From Canceled Orders to Rising Costs, Supply Chain Disruption is Hitting IT Ops Where It Hurts

Supply chain issues have impacted just about every industry, including IT. But it doesn’t just affect your ability to procure and maintain effective IT hardware. 

The impact runs through the business—new hires are unable to start work on time because laptops are hard to get and slow to ship, rising costs cut into the ability to spend on new tech, and your vendor relationships can be strained when orders are canceled.

This report looks at how IT procurement professionals are managing the tech needs of their business while still suffering ongoing supply chain delays on IT Ops. 

Throughout, we’ll share the challenges and consequences your peers are experiencing and insights into the changes you might need to make in your procurement strategy.

We conducted the IT Hardware Supply Chain Disruption Survey in February, 2022 of 292 U.S. IT professionals who are very to extremely involved in procuring IT hardware for their organization. The purpose of this survey was to understand the effects of the ongoing IT supply chain disruption on their businesses' ability to procure IT hardware (e.g., laptops, phones, networking hardware) and subsequent challenges. (See our full survey methodology at the end of this piece.)

In this section we’ll share what IT procurement professionals say are the consequences of the delays they’ve experienced in the past 12 months. From higher prices to low inventory, we’ll give context as to how these came to be part of the new reality for IT Ops teams. 

Consequence #1: Higher direct costs

The top reported challenge (39%) of higher direct costs, such as a price increase on the laptop model you typically purchase, can lead some businesses to buy less expensive products (e.g., smaller or cheaper laptops). While this can help your budget, the addition of new hardware types causes myriad issues, such as the learning curve for initial setup and new troubleshooting issues the IT help desk has to work through.

Consequence #2: Insufficient inventory

Thirty-six percent of respondents report not having enough inventory for their workforce. Businesses are compensating for this by increasing how often they place orders (47%), purchasing excess product (35%), and ordering larger quantities earlier (31%). We’ll get into these mitigation steps later on in this piece.

Consequence #3: Inability to keep up with headcount changes

This has always been a challenge but it’s become exponentially more difficult with supply chain disruptions and the Great Resignation/Reshifting. Businesses will always be hiring, employees will always be switching roles/jobs, and IT will always be flexing to accommodate the hardware needs of the current workforce. But for that to be the third-ranked challenge experienced (35%) shows just how much work has changed since the pandemic started. Employees are leaving jobs at record rates and IT departments aren’t able to place hardware orders at a dynamic pace to keep up.

Consequence #4: Inability to repair or maintain equipment

Thirty-four percent of respondents report the inability to repair or maintain machines/equipment as a top consequence. IT teams have likely been trying to repair more equipment instead of replacing it since the pandemic started as a way to offset rising costs and brace against the uncertainty of the business staying in the green. Also, the raw materials shortage makes finding spare computer hardware parts more difficult.

Consequence #5: Higher indirect costs

Rounding out the top five consequences experienced in the past 12 months is higher indirect costs (27%). Specifically, indirect costs include overhead expenses such as rent, opportunity costs such as longer process/workflow times, and lost productivity due to hardware issues.  

Now that we’ve discussed the consequences of supply chain delays, let’s get into the current challenges IT departments are facing and what can be done to address them. 

Here are the types of challenges IT departments are facing in regard to IT hardware supply chain disruptions:

Top challenges that can be addressed in partnership with your HR team: 

- 37% report insufficient information submitted in the request or a lack of information needed to optimize orders.

How to address this: Hiring managers typically submit the requisition for a new employee.

Update the IT hardware request form—whether in your ITSM, email template, or however you receive such requests—to ask about the level of flexibility in laptop type, correct shipping address for recipient, and any other information you need so your IT team can fulfill the request effectively without having to go back and forth with the requestor for more information.

- 30% report employees are not returning their machines after they leave the company.

