Are you getting Value for Money from your IT Infrastructure Vendor Maintenance Contracts

Are you constantly looking at cost saving opportunities for your expense planning cycle?.  Have you looked in detail at your vendor maintenance contracts coverage levels and their associated costs?.  I’m sure some of you will say, yes of course, it’s a big ticket item, but we can’t cut those support levels from our vendors, for fear of extended downtime to our systems.

In many cases, that may be true, customer applications are hosted on data center infrastructure like servers, storage, switches, so you’ve got to ensure any failures are quickly resolved. So I can see how you may quickly conclude that it goes without saying that you require 24*7 vendor support. As we know, this doesn’t come cheap, but is it a premium worth paying for? .  To understand that, you need to do a deeper dive into your whole environment and review all systems assets that support your test/integration/staging/development or whatever you call your environment that houses the replica systems to support testing release and deployments before they go into production? . Also, have you run the numbers and check back over the past year or so to see the number of times you’ve had to invoke vendor support to return a mission critical system to a norm state. I’d argue that IT houses could be paying across the board for premium vendor cover when not actually required where you may already have redundancy built in. We assume it happens, but are you actually recording this data and checking it periodically?.

As you know when you purchase an IT capital asset, it generally comes with a few year vendor support contract built in, say 4 years in many cases. When the asset enters year5 and beyond you obviously need to be planning to raise your expense budget to cater for the standard 9*5 NBD [next business day] support level which comes at a cost, or if you need to uplift that to 24*7 premium support, then it’s an even more expensive cost to add to your expense plan. So you’ve a couple of options…

1. Replace the asset after 4years, something that Intel would recommend from a server perspective for many reasons, one relevant to this blog is the server maintenance contract cost which hits your expenses and cannot be capitalized.
2. Continue to maintain the asset but provision more expense budget to manage this asset going forward. Remember that as the asset ages so does the likelihood of hardware faults and the need for vendor maintenance cover.

From my experience, I’ve noticed on several opportunities to reduce the cost burden of yearly maintenance contracts by weighing the risk & reward. I’d like to share some examples of what to consider when you review your costs and weigh up the risks against reducing costs. My theory is that many IT departments could have been overpaying because of the fear of extended downtimes.

Low risk item to consider:
1. Reduce all Test/Development/Integration systems from 24*7 or 9*5NBD[next business day] cover to ‘Time & Materials’ cover only – generally you’ll find a substantial cost saving for little added risk, since these systems will not impact customer applications, as they are only used for test/staging/development. However, you’ll have estimate hardware failure rates, perhaps based on historical rates of failure, assuming you’re tracking this.

Medium/ High risk Option to consider:
1. Change maintenance cover for all clustered servers from 24x7 to 9x5NBD – given that they are clustered, means they already have redundancy buier:lt in, so if you lose one node, you don’t impact the customer and you have time to replace within next business day.
2. Change maintenance cover for some systems[e.g. ‘non mission critical’] from 24x7x4 to 9x5NBD

Higher risk Option to consider:
3. Change maintenance cover for all servers [including standalone systems] from 24x7x4 to 9x5NBD – higher risk than just clustered systems as this includes standalone systems that don’t have automatic failover redundancy. However, you can offset the risk by carrying some inventory of frequently swapped parts, like cache batteries, disk drives, memory modules etc.

I’m interested in hearing other opinions on how you’re improving value for money from vendor contracts. I’d also like to hear folks are already doing the above on a regular basis or if they’ve pushed the vendor support to a minimum and noticed a degradation in service levels?.