CIOs consolidate IT spending with larger vendors

As IT budgets tighten, most CIOs turn to larger vendors that have strong brands and the ability to provide a wide variety of products and services to consolidate their purchases.

The main beneficiary of this trend is IBM, followed by Dell Computer, Cisco Systems, and Hewlett-Packard , according to a survey of 100 CIOs conducted by the research department of investment bank Merrill Lynch & Co.

While 5 per cent of respondents said they were shifting purchases to smaller vendors a massive 80 per cent said they are consolidating purchases with larger vendors. The rest reported no change either way in their purchasing strategy.

While Mission Australia IT national manager Michael Robinson said he disagreed with part of the findings, he added that his organisation is consolidating purchasing with a core of specialist providers, such as network infrastructure, products and peripherals, telecommunications, desktops, laptops, servers and services.

"We are also shifting purchases to smaller vendors to align our specific needs with organisations we see as having better skills in a particular area," Robinson said.

Robinson agreed the large vendors are the main beneficiaries of this trend "only because those companies are trying to be all things to all people".

"Personally, I think too many people have been burnt by having all of their eggs in one basket. You need to diversify to get the best quality and price," Robinson said.

Robinson said there is definitely a preference for managing fewer vendor relationships, but within reason.

"I have no interest in managing relationships with multiple providers of similar services, [I'd rather deal with] a selected few," Robinson said.

The survey also found that respondents are spending less than planned this year on computer hardware, communications equipment and software.

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