Lower prices no magic pudding

Value for money and pricing recorded significant rises as issues of importance to IT managers during the first six months of 2003, according to the latest six-monthly instalment of the Corporate Report from research house InterData.

The Corporate Report measures issues of importance and IT vendor performance satisfaction as rated by 500 senior IT executives in large Australian enterprises.

The survey rates the sentiment on a "reverse scale" of 1 to 5, with 1 being the most satisfied or important and 5 being the converse.

While the top five relationship factors of end-user support, commitment to relationship, added value in relationship, value for money and quality of general advice remain relatively static, money and performance concerns are clearly on the march.

Value for money recorded a 6.5 per cent increase (up to 1.15 from 1.23) in importance, while price jumped by a substantial 5.5 per cent (to 1.77 from 1.88) in a sure sign that purchasers are bargaining harder than ever.

IT managers like P&H Mine Pro Services National IT&T manager Brent Hasler confirmed the trend but cautioned that stripping out any margin for vendors could lead to other problems.

"We are always very conscious of price, of course,” said Hasler.

“Naturally, we will make sure that we are not getting ripped off and we do that by comparing prices, especially when budgets are diminishing.

“But I'm very cautious not to make it impossible for vendors to make any money out of a deal because that can cause problems down the line, and the cost will often come out of somewhere else, usually service."

Hasler said that many organisations also effectively priced-in premium on quality and reliability of services when choosing vendors. He estimated many organisations would pay up to 10 per cent more.

How the vendors rated

One notable movement in the Corporate Report was sagging customer satisfaction levels, with Oracle slipping to 2.67 from 2.50 on competitiveness, as well as losing ground on responsiveness, effectiveness in problem resolution, understanding user needs, being proactive in dealings and added value in a relationship.

Microsoft slipped on price satisfaction (from 2.42 to 2.50), possibly due to its new licensing regime, while Dell regressed marginally on satisfaction levels for professional competence (2.50 from 2.48) and contact with senior vendor management (2.55 from 2.49).

The worst performing areas for vendors remained consistent, with effectiveness of problem resolution, price, responsiveness, quality of implementation, people, and industry development still disappointing users.

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