Centralised purchasing threatens channel

Centralised purchasing threatens channel

A leading channel figure is calling on resellers to take a stand on 'whole of government' purchasing policies to ensure local industry survival.

ASI Solutions director, Maree Lowe, said resellers should lobby government to define their role.

"We've got to work out how to present the channel's case to the CIO or purchasing manager," she said. "We must be prepared to participate in determining what the policy should be before it is set, and understand what the government is working towards."

The call follows the NSW state government's appointment of former Department of Education and Training CIO, Paul Edgecumbe, as its first CIO. His introduction follows the creation of a similar office in Victoria.

A representation from the Victorian Purchasing Board, which looks after tenders once a preferred panel of suppliers has been put in place, said all ICT purchases by government agencies were directed to the CIO office.

Similarly, the NSW CIO would be responsible for assessing ICT plans and adjusting them before agencies developed business cases for specific IT investment, NSW Minister for Commerce, John Della Bosca, said.

These appointments showed governments were adopting an enterprise approach to IT buying, Lowe said. In turn, greater focus was being placed on the business case for procurement, with more attention paid to pricing and the long-term benefits of investment across the board.

While it makes business sense, resellers claim the centralised buying system could override specific agency requirements and cut them out of contracts. Fed IT is a supplier of hardware and services to the Victorian Department of Education and Training and the Department of Defence.

Its director, Steve Bowtell, said introducing a CIO limited reseller opportunities to participate.

One way it would do this would be to initiate hardware procurement for several departments simultaneously, rather than on an individual basis. This would result in bulkier contracts and see vendors bring in cut-throat pricing, he said.

"Small government departments rely on small to mid-sized resellers," Bowtell said. "But we won't be available to them when they have to purchase from the one whole of government body list."

The extended scope of these contracts could also force the government to outsource the tender process, further cutting out contact with end-users, he said. A spokesperson for the NSW Department of Commerce said part of the CIO's role was to ensure the government gets the most out of its IT expenditure. "We understand reseller concerns but have to ensure that the taxpayers get the best value," he said.

Bowtell said the only way to hold onto a slice of government hardware contracts was to have strong client and vendor relationships.

"You need to convince the vendor that you are necessary in the process," he said.

"For example, we are a supplier of HP to the state government in Victoria. HP goes into the department and nominates two or three dealers who can do the business on its behalf with access to the pricing they have set for the government."

Australia's largest PC manufacturer, Optima, is also concerned about the centralisation of tenders. Its CEO, Cornel Ung, said the company was already lobbying government.

Optima decided to take action after recently losing a share of its hardware procurement business into the public schools sector to international vendors. "We have to let them see what type of services we provide to schools while also meeting their requirements," Ung said.

Lowe said the changes could see resellers shift their focus from product selling to servicing the needs of departments.

"There will be areas we walk away from because they are no longer relevant or have no margin in them," she said. "It is the more specialist contracts where the reseller fits in."

For more on this story, check out this week's edition of ARN.

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