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IT Purchasing Whitepaper

We frequently receive questions about why we prefer UC- and UC Davis-contracted vendors over non-contracted vendors, even when the non-contracted vendor may offer items at (seemingly) lower prices. This whitepaper provides some context for our purchasing policies.

Leveraging our collective purchasing power

The University negotiates contracts with vendors for discounted pricing based on the volume of our purchasing. When we purchase through those contracts, our purchases count toward our purchasing volume and will be used to negotiate deeper discounts in the future. Purchases made outside of our contracts damage our ability to leverage our purchasing power as an institution.

Total Cost of Ownership (TCO)

Total Cost of Ownership (TCO) [1], [2] looks at all of the costs for owning a piece of equipment, including many factors other than the initial purchase price, such as support staff time, support contracts, infrastructure costs, software costs, etc. The TCO is what the university actually pays for a piece of equipment over its lifecycle. The TCO for a typical computer is about three times the purchase price. By taking TCO into account in our purchasing decisions, we can reduce the TCO to approximately twice the purchase price. Our purchasing guidelines and recommendations take TCO into account: even though the initial purchase price may be higher, the TCO is lower.

Here are some of the ways that our recommendations reduce TCO (many of these are addressed in other points, as well):

  • By limiting the variety of equipment in our environment to items that we know we can support well, we reduce the support costs over the lifetime of the equipment.
  • By ensuring that purchases are protected by warranties and maintenance contracts, we contain the support costs to a known quantity.
  • By removing old, out-of-warranty equipment from our environment, we reduce exposure to the increasing costs of maintaining and repairing out-of-warranty equipment.

[1] http://www3.intel.com/content/dam/doc/white-paper/pc-upgrade-cycles-using-tco-determine-pc-upgrade-paper.pdf

[2] http://www.gartner.com/it/page.jsp?id=636308

Fitness for our environment

Without the operating system that runs on it, without the network connection that provides access to network resources, without the software that enables functionality, a computer is useless. Providing that technology environment requires a lot of technology and labor infrastructure, and the cost of that infrastructure is high.  By controlling what we allow into our IT environment, we can contain the costs of that infrastructure. At the same time, we recognize that the needs of our customers are diverse, so we try very hard to balance containing infrastructure costs with being flexible.

Business versus Consumer lines

Most computer manufacturers offer separate business and consumer product lines. The business lines offer the following advantages:

  • higher quality components
  • consistent components during the model lifecycle
  • compatibility of components and peripherals across an entire line
  • guaranteed support for all components during entire product lifecycle
  • guaranteed availability of identical replacement components during entire product lifecycle
  • guaranteed driver, firmware and software updates for major OS releases during entire product lifecycle
  • integrated manageability options enable support automation
  • designed for easy (and typically tool-less) maintenance

What all of these boil down to is that we have a much better ability to support business lines than consumer lines. While the initial purchase price for business lines may be higher and they may offer fewer flashy options when compared to consumer lines, the business lines deliver a better overall experience at a lower total cost.

Support contracts

As mentioned above, support costs—including maintenance and repair—are often higher than initial purchase costs. When the UC system or UC Davis negotiates a contract, the support costs in the form of warranties and maintenance contracts are usually included in the contract as part of the up-front purchase price.  By purchasing on-contract, we leverage the purchasing power of the UC system to lower these support costs.

Additionally, the level of support is negotiated in the contracts. When you call Apple or Dell as a consumer, you talk to first-level support personnel who will walk you through a lengthy script. When we call Apple or Dell as part of our contract, we get priority access to high-level tech support, and we also have direct access to ordering parts or on-site service.

Reduced overhead through e-procurement

Purchasing requires a significant amount of staff time to process—not just on the front end of making the purchase, but also on the back end of receiving and processing paperwork. Purchasing from a non-standard vendor often takes 2+ hours of staff time and can add anywhere from $40 to $200 to the (hidden) cost of the purchase.

However, for our contracted vendors, UC Davis has an “e-procurement” system that allows us to place orders that are automatically entered into the UC Davis accounting system. E-procurement dramatically reduces the staff time required to process an order, both during the initial order process and during the back-end accounting phase of the purchase.

Better terms from contracted vendors

Our contracted vendors agree to certain terms, including no restocking fees, extended return periods, free or reduced rate standard shipping, discounted expedited shipping, paying for return shipping, and providing dedicated customer service contacts for any order-related issues.  These contracted terms reduce the administrative overhead for both standard orders and exceptions. They also protect us from unexpected costs. For instance, whether it’s due to defect or simply because we decide the item is not a good fit for our needs, our contracted vendors will accept returns for an extended period, charge no restocking fee, pay for the return shipping, and do all of this with no hassles.

Our Contracts

Primary

Our primary contracts are the contracted vendors we prefer whenever possible because they both offer contracted pricing and support, and because they support e-procurement, which significantly lowers the cost of purchasing administration.

Computer peripherals, upgrades and supplies

  • CDW-G via UCDBuy e-procurement

Windows computers, servers, printers, upgrades and peripherals

  • Dell via UCDBuy e-procurement

Secondary

Our secondary contracts are the contracted vendors we use when items are not available from our primary contracts. They do not offer e-procurement integration.

Windows Computers and Servers

  • Microsoft via UC contract
  • Silicon Mechanics via UC contract

Software Licenses (Microsoft, Adobe)

  • SHI via UC contract

Printers

  • Xerox via UC contract
  • HP via UC Contract

Non-Contract

Non-contract vendors do not have pricing contracts with the UC system or UC Davis, through they may offer standard educational discounts. Additionally, they do not offer e-procurement integration.

Macintosh Computers, iPad tablets, etc.

  • Apple Computer – offers standard educational discount