How to Curb Rising Hardware Support Costs

Spend Matters welcomes another guest post from NPI, a spend management consultancy, focused on delivering savings in the areas of IT, telecom and transportation.

Gartner estimates that the global IT industry will top $3.6 trillion in sales by the end of 2012. One of the largest upticks in spending can be found in computing hardware, with an estimated increase of 6.6 percent. For many companies, this means more than just new hardware investments – it means rising support costs.

Support costs can quickly outweigh the initial purchase price of computing hardware, especially for companies that don't challenge vendors' annual rate increases. And much of today's computing and network hardware is built for longevity, often delivering reliable performance long after vendors sunset products. This forces many companies to make a tough and costly decisions when their hardware approaches end of life: to upgrade hardware despite the fact it still meets their current demands; pay a higher fee to support their out-of-date assets; or invest in new equipment.

As computing becomes more and more ubiquitous across the enterprise and hardware proliferates accordingly, the support costs are increasingly burdensome on today's IT budgets. Without a way to negate these rising costs, hardware support will negatively impact companies' ability to fund new IT initiatives.

Here are five questions companies should answer before they renew their current hardware support agreements or purchase new hardware:

  1. Conduct an end-of-life audit on all hardware. How long will your current hardware be supported by vendors?
  2. Are you paying for premium support in areas where you could get by with less support?
  3. For areas where you need premium support, are there third-party support provider alternatives?
  4. Find out if you're paying your reseller too much. How much would you pay for support if you bought directly through OEM? Is your reseller charging you fair market value rates?
  5. If you are working with a reseller, what incentives do they get from the OEM? Make sure they're being passed on to you in the form of extra discounts.

How are Spend Matters readers keeping hardware support costs in check? What has been the most effective strategy for your business?

- Jeff Muscarella, EVP of IT, NPI

First Voice

  1. Kevin Lemmens:

    In these times of fast developing technologies and times in which these technologies are in certain industries