What can IT procurement pros do amid pricing volatility?

There’s a line at the hardware store, and we’re not talking Home Depot.

Buyers from IT teams are looking for the chips and semiconductors to power their PC refreshes and AI overhauls. But prices and lead times are unpredictable, given the current demand for hardware.

Does an IT pro, especially one at a small company, have any leverage to negotiate amid this pricing volatility?

Two major factors have driven tech pricing increases and unpredictability:

• AI infrastructure. Driven by AI infrastructure buildouts, manufacturers are dedicating production to high-margin AI memory products, leading to a shortage of consumer and enterprise memory options like DDR4 and DDR5.
• Supply chain uncertainty. Semiconductor materials like helium are in short supply in the US, as IT Brew reported last year.

In turn, IT buyers face reported increases in lead times and costs for CPUs and memory chips, as well as the PCs and other enterprise hardware that require them.

Matt Zafirovski, CEO at technology solutions provider Tusker, said a customer working on a data center buildout placed an order for “a really important networking component” in March—and the ship date is set for November.

Zafirovski recommends that companies handle pricing volatility with preparation:

• Understand your roadmap. Know what you’re trying to build out for the next two to four years, he said, so you can plan, prioritize, and sequence purchasing.
• Reviewing refresh plans. Not every employee needs to be on the same endpoint refresh cycle, Zafirovski said, and companies should determine which users require frequent hardware updates, and which assets can be stretched. “De-specing,” or reducing necessary hardware, on a device is also an option. “If the price of the laptop went up 30% on the endpoint over the last six months, do you de-spec and cut the amount of processing power, the amount of memory in half?” he told us.
• Putting all options on the table. Consider alternative vendors and even emerging options like GPU-as-a-service (i.e., GPUaaS, or cloud-based access to graphics processing units on demand). The option offers a potential “pay as you go” alternative.

Let’s negotiate. But how much power do IT pros at small or medium-size companies (SMBs) really have to name their price? An SMB practitioner has more flexibility than they might expect, according to Gordon Wong, senior partner and operations excellence practice lead at consultancy West Monroe.

Vendors depend on SMBs to hit their projections. “They’re going to want to be the first place you look anytime you need new technology or new hardware in your environment. The leverage that you have is that you’re small and you’re nimble, and you can pivot from one vendor to another vendor very quickly,” Wong told IT Brew.

Here are his recommendations for those negotiating price:

• Don’t just say, “Can I get a discount?” Instead, structure a partnership that benefits the vendor if you, the buyer, grow or keep buying from them, he said. Negotiate volume bands, for example, and different price levels tied to higher volumes bought over time: “Now you’re buying at a larger scale, and maybe you qualify for a different tier of buying.”
• It’s not just about unit price. Consider factors like technical support, and proactive help with refreshes—and then tie prices to meeting those needs. “It’s less about the unit cost, but it’s more about what are you getting for that cost,” he said.
• Control volatility. Prices can change, and negotiators have an opportunity to place holds in their contracts. (For example, maybe a buyer can demand a price lock if they agree to a deal in a certain number of days.)
• Create flexibility. If you divest, you don’t want to be stuck with extra hardware. If your company grows, you may need more devices. Buyers should try to build reopening clauses when factors like business model, spend, or even geography change. “I think the most important strategy is to set up optionality as a small and medium-sized business,” he said.
• Avoid lock-in. Additionally, Wong recommended business leaders create IT infrastructure that doesn’t lock you with one vendor—easier said than done. Make sure “there’s always some level of competition as you discuss pricing,” he said.

Unpredictability exists not just in the hardware pricing, but in how tomorrow’s AI-ifying enterprises will configure their hardware.

Russell Jukes, chief digital and information officer at enterprise technology services and solutions company DXC Technology (and someone who’s been reconsidering refresh cycles lately himself), said AI capabilities “at the edge,” on locally processing devices like laptops and PCs, are still evolving. New architectures could change traditional hardware setups—for instance, maybe a traditional network switch is someday replaced by a software-defined one on a local, AI-ready device.

“We don’t quite yet fully understand what AI will look like at the edge,” he said. “Buying ahead now and then missing out on those capabilities might be a degradation.”