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A survey of nearly 400 IT service providers, MSPs, and other professional service companies finds well over half (58 percent) have increased their suppliers over the past three years, with 26 percent keeping the number of vendors they work with the same and 16 percent reducing them.

Conducted by QuoteWerks, a provider of a suite of applications for managing IT procurement processes, the survey also finds more than half (54 percent) working through three or more distributors. Nearly half of respondents (48 percent) also identified distributors as their primary suppliers, with 32 percent preferring to work through e-tailers. Another 12 percent are working directly with vendors.

The biggest issue identified by survey participants is determining availability from vendors and distributors (39 percent), followed by supply chain concerns (19 percent).

Nearly half of respondents (49 percent) also procured more than $100,000 worth of hardware, compared to 42 percent that procured between $25,000 and $100,000. However, 53 percent of transactions involved deals valued at less than $3,000. The number of survey respondents that can reduce the amount of time required to provide customers with a quote to just under an hour is 20 percent, compared with 40 percent that require two to three hours.

A full 93 percent use some type of professional services automation (PSA) platform to manage and track customer activities. Just under half (47 percent) rely on automation to manage requests for quotes (RFQs), compared to 26 percent that still rely on email.

Loyalty has its rewards

Despite years of efforts to convince IT service providers to create exclusive relationships with vendors and distributors, its apparent most partners continue to shop around. While some of that behavior may be a response to the supply chain issues that made it hard to find hardware in the wake of the COVID-19 pandemic, IT services providers have been employing multiple credit lines extended by distributors and vendors for decades.

Less clear, is how much all that shopping around makes a difference. Vendors and distributors often reward IT service providers that reach specific sales volume thresholds with additional discounts. Of course, vendors’ various channel programs can also provide all kinds of incentives to IT service providers as part of their never ceasing effort to sway more deals in their direction. Each IT services provider must decide for themselves to what degree does it make sense to manage multiple vendors and distributors. Each vendor and distributor engaged inevitably adds more overhead to procurement processes that are often already too cumbersome to manage and track.

Every dollar counts

Of course, many IT service providers buy hardware the same way that they always have because of simple inertia. Hardware margins are always thin, so incentives can be slight. However, if an IT services provider is selling more than $100,000 worth of gear, the incentives can add up. That’s important because in the face of stiff competition it’s not always easy maintain margins on IT services provided. After all, every dollar counts during uncertain economic times so many IT service providers would be well-advised to take another look at how their organization is managing procurement.

Photo: Dilok Klaisataporn / Shutterstock

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Mike Vizard

Posted by Mike Vizard

Mike Vizard has covered IT for more than 25 years, and has edited or contributed to a number of tech publications including InfoWorld, eWeek, CRN, Baseline, ComputerWorld, TMCNet, and Digital Review. He currently blogs for IT Business Edge and contributes to CIOinsight, The Channel Insider, Programmableweb and Slashdot. Mike blogs about emerging cloud technology for Smarter MSP.

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