Five Reasons You’re Paying Too Much for Support
No company has an IT budget so generous that it can afford to throw away money. But when companies aren’t managing their maintenance contracts proactively, they only have two choices—risk leaving the business unprotected or pay for potentially unnecessary contracts. Most companies opt to pay the renewals, which could be draining their budget needlessly.
A few preventative measures can put your budget to better use. Here are five mistakes that most commonly lead to unnecessary support costs:
- Not paying attention to expiration dates. When you miss a maintenance renewal, your vendor will almost certainly charge a reinstatement fee, which could add 20-50% to the cost of the contract. So, if you have a $500,000 maintenance contract that lapses, for example, you might have to pay $750,000 to reinstate it. You can ask your vendors to waive or reduce these fees, but don’t expect that they’ll oblige—vendors tend to be inflexible on this score.
- Not reviewing your inventory. If you have co-branded equipment or a mix of support contracts from Original Equipment Manufacturers (OEMs) and third-party providers, make sure you’re periodically reviewing your inventory. Both these scenarios frequently lead to duplicate contracts, so you could be paying twice for the same coverage. As a bonus, this process also reveals errors that could delay support coverage, which indirectly saves you downtime costs.
- Not consolidating your contracts. Consolidating your contracts substantially increases your purchasing power, which puts you in a better position to negotiate larger support discounts. You might also have more leverage to ask for extra features that vendors wouldn’t typically offer, such as a dedicated Technical Account Manager (TAM), training credits, or a free upgrade to a higher service level. 4
- Not performing regular true-ups. All environments change over time. That’s why it’s crucial to schedule true-ups on a regular basis. (We recommend once every 6-12 months.) To true-up your maintenance contracts, review your inventory and update it with assets you’ve added or de-commissioned since your last review. Then compare that inventory against your current contracts. This will prevent you from buying premium-level support for equipment that you’ve retired or repurposed for non-critical applications—and from paying reinstatement fees on contracts that you missed.
- Not sizing up your needs. If your company operates eight hours a day, five days a week, you probably don’t need 24/7 support. Likewise, equipment used for non-critical applications or test environments doesn’t need premium support. In both cases, you can save money by lowering your support levels to better align with your business operations and environment needs. For older, non-critical equipment, you may even be able to drop support contracts altogether by stocking up on the spare parts that typically fail—such as cards, drives, or switches. Just make sure that your team has the necessary skills to perform this brand of self-support.
With maintenance support contracts, there’s a fine line between fully protecting your business and overspending. These steps should get you closer to meeting that mark.