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."
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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.
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 the Gartner Outsourcing & IT Services Summit in London.