{"id":5537,"date":"2020-09-15T18:59:30","date_gmt":"2020-09-15T16:59:30","guid":{"rendered":"https:\/\/tekmart.co.za\/t-blog\/?p=5537"},"modified":"2020-09-15T18:59:31","modified_gmt":"2020-09-15T16:59:31","slug":"is-third-party-threat-a-viable-server-maintenance-contract-tactic","status":"publish","type":"post","link":"https:\/\/tekmart.co.za\/t-blog\/is-third-party-threat-a-viable-server-maintenance-contract-tactic\/","title":{"rendered":"Is third-party threat a viable server maintenance contract tactic?"},"content":{"rendered":"Reading Time-approximately:<\/span> 3<\/span> minutes<\/span><\/span>\n

When negotiating server hardware and maintenance agreements with vendors, server customers can threaten to go elsewhere. But how effective is that tactic?<\/strong><\/h2>\n\n\n\n
\"James<\/figure>\n\n\n\n

By James Alan Miller<\/a><\/p>\n\n\n\n

Name-brand server hardware vendors have lost considerable market share to white box suppliers over the last several years. As a result, they employ a transactional game using ingrained sales tactics during server hardware deals and server maintenance contract negotiations throughout the sever lifecycle. One strategy organizations use to counter these often-aggressive sales strategies is to threaten to go with a third party during negotiations with their supplier.<\/p>\n\n\n\n

But how effective is exploring alternatives to your vendor during\u00a0server hardware and maintenance\u00a0contract negotiations? Do enterprises tend to follow through with the threat or are they — more often than not — simply using it as an exercise to determine a baseline and get a better deal with their current supplier?<\/p><\/blockquote>\n\n\n\n

If you asked analyst Danilo Milevsky, of IT consultant firm ClearEdge Partners, a few years ago, he would have said most of his clients don’t follow through. But things have changed, he said in answer to a question about the subject during the webinar\u00a0Moments of Truth in the Server Lifecycle, which Milevsky presented with fellow ClearEdge analyst Atish Patel.<\/p>\n\n\n\n

“In the past two, three years, we’ve really seen most of our clients follow through,” he said. “It used to just be a tactical play and kind of a threat and an exercise; whereas, now, I’d say probably 30% to 50% of our clients do go to a third party and follow through.”<\/p><\/blockquote>\n\n\n\n

They don’t always follow through for their whole IT environment, however. Sometimes, they end up going with the alternative for just a piece of it, Milevsky added.<\/p>\n\n\n\n

“Because even if you’re able to peel off 25% or 50% of your environment, that’s 50% of your\u00a0spend that IBM\u00a0is not getting or that [Hewlett Packard Enterprise] is not getting,” he said. “So, they’re going to be worried about that, and they’re going to feel the threat, and they’re going to come back with a competitive offer.”<\/p>\n\n\n\n

\"\"\/
Organizations can use this checklist when negotiating enterprise license agreement hardware and maintenance renewals.<\/strong><\/figcaption><\/figure>\n\n\n\n

So, in short, the answer is yes. The threat of going with a third party, rather than your current provider during server maintenance and\u00a0hardware refresh and renewal negotiations, works. Furthermore, many organizations actually follow through with the threat by changing suppliers — at least, for part of their overall contract with their server vendor.<\/p>\n\n\n\n

They are also using the threat tactic also as an exercise — sometimes, simultaneously — Milevsky noted. It depends on the preferences of the business.<\/p>\n\n\n\n

I wonder what other maintenance providers would offer?<\/strong><\/h2>\n\n\n\n

During the webinar, Milevsky mentioned a client who successfully used the threat of going elsewhere as part of a strategy to get a better deal from its server supplier. It involved a $2.4 million server maintenance contract renewal, where IBM offered a 13% discount as part of larger deal.<\/p>

ClearEdge analysts determined the 13% maintenance discount lacking, with 20% to 30% off sounding more appropriate and competitive. They suggested the client go out and see what kind of deal a\u00a0third-party maintenance provider\u00a0would offer on the same $2.4 million bill of materials.<\/p>

So, the client then went to two alternative providers — Park Place Technologies and Curvature — to obtain alternative cost quotes for outsourcing maintenance.<\/p>

Before either bid returned for the contract, IBM went ahead and reduced maintenance to $1.2 million — 55% off the original bill of materials, Milevsky said.<\/p>

“So, just because of the threat of going to a third party and IBM losing the business, [IBM] immediately came back and dropped the price because they knew they needed to compete at a better price in order to keep the business,” he explained. “So, [the client] didn’t even end up going with a third party because IBM cut the price immediately.”<\/p><\/blockquote>\n\n\n\n

“There’s definitely a value of keeping your\u00a0OEM maintenance\u00a0versus a third party,” he concluded. <\/p>\n\n\n\n

“You might have those needs, you might need the firmware and software upgrades, you might not. So, it really comes down to evaluating what your business needs are — and what the monetary value is and your monetary needs are — to counterpose those two things.”<\/p>\n","protected":false},"excerpt":{"rendered":"

Reading Time-approximately:<\/span> 3<\/span> minutes<\/span><\/span>When negotiating server hardware and maintenance agreements with vendors, server customers can threaten to go elsewhere. But how effective is that tactic? By James Alan Miller Name-brand server hardware vendors have lost considerable market share to white box suppliers over the last several years. As a result, they employ a transactional game using ingrained sales tactics during server hardware deals<\/p>\n

Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4,30,90,3],"tags":[],"class_list":["post-5537","post","type-post","status-publish","format-standard","hentry","category-datacenter-news","category-expert-advise-and-opinion","category-hyper-converged-infrastructure-management","category-industry-news-and-expert-advise"],"_links":{"self":[{"href":"https:\/\/tekmart.co.za\/t-blog\/wp-json\/wp\/v2\/posts\/5537","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tekmart.co.za\/t-blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tekmart.co.za\/t-blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tekmart.co.za\/t-blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tekmart.co.za\/t-blog\/wp-json\/wp\/v2\/comments?post=5537"}],"version-history":[{"count":1,"href":"https:\/\/tekmart.co.za\/t-blog\/wp-json\/wp\/v2\/posts\/5537\/revisions"}],"predecessor-version":[{"id":5538,"href":"https:\/\/tekmart.co.za\/t-blog\/wp-json\/wp\/v2\/posts\/5537\/revisions\/5538"}],"wp:attachment":[{"href":"https:\/\/tekmart.co.za\/t-blog\/wp-json\/wp\/v2\/media?parent=5537"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tekmart.co.za\/t-blog\/wp-json\/wp\/v2\/categories?post=5537"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tekmart.co.za\/t-blog\/wp-json\/wp\/v2\/tags?post=5537"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}