How to address this: Update the employee offboarding checklist to include the process for the employee to return their equipment. A common solution here is to create a hardware relinquish IT ticket, just like the hardware requisition ticket for when an employee starts, that includes information such as a shipping label (ideally printable), instructions for the employee to follow, the point person on the IT side, and the manager responsible for the employee’s offboarding.

- 22% report a lack of visibility into the hiring plans of other departments.

How to address this: Send out regular surveys to hiring managers asking about their hiring and turnover plans. This will help you plan details for larger orders and understand the timing you need to place those orders.

Challenges that can be addressed with your vendor

- 32% report that relying on a single vendor and order size requirements/limitations are top challenges.

How to address this: Don’t jump ship right away. Have a frank conversation with your current vendor to level-set expectations and capabilities. Then use that information to then decide if you need to start looking for a supplemental or replacement vendor.

Adding a new vendor typically means you may have to order new types of hardware and expanding the types of hardware you use introduces security and customer support issues. These issues may not be immediately evident but, I promise, will come to bite you in the rear. And probably during the week before a holiday break. We’ll get more into this specific challenge in the next section.

Only 2% of respondents report no delayed orders from any of the main laptop providers. Nearly half of our respondents have experienced IT hardware supply chain delays in the past 12 months with the most popular brands (Dell at 50%, Microsoft at 47%, and Apple at 43% of respondents). If you plan to order from one of them, you may want to consider other providers to avoid delays. 

Note: Not all businesses purchase laptops for their employees. In fact, 8% of our respondents say their employees buy their own laptops and 3% say they don’t use laptops in their business. The numbers in this section are focused only on the experiences of IT departments that do purchase laptops for employees.

How long are these delays? 

Well, 71% are experiencing shipping delays of up to six months. And almost three out of four businesses have had to cancel and reorder with another vendor at least once since the pandemic started.

Fifty-two percent of respondents say the longest they’ve waited for a laptop order to arrive was between four and 13 months. 

Waiting for new laptops to arrive means employees are using older models to stay productive until the new one arrives, or worse, having to use a personal computer or other alternative to get their work done.

But the delays are slightly shorter now and 52% of respondents say they place orders up to four weeks ahead of when the machine is needed. 

What does this mean for you? 

Canceling orders and switching to new vendors can impact the relationship you have with your current vendors. The ones that you’ve canceled with could demote your status as a customer, resulting in even slower fulfillment timelines and poor customer service. And the new vendors require time to establish your new account and build a new relationship.

We recommend adjusting the timing of when you place orders with your current vendors to alleviate delays before deciding to switch vendors. 

Forty-one percent of your peers are currently placing orders for new laptops “as needed” and 16% say they do so weekly. But when asked when they should be placing orders, weekly jumps to 21% and “as needed” is reduced to 33%. So evaluate your current experience against these numbers and you’ll be able to make the needed adjustments. 

Sixty-seven percent of respondents are shipping laptops to new employees—of those, 43% typically get the machine to the employee prior to their start date and 24% get it to them after their start date—which is problematic, but not as much as making employees come to an office to get it. 

I wrote about this issue last September when our research found that 38% of employees reported that they had to go into an office to receive their work laptop. Five months later, we still have 22% of businesses using this strategy.

Our recommendation is still that a central IT resource should procure employee laptops, install the required software apps, and then ship the machine to the employee. 

Shipping laptops standardizes the process to be effective independent of your current work model and protects the process against future changes, whether planned or unplanned. It’s better to future-proof this process sooner rather than later.

That’s enough about getting new laptops. Now what about what to do with the old ones? 

While getting new laptops may be the focus in the news, IT Ops knows that they must manage the entire lifecycle for electronics and hardware in order to optimize their investments and offset the procurement issues for new hardware. 

Fifty-eight percent of respondents report focusing on refurbishing hardware. Refurbishing not only saves money and helps you avoid challenges in getting new hardware, it’s responsible device management. Laptops and other IT hardware contain hazardous material such as heavy metals that can’t be just pumped into the ground in a landfill. How your business handles this disposal impacts not only your role in being a responsible business but also community health. 

