With many businesses looking at ways to slash IT budgets, now
is the time to take a close look at support contracts.
Businesses are paying more than they need to for support,
particularly for virtualised datacentres, says Rob Addy, research
director at Gartner.
Virtual datacentres have been engineered for high availability,
he says. "If you have spent millions on high availability, you
don't need high levels of support."
IT departments use clustered and virtualised environments to run
business-critical systems where the impact of a failure could
materially affect the health of the company.
CIOs often buy support contracts offering a response time of
under two hours. But Gartner has found that IT departments benefit
from an average response time of just over two hours when they buy
a four-hour contract.
It makes little sense buying a two-hour contract, says Addy,
when the cheaper four-hour contract offers similar results. He
urges users to consider going further and look at next-day response
time, which would cut support costs by 25%.
Cheap and cheerful
IT departments can make bigger savings by swapping expensive
commercial software for open source packages. "You don't need a
brand new copy of AutoCAD to make an office plan," says Addy.
Instead, users should look at free viewer software and open source
alternatives for applications like PDF printing, compression,
database tools and discovery tools.
The channel
CIOs should consider using approved channel partners rather than
buying support contracts directly. This is one of the best ways to
reduce support costs significantly, says Addy. Gartner estimates
users can save between 30% and 60% by switching to the channel for
their support requirements, rather than going direct.
Become a partner
In ERP, there are no viable channel partners, says Addy, so
users are stuck with buying support from their ERP provider. But
even though Oracle and SAP charge 22% for support, Addy says CIOs
can still make savings. Users can opt for "pseudo partner" status
if they are negotiating a major ERP contract. "It is the best kept
secret in the industry that by demanding pseudo partner status, you
can reduce your support fees by as much as 60%."
Becoming a pseudo partner means that the CIO needs to think
strategically about the company's long-term commitment to the ERP
system. The CIO will need to establish a competency centre with IT
staff who have been certified by the supplier to support the
software. Addy believes that the cost of setting up, staffing and
running a competency centre would be far lower than the annual
support fee charged by SAP and Oracle on a $10m contract.
Pay per use
Addy warns CIOs to steer clear of lock-ins such as when the
supplier throws in an extra year "for free" in a five-year support
contract. Instead, users should consider switching to a pay-per-use
model, as offered by Microsoft and network equipment suppliers.
HP offers a service for cloud operators, where there is no
formal support. Instead HP operates a "milk round", swapping out
broken servers from the datacentre on a weekly basis.
Between 10% and 15% of IT directors' budgets are spent on
support. Given the tough economic climate, CIOs can reduce the
amount they spend on support by between 20% and 30% without
knocking the business.
Rob Addy was speaking at theGartner Outsourcing & IT Services Summitin
London.