Procuring ICT Products

from Retail Stores vs.

Transversal Contracts

Technology Advisory Services (TAS)

June 2017

• TAS is responsible for Product Certification process

• 6 certified Technology Domains:

– Personal Computing Devices

– Peripherals

– Servers & Storage

– AVCT (Audiovisual)

– Networking

– Infrastructure

• GITOC-approved specifications with input from all role players, including Departments, suppliers, >110 OEMs

– All Departments invited to participate! (e-Mail or GITOC TTT channels)

– www.sita.co.za/prodcert.htm

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Technology Certification process

Product Certification website

3

www.sita.co.za/prodcert.htm

Transversal Contract vs. Retail (summary)

4 * SITA Research Report - Procuring ICT Products from Retail Stores vs. Transversal Contracts

Cost factors in ICT procurement

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Pri

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• Constitution mandates cost-effectiveness, not cheapness

– Cost ≠ Price – i.e. TCO focus

• Transversal contract TCO features:

– Complete solution (e.g. pro OS, carry bag + lock)

– 3-year on-site warranty and support SLA

– Better security (encryption, no leaks during repair,

security clearance for technicians, remote wipe

option)

– Stable, manageable platform with asset tracking

and data protection options

– Pro OS options: Windows 10, Windows 7, Linux

• Home OS cannot connect to Domain (AD)

– Standard configurations with pre-built disk images

for mass roll-out

– No preloaded trialware/crapware/spyware

• Windows Pro + minimum accessories bundle = ~R3000 extra

• 3-year warranty + on-site SLA = ~R1500 extra

• Contract products have enterprise-level options: docks, biometrics, asset

tracking tools, OS downgrade rights, Linux (open source)

• Support for economic imperatives such as empowerment

• Blacklist process as recourse: only on Contract

• There are lower-price options on Contract:

– PC2, Note2 still meet enterprise requirements

• e-Waste processes supported by enterprise OEMs

• Retail stores often offer one-time specials (typically dumping older products)

• ICT products contain 100s of parts. Even if CPU, RAM and HDD are similar,

it doesn’t mean the products are the same.

• Retail systems do not comply with SITA minimum spec, cannot be certified

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Additional considerations

Note1 Note2 Note3 Note4 Note5 Retail laptop

Netbook /

Chromebook /

Thin client

laptop

Value notebook Thin and light

notebook

Midrange

business

notebook

Advanced

business

notebook

No clearly defined

user profile

Single-core, 64-

bit pref

Low-cost X64

dual-core

X64 dual-core

(Including LV &

ULV)

X64 dual-core X64 quad-core Low-cost, low-

featured, low-

quality, but cheap

Atom 1GHz 5th-gen Celeron 6th-gen Core i3 6th-gen Core i3 6th-gen Core i5 Celeron - i7

SITA-specified laptops: Comparison

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CAPABILITIES

Sweet spot

for standard

users

Price

curve

+ PRICE

Retail Enterprise

Price R380 R1330

Ink prices Black: R 145

Colour: R 170

Black: R 295

Colour: R 195

Ink yield (pages) Black: 200 Colour: 165

Black: 2200 Colour: 1400

Duty cycle per month 750 pages 15000 pages

Print speed 16 pg/min 34 pg/min

Ink cartridges 2: K + Tricolour 4: CMYK

Cost per page R1.76 R0.55

Pages per month 200 200

TCO over 3 years R 8 810 R 3 980

TCO over 5 years R 17 240 R 6 630

Printer TCO example

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Retail Enterprise

Price R380 R1330

Ink prices Black: R 145

Colour: R 170

Black: R 295

Colour: R 195

Ink yield (pages) Black: 200 Colour: 165

Black: 2200 Colour: 1400

Duty cycle per month 750 pages 15000 pages

Print speed 16 pg/min 34 pg/min

Ink cartridges 2: K + Tricolour 4: CMYK

Cost per page R1.76 R0.55

Pages per month 200 200

TCO over 3 years R 8 810 R 3 980

TCO over 5 years R 17 240 R 6 630

Retail Enterprise

Price R380 R1330

Ink prices Black: R 145

Colour: R 170

Black: R 295

Colour: R 195

Ink yield (pages) Black: 200 Colour: 165

Black: 2200 Colour: 1400

Duty cycle per month 750 pages 15000 pages

Print speed 16 pg/min 34 pg/min

Ink cartridges 2: K + Tricolour 4: CMYK

Cost per page R1.76 R0.55

Pages per month 200 200

TCO over 3 years R 8 810 R 3 980

TCO over 5 years R 17 240 R 6 630

Retail Enterprise

Price R380 R1330

Ink prices Black: R 145

Colour: R 170

Black: R 295

Colour: R 195

Ink yield (pages) Black: 200 Colour: 165

Black: 2200 Colour: 1400

Duty cycle per month 750 pages 15000 pages

Print speed 16 pg/min 34 pg/min

Ink cartridges 2: K + Tricolour 4: CMYK

Cost per page R1.76 R0.55

Pages per month 200 200

TCO over 3 years R 8 810 R 3 980

TCO over 5 years R 17 240 R 6 630

The fine print …

2.5x less!