Twenty-nine percent of respondents report asking employees to recycle or dispose of their old, retired hardware themselves. If you’re part of the group, provide guidance to employees on what that responsible donation looks like. The key concern with this approach is the security of data stored locally on the machine. Many employees may not even know that they’ve stored critical information on their laptop that needs to be removed prior to donation or even throwing it away. 

Inflation is hitting everyone with no end predicted anytime soon. So how can your IT department manage rising costs? Let’s take a look at how your peers are doing:

• 39% of respondents report higher direct costs as one of the top consequences they’re experiencing (or have experienced) of IT hardware supply chain disruptions in the past 12 months. 

• 48% of IT departments are responding to this by just absorbing these costs within their current budget. 

But the story is slightly different depending on how IT departments are paying for hardware. Respondents fell into one of three categories for how new hardware is paid for:

• 49% of respondents say IT makes purchases and then charges each department for what they’ve ordered.

• 38% say expenses come solely out of the IT department’s budget.

• 13% report they use a general budget for operational expenses to pay for IT hardware. 

Let’s look at how these different budgeting strategies are handling the rising costs.

*Note: the 37 respondents who report using a general operational budget to pay is statistically low, although not unimportant.

Overall, IT departments that do not chargeback other departments for their hardware expenses are more likely to report needing to switch to less expensive products (seven percentage points higher compared to those where IT does chargebacks).

Switching to less expensive hardware creates an opportunity cost that affects the employees now using potentially less effective equipment. And not billing individual departments for the hardware purchased for them centralizes the negative impact of higher prices on IT, as opposed to sharing the burden with chargebacks. This could mean other purchases, such as new servers or software, are postponed due to the increased cost of laptops for employees.

When IT departments use their own budgets to not only keep the lights on (and retain tech talent and drive new tech adoption) but also support the hardware needs of all employees, the entire business will suffer from a lack of proper tech investment. 

Ordering more products, more often, and earlier are the main actions being taken by IT departments to help address the supply chain bottlenecks they’re experiencing. These tactics are effective and low risk. 

But the top action taken—buying different products based on what’s available when you need it—can have serious long-term effects that you’ll need to minimize the risks of.

Here’s the breakdown of the actions IT departments are taking.

Half of respondents report adjusting the products they’re buying based on availability as a result of supply chain disruptions. And while this approach does alleviate immediate pressure, increasing the types of servers, laptops, etc. used by the business creates long-term challenges for IT support teams. Challenges include a learning curve for the IT team charged with building machines and servers, and not having inventory for spare parts for new equipment. Even taking this approach for a short period of time will impact your IT department’s ability to manage this expanded pool of device types.

Twenty-seven percent of businesses are switching to purchasing from local suppliers (e.g., Best Buy) which is an appropriate response when you need hardware, especially laptops, immediately. It’s a decent workaround, but it can have its own set of consequences, such as increasing the security vulnerability and troubleshooting capabilities of your IT teams because the model available in stores may not be the same as what you regularly order from a vendor. This action should only be used for one-off cases. 

These tactics are effective actions to take, but your approach should be evaluated and refined regularly in order to keep up with the ever-changing supply chain disruptions. Logistics won't be getting easier in the near future so the next section will discuss how to plan for long-term disruption.  

Only 12% of respondents expect backlogs/delays for IT hardware to last more than a year. But this is very low compared to what other analysts and experts in the industry are predicting (here’s one example and another). 

The root causes of this disruption (raw material shortages, public health measures, worker shortages, to name a few) won’t be alleviated anytime soon. And the looming war in Europe isn’t helping support rosy predictions. 

IT departments might’ve done their 2022 budget planning with the hope that delays and inflation will subside during the year. But there’s still time to make adjustments.

Here’s a recap of the top tips we shared throughout this report on how to manage the long-term supply chain delays and rising costs: