As we enter the second month of 2022, it’s evident that many industries are still feeling the pain of chip shortages and general global supply chain lag. We are now looking at ETA dates in May-June 2022 for access points, servers, switches etc. – across nearly every manufacturer. According to a recent study by Deloitte, this is only the tip of the iceberg; reports from Intel and Nvidia are showing lead times stretching as far away as 2023.
Typically, infrastructure upgrades have a 60 day planning/RFP/closing cycle, depending on the scope and scale. With current lead times, proposals will need to be scoped and executed approximately 5 months out from the desired completion date.
The future is unpredictable. One on hand, with lead times pushing into 2023, Deloitte has projected the chip shortage may last another 24 months before it recedes, similar to the chip shortage experienced in 2008-2009 (Deloitte, 2021). However, global consulting firm McKinsey & Co (2021) has offered a differing view, warning that “chip shortages could become the new normal”, so budgets, project schedules, and spare hardware inventory should be allocated otherwise.
An encouraging development that has emerged in the market is the resurgence of domestic manufacturers. For many firms that had previously lost market share to international competition, demand has skyrocketed and they are taking sweeping steps to increase production – such as expanding their workforce and buying more equipment. Just like IT procurement, planning ahead is the name of the game here – many manufacturers are asking customers to share info about their needs earlier, allowing them to anticipate demand and alleviate shortages in the marketplace (Clark, 2021).
The world is changing rapidly and it is more important than ever to plan ahead but remain flexible. If a project completion deadline is in Q1, alternative vendors or hardware with lower lead times may need to be considered. Being a vendor-agnostic consulting firm, we’ve become quite agile at procurement workarounds. If your organization is planning any sort of hardware upgrade for 2022, feel free to reach out to our sales team for a consultation.
References:
https://www.nytimes.com/2021/11/08/technology/computer-chip-shortage.html