High Australian dollar no excuse to hold off on ICT purchases: Analysts

$A may overtake the $US soon but IT leaders should stay focussed on their longer term ICT strategies

The Australian dollar may overtake the US dollar as soon as next week, but IT departments have been advised not to hold off on their technology purchases in an effort to reap the most of potential future price cuts in coming months.

According to Gartner Australia’s managing vice president, Ian Bertram, there would likely be limited scope for re-negotiating more favourable services deals as exchange rate fluctuations were typically built into contracts.

“For hardware, use [the string dollar] as a negotiating tool or tactic, but I don’t know how far it is going to get you because most [deals] are done in local currency even for big purchases,” he said. “But, hey, no harm in trying.”

Bertram advised that CIOs and IT managers not hold off their purchases, especially if they were for critical projects such as data centre upgrades.

“If they are non-critical pieces of hardware, and you can use the dollar as a negotiation point, sure, but don’t be surprised if the vendor doesn’t give it to you,” he said.

“A vendor will quite easily rack up their prices when the dollar goes the other way, but they are not as willing to move their prices in the other direction.”

According to IDC Australia market analyst, Amy Cheah, any cuts to IT hardware and services would take some time to follow through, if at all.

“Particularly in the hardware space, margins have been squeezed for some time… so there is a chance some vendors and channel players will retain the margin they get from a higher Aussie to win back some of the profits,” she said.

Instead of fixating on the high Australian dollar — which could still depreciate, stay where it is, or appreciate further — CIOs and IT managers were better off focusing on longer term strategies to align IT with business objectives.

“The high Aussie dollar should not be the dominant factor in making a decision around purchasing,” Cheah said. “It might sound like a cliché, but CIOs and IT managers should always be looking at where they can achieve savings through better negotiated service agreements and supply contracts.”

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