Global market situation increases device and licensing costs in State ICT Services

The global growth in investments in artificial intelligence has significantly increased demand for server hardware components and raised prices for both end user devices and server equipment. As a result, procurement prices for workstations and other end user devices as well as server equipment used in public administration are increasing, and uncertainty in supply chains is growing. In addition, licensing costs for widely used software products are rising.

The current market situation is estimated to increase the production costs of devices and licences used in key ICT services by tens of percent by 2031, according to indicative forecasts. Higher device prices will also be reflected in new contracts tendered by Valtori as current contract periods come to an end. The sharp increase in prices of end user and server equipment is expected to continue at least until 2028. According to some forecasts, hardware costs may remain permanently at a higher level than before.

Measures to mitigate cost increases

At this stage, it is still difficult to assess the impact of rising production costs on customer prices. Valtori is continuously working to ensure that customer prices do not increase. This requires active measures and close cooperation with Valtori’s partners.
So far, we have succeeded in lowering the prices of our services in line with the objectives of the Government productivity programme. We will continue to work actively to curb cost increases and to keep any price rises as moderate as possible for our customer organisations.

Key measures include:

• Active cooperation with service providers to secure the most cost effective contracts possible.
• Achieving cost savings by centralising procurements, narrowing the range of devices in use and optimising procurement timing.
• Optimising device models in use, improving device rotation and extending equipment leasing periods.
• The situation is likely to require the renewal of existing tools and practices and, in some cases, a transition to completely new alternatives.
• Providing customers with concrete means to manage cost levels; for example, by reducing the use of higher priced device models and consolidating device orders into larger batches.
• Developing internal processes to better anticipate and manage the impacts of changes in the market situation.
• Renewing Valtori’s service pricing model to be consistent across service environments and to support service modularity, enabling customers to select and pay only for the services and features they need.
• Actively improving the efficiency of software licence usage and cost control through the public administration’s licence management Lyhty cooperation network.

Further information

Sakari Marttila
Deputy Director General 
[email protected]