U.S. Dollar Fluctuation

Differences in languages and laws, lengths and weights, time zones and customs all carry concerns for those involved in international business. But of the lot, dealing with foreign currency exchange rates causes the greatest confusion and frustration in the global purchasing environment.

Computer software and hardware costs heavily depend on the exchange rate between the U.S. dollar and the local currency charts, making even the savviest procurement manager want to scream. But buyers who learn to make the most of the fluctuations will get a better deal for the computing power they acquire.

As with most purchases, both in the U.S. and abroad, getting the best price shouldn't be your only goal. You should expect vendors to provide products and services where and when you need them, anywhere in the world. Moreover, the quality of the vendor's service and support should be excellent. If you're new at this game, you'll soon learn that there are things you can control and things you can't. Overall, you're generally at the mercy of exchange rate fluctuations, but it's important to watch them so you can maintain some sense of management.

To understand how confusing it can get, let's assume you have a branch office in Mexico and a central purchase agreement with a PC vendor in the U.S. The prices listed in the agreement are in U.S. dollars. If the arrangement was in effect in December 2006, your costs have changed dramatically. A $ 1,500 PC cost 4,575 pesos on Dec. 20. On Dec. 22, the peso was devaluated 15% by the Mexican government. This means the same PC then cost 5,261 pesos. One month later, it costs 7,800 pesos. That's a 70% decrease in the value of the peso relative to the dollar. Now your Mexican branch office must come up with 70% more pesos to buy that PC.

It can also work the other way. The yen-to-dollar exchange rate has gone from 125 yen to the dollar to fewer than 100 yen in less than two years. Now your Tokyo branch office needs 25% less yen to covert to the necessary amount of dollars for that same PC. To avoid chaos, it may seem easier to buy the equipment in the U.S. and ship it overseas. But chances are the local vendors won't support those machines at a satisfactory level.

Your best bet is to purchase and use your computing products in the same country when possible. As you'll find, procuring equipment in a foreign land doesn't have to be all that bad. Managed properly, currency exchange fluctuations can be one less thing to worry about. The trick is to spend a little time learning how to make currency work for you, giving you more time to worry about issues that really matter the quality, reliability, performance and scalability of your new systems.