Computer Category Management Final.docx

Category: Computer Equipment Subcategories and Contracts (505ENT-M22-WICOMPUTER-00, Computer Equipment and Related Services, 11/12/21-11/11/24)

Current Suppliers (Current contract data, starting November 12, 2021, the contract start date).

Spend (Amount and customer breakout; how much each year; who buys most/least; projections for increase or decrease year over year)

Ex: Customer spend proportions; contract historic spend vs. projection

Market Trends and Risk Forecast

The computer industry changes rapidly and has been hit hard by an intel chip shortage for the last couple of years. The recent Pandemic and tariffs, have increased costs and caused computer shortages.

Pandemic:

· The majority of computer manufacturers have factories in China, and when outbreaks occur, manufacturing plants have temporarily shut down, causing delays.

· Even when production ramped up, shortages continued, while demand spiked. Especially with employees working at home, laptop demand increased.

· Finally, transporting the computers to the United States has had delays with shipping. Many couriers, including UPS and FedEx, have suspended their service guarantees (which promise you a refund if you don’t get your package), citing COVID-19’s disruptions to supply chains, travel restrictions, and limited flight capacity, and noting that they anticipated delays

· This is resulting in price increases across the industry.

Environmental:

· Factories also shut down in the last year due to global climate change resulting in droughts and warmer temperatures. Factories in China’s southwest shut down and a city imposed rolling blackouts after reservoirs to generate hydropower ran low in a worsening drought.

Tariff’s are also a continuing issue:

· In September 2018, the federal government placed a ten (10) percent tariff on computer hardware electronics.

· In May 2019, the tariffs increased to twenty-five (25) percent.

· It affects desktop cases, motherboards, graphic cards, cables, racks, routers, and power supplies.

· Lenovo has moved eighty-five (85) percent of their supplies out of China, so they are mostly unaffected by Tariffs.

SBOP found that over time, the percentage discounts have decreased from the original discount of approximately 60% to an average of 30-40% discount. For the new computer configurations, the discounts went back to the 60% off list price.

The new standard configurations have decreased from 63% of purchases to 52% of overall purchases. When SBOP rebid the Computer Equipment and Related Services contract last year, the HP models that were bid did not match up with our previous standard computers, or what agencies were frequently buying. Thus, with the refresh in next fiscal year, we are hoping to correct the issue and better reflect what agencies are purchasing.

Another issue has been the intel chip shortage:

· Starting in 2019, the Intel Chips production had issues, and the shortage is expected to last at least through 2024.

· At one point, the delivery time for computers were almost a year.

· The computer shortage has improved briefly, so agencies can get computers, but not the docking stations since the same chips are used. Some higher end docking stations remain available, but at a higher price for agencies.

Legal Impacts

Section 5.7 of the RFP states, “During the contract renewal period, the State may refresh minimum standard configurations, discount categories, and value-add Services to reflect updated business needs. The State reserves the right to add or delete products and/or services and to expand or decrease the standard configurations over the life of the Contract. This includes adding non-OEM Accessories for optional purchase. These changes will be at the sole discretion of the State to review and approve hardware and/or service changes through a written approval process, including mutually agreed upon pricing.”

User Groups/Agencies Impacted

This contract is highly used by state agencies and municipalities. This contract is also available for use by University Campuses.

Key Metrics and Savings Targets

The State (including municipalities) spent approximately $21.3 million on computers (desktops, laptops, workstations, mobile workstations, and tablets) in FY22. The previous year’s spend was $20.6 million on computers. The pandemic continues to create a larger need for laptops and tablets to accommodate remote work. The spend on tablets increased by $682,000 in last fiscal year.

In November 2022, SBOP awarded a new contract, after working with a standards committee to update specifications. The contract was revised to negotiate the standard configurations annually to better reflect agency spend, and to receive the best possible discounts.

Current Progress and Recommendations

SBOP intends to revise the standard configurations annually, based on input from state agencies, and by monitoring usage data. The following recommendations will be implemented:

· Review current computer configurations on an annual basis to ensure they meet the needs of state agencies

· Review Quarterly spend and identify the most frequently purchased models

· Analyze individual agency purchases to identify which agencies are buying standard models or custom computers

· Determine if agency needs are not being met through the contract and whether the standards committee is fully representative.

E-commerce Enablement Status All of the Vendors are on Wisbuy. With the latest amendment, we have also required that the standard computers be available on the landing page of their punch-out sites.

Code Scope (NIGP and account codes)

FY2022 Standard Computer Comparison

Standard Computer Custom Computers 11074471.029999996 10183230.730000002

Agency PDS Vanguard Computer Vanguard Storage and Recover Insight Dell 2635496.1400000048 2245070.4699999993 4377772.7100000046 2930162.98 78970.11 UW PDS Vanguard Computer Vanguard Storage and Recover Insight Dell 187555.7 1654461.0999999896 1929 17705.349999999999 Municipality PDS Vanguard Computer Vanguard Storage and Recover Insight Dell 6048491.9299999997 4536273.3199999984 3075633.5000000033 37602.980000000003

Annual Contractor Spend

FY22 PDS Vanguard Computer Vanguard Storage & Recovery Insight Dell 12841606.119999999 10852686.509999994 11214014.84 3110509.92 78970.11 FY21 PDS Vanguard Computer Vanguard Storage & Recovery Insight Dell 14147274.190000005 7621026.5800000019 7668796.4800000004 1167542.7999999956 FY20 PDS Vanguard Computer Vanguard Storage & Recovery Insight Dell 15143506.49 8646115.1999999993 8418522.1400000006 1976614.6

FY20 Quarter 1 Quarter 2 Quarter 3 Quarter 4 6690400.2999999998 6070560.9500000002 7005047.0599999996 15526503.689999999 FY21 Quarter 1 Quarter 2 Quarter 3 Quarter 4 12094670.5 5354882.7900000028 6847059.6400000034 8205189.0499999998 FY22 Quarter 1 Quarter 2 Quarter 3 Quarter 4 10404347.780000003 5652632.2399999993 6354117.6600000001 15686689.819999991

Customer Type Spend Comparison Sales Corrections Other Agencies UW Municipal 3168453.3499999833 9099019.0599998981 1861651.1499999897 13698001.730000002