Failure and service risk: Retail store

9

No delivery or

installation

No on-site support

Failure and service risk: Transversal contract

10

Delivered

& installed

on-site

11

Price comparison 2017

Decision factors

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Conclusion

• When comparing apples to apples, Contract is

cheaper and offers lower TCO.

• This is not about protecting SITA’s business - SITA

makes no money from transversal contracts.

• It’s about informing Government about “cheap”,

low-quality consumer-class devices.

• Contact us for more info:

– tas@sita.co.za

– www.sita.co.za/prodcert.htm

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Questions?

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“In other words standards are being formulated whereby the non-standard parts, which must

conform to certain standards of non-standardisation, are also to be handled only in a

standardised non-standard way in order to standardise on the overall non-standardisation.”

— John Gordon, The Alice and Bob after-dinner speech

Thank You!

Backup info

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Price comparison detail

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Item Product Config

Note3 Lenovo ThinkPad

T460

14" WXGA, Core i5-

6200U, 4GB, 500GBR 14 126 N/A - R 17 699 125% R 18 561 131% N/A N/A

Note3 Lenovo ThinkPad

X260

12.5" WXGA, Core i5-

6200U, 4GB, 500GBR 12 717 R 18 179 143% N/A - R 17 945 141% N/A N/A

Note3 Lenovo ThinkPad

T460s

14" FHD, Core i5-

6200U, Upgr: 8GB,

256GB

R 17 396 R 25 565 147% R 23 899 137% R 23 292 134% N/A N/A

Note4 Lenovo ThinkPad

T560

15" FHD, Upgr: Core

i7-6200U, 8GB, 1TBR 20 413 R 22 799 112% R 21 899 107% R 23 750 116% N/A N/A

Note3 Dell Latitude

E7270

12.5" FHD, Core i5,

Ugpr: 8GB, 256GBR 23 790 R 25 935 109% N/A - R 28 619 120% N/A N/A

Note3 Dell Latitude

E7470

14" WXGA, Upgr:

Core i7, 8GB, 256GBR 27 565 R 34 009 123% N/A - R 29 062 105% N/A N/A

Note4 Dell Latitude

E5570

15.6" FHD, Core i5,

500GB, Upgr: 8GBR 21 716 N/A - R 22 699 105% N/A - N/A N/A

Note4 Dell Latitude

E5470

14" WXGA, Core i5,

4GB, 500GBR 20 111 N/A - R 17 299 86% R 18 895 94%

Contract vs

Retail PCs:

Details

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Consumer vs. Enterprise computers

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• Failure risk – what happens if it breaks?

– Have to take it back to store – on-site support is a huge issue

• OS considerations

– Pro OS with downgrade rights

– Domain support

– Alternative OS options: Linux

• Build quality & reliability

– Metal/carbon body and hinges, higher duty cycle, more reliable

– Often ruggedised (MIL-STD 810G), drop/dust/temperature/spill-resistant

• Security designed in (including data loss prevention)

• Long lifecycle

• Enterprise-level accessories

– Included: bag, lock, 3-year support

– Support for asset management and tracking, remote wipe

– Optional: biometrics, docks, service upgrades, etc.

Detail comparison

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Configuration Intel Core i5 CPU, 8GB RAM, 500GB HDD Identical basic system configuration – but this is not important in terms of TCO and long-term use

Storage 500GB 5400rpm HDD Old technology, low performance drive

500GB 7200rpm/SSD New technology, high speed drive

Display Low-resolution, glossy coating, medium brightness, TN Low definition, best suited to dark environments where reflections do not distract, poor

viewing angle

High-resolution, high-brightness, anti-glare, IPS High definition, good viewing quality in all environments (specifically office with bright lights),

good viewing angle

Physical size and weight Average: 2.5kg, 2.17dm3

Relatively large and heavy due to consumer design and non-optimised materials Excellent: 1.3kg, 1.16dm3

Best-in-class size and weight for enterprise: almost half the size and weight of the retail system

Mobility and battery life Mediocre Mobility is not a primary mandate – price is

Good System design and components optimised for mobility

Product focus Up-front price – short-term Sucker the buyer with a “CHEAP!” sticker

TCO – long-term Lower cost with fewer failures over long-term use

Operating system Windows 10 Home Bleeding edge consumer OS, no domain integration, enterprise features. Compatible with all

Gov systems? Not tested.

Windows 7 Pro Mature, Dept-approved and domain-integrated, enterprise OS. Tested compatible with Gov

systems

Security No specific provision No built-in security capabilities

TPM, AD login, Encryption, Fingerprint, K-Lock Secure storage of crypto keys, Departmental login, support for encryption, physical cable lock

Data security in case of failure

Data is at the mercy of retail store No guarantee of breach or data loss

Data does not leave office Cannot be lost or compromised

SSA guidelines for data security in case of failure

No provision for data security Hard disk with data has to be returned to OEM

Keep your HDD programme OEM allows hard drive to remain at client, in line with SSA guidelines

Installed software No control – OEM marketing Several types of scareware, trialware and ransomware – even spyware

Full control – Gov software image Built by Department, loaded @ factory

Additional features None Backlit keyboard, Fingerprint reader, Dual pointing device, Docking station support, 3G support

Certified build quality & reliability

None Built from cheapest, low-end parts

MIL-STD 810G Tested for ruggedness for day-to-day use

On-site delivery and installation

User responsibility Carry in to store with 6-week turnaround

Included in price

Support and warranty 1-year carry-in User responsibility, turn-around time unknown

3-year on-site Guaranteed 8x5, 8-hour repair SLA

Standard accessories Charger Other accessories are extra

Charger, Carry bag, K-lock No other accessories needed

System management None Cannot be remotely managed

Intel vPro or equivalent Fully manageable by Dept ICT staff

Anti-theft No provision No support for third-party anti-theft/tracking tools

Anti-theft support built in Full support in BIOS for tools like CompuTrace

Hardware design Retail, low duty cycle Lower-quality components and accessories built to sit on a desk at home for 80% of the time

Enterprise, high duty cycle System and accessories designed and built to withstand 3 or more years of daily travel

Product life cycle 3-month cycle High churn rate of components, including motherboard. No possibility of standardisation

12-month+ cycle Stable components selected for long life cycle. Standardisation is easy and manageable

SITA-certified No Retail products do not meet Gov specifications

Yes Meets all Government requirements

PPPFA support None BEE according to NT Full support for empowerment

TCO factors

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Category Expense Definition How to Calculate

Hardware &

software Direct

Includes initial hardware and software purchases or

lease costs, along with software licensing,

subscriptions, maintenance contracts, extended

warranties, set-up fees, supplies, materials and spare

parts.

Pull invoices, purchase orders and records related to hardware and

software expenses over a three year period. Divide total costs by

three to get an accurate annual TCO picture. Depreciation costs

should also be included.

Operations Direct

Includes all labor costs for IT operations, such as tech

support, database administration, website, helpdesk,

etc. Includes staff salaries (wages and benefits), as

well as any outside service providers. Also includes

facilities costs used by IT staff (office space, furniture,

utilities), along with network costs and internet

connectivity.

Many small organizations do not have dedicated IT staff. In that case,

responsibilities typically fall to the office manager or person who knows

the most about computers. Estimate the # of hours that person (s)

spends directly managing IT and multiply by their hourly wages. If you

work with an IT service provider, add up all those payments, including

hourly fees. If you are locked into a monthly retainer or long-term IT

service contract, make sure you factor in those fees as well.

Administration Direct Includes finance, HR, administration and procurement

costs spent managing internal IT staff or outsourced

providers. Also includes training for staff members.

Whether you have an internal IT staff or work with outside service

providers, someone still spends time hiring, procuring and managing

those relationships. Estimate the # of hours spent on IT oversight and

multiply by the appropriate hourly wage. Any employee training

expenses should also be calculated.

End-user

operations Indirect

Includes productivity lost to end-user frustration,

troubleshooting, “futzing” and providing informal IT

assistance to co-workers.

This category is the most difficult to measure, yet represents the

highest percentage of TCO. Many employees try to fix problems

themselves, rather than pay expensive hourly rates for outside service

providers. Estimate the # of hours employees lose dealing with

computer issues, along with the # of hours they spend self-training or

helping others, and multiply by the average hourly wage.

Downtime Indirect Productivity and revenue lost to inoperable or

inaccessible computers, servers, software, internet

connectivity, etc.

Estimate the # of hours computers are down due to viruses, hardware

failure and planned maintenance and multiply by the average hourly

wage.

www.networkalliance.com/your-advantage/understanding-technology-costs

Printing TCO over time

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Print volumes

Tota

l cost (T

CO

)

Acquisition cost Running costs

SITA SCM: Why use transversals?

• “Computers acquired from contract come with an on-site

three year warranty which includes maintenance, while

product acquired from retail comes with a one year

warranty which requires the customer to carry the

equipment in for any repair.”

• “All the IT equipment acquired from contract are quality

checked by SITA LAB and OEMs have signed an

agreement with SITA to ensure that they supply the

equipment according to government standards.”

• Well-informed, objective advice from SITA Lab, tested,

vetted and benchmarked

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Discussion

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• Cost ≠ Price: Constitution Article 217 requires cost-effective procurement.

• “The same” ≠ “The same” – retail systems differ fundamentally i.t.o.

design, quality, components, manageability, reliability, longevity, etc.

– In a true apples-to-apples comparison retail systems are usually

significantly more expensive.

– OEMs estimate ~R6000 value-adds for enterprise-class systems.

• Time and Material repairs are costly, ineffective, time-consuming and

difficult to manage. Bundled on-site SLA is hassle-free.

• Research Report available with all the details.

• SITA specifications are drafted with input from Government.

– Collaborative effort, “open-source” methodology.

– Please participate via e-mail or monthly GITOC TTT forum.

e-Government House of Value

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ICT Planning ICT Integration ICT Operations

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