to prevent profit erosion.
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