High Savings in IT and Mobile Communications
What specific challenges are there in IT procurement compared to other purchasing areas or product groups?
In IT procurement, there are specific challenges that differ significantly from other purchasing areas or product groups. The biggest challenge is ensuring the operational readiness of IT, as a failure can cripple the entire company’s activity. While a faulty laptop is only a minor issue, the failure of the central IT system would halt the entire operation, as no external connections would be possible. Therefore, it is crucial that changes in providers or suppliers do not cause disruptions.
Another challenge is that the IT department often purchases autonomously, with the general purchasing department barely involved. However, we recommend collaboration as this allows the IT department to get more services for the same budget. It is important to have broad technical expertise for this. At Kloepfel Consulting, we have buyers who specialize in the IT sector and can negotiate with large monopolists like Microsoft or SAP.
How do you engage with the client’s IT and purchasing departments?
With our many years of experience in the IT sector, ranging from mobile communications to notebooks to Microsoft and SAP, we have the necessary expertise to clearly demonstrate savings opportunities to the client. It is important to show empathy and understanding for the client, as we intervene in existing business processes. The client’s IT department receives a transparent insight into our work throughout the entire project. This ensures optimal support and allows us to realize the identified savings together with the client.
What measures can reduce costs in IT procurement without compromising quality? What can Kloepfel do?
First of all, it is important to understand the interrelationships between the individual IT services by analyzing the customer’s IT infrastructure. At Kloepfel Consulting, we conduct an initial interview lasting between 1 to 1.5 hours, depending on the size of the company. The interview aims to get an overview of the customer’s working methods. We gather information such as whether there is an in-house data center, which cloud system is used, which ERP system is in place, or how the company’s locations are interconnected.
After the interview, a summary is created, and the areas where savings are possible are identified. The client then receives an overview with our analyses. Only then does Kloepfel specifically request the necessary documents for the sub-areas to be analyzed.
3 examples of how costs can be optimized:
Location networking: For location networking, MPLS (Multiprotocol Label Switching) is often used, a telecommunications technique for accelerating and managing network traffic. New technologies like SD-WAN, on the other hand, allow the use of simple internet connections with intelligent control, which is more cost-effective and efficient. Kloepfel’s IT buyers achieve savings of between 10 and 40 percent in such projects without quality loss.
Questioning demand: Employees of a company often request IT equipment considered the best. But is the most expensive always necessary? For simple business processes, devices with lower specifications are often sufficient, such as an iPhone SE instead of an iPhone 15. This can save significant costs.
Market comparison: There is constant competition in the market. Therefore, we continuously analyze how other customers and competitors meet IT needs. Based on these comparisons, we find cost-effective solutions for our customers.
What savings does Kloepfel make possible?
The addressable procurement volume is often very limited. We usually calculate that about half of a company’s available IT budget can be optimized by us. For example, with a budget of 5 million euros, approximately 2.5 million euros can be optimized by us. On average, we realize about 8 percent savings, which corresponds to around 200,000 euros in annual savings.
If a buyer handles the project who is not specialized in IT, there is a risk that the full savings potential will not be realized due to a lack of expertise. To address the right areas, it is crucial to understand the interrelationships between the various IT sub-areas. It is important that the entire IT process functions smoothly, even if only a sub-area is optimized.
What role do contracts and negotiations play in IT procurement, especially concerning Service Level Agreements and license agreements?
Contracts and negotiations play a central role in IT procurement, particularly regarding Service Level Agreements (SLAs) and license agreements. SLAs are framework agreements that define specific services and their quality. For the IT manager, they are essential as they set the conditions for system recovery time and service availability. The costs for SLAs can be significant and require extensive market knowledge.
License agreements, on the other hand, regulate the use of software and other IT resources, where detailed knowledge of the IT department’s needs and the available offers is also important.
Negotiating these contracts can result in better conditions, such as volume discounts or flexible payment terms. Within the company, the IT department’s needs must be aligned with the available resources and priorities. A thorough market analysis helps identify cost-effective external services. A cost-benefit analysis in collaboration with the client then decides which IT services should be provided internally or externally. This ensures that the organization receives tailored services and products at the most cost-effective conditions.
Are there any trends or developments that will influence the future of IT procurement?
Advancing technologies such as Artificial Intelligence and digitalization will influence the future of IT procurement. This should always be kept in mind from a cost-benefit perspective.
Contact:
Kloepfel Group
Damir Berberovic
Tel.: 0211 941 984 33 | Mail: rendite@kloepfel-consulting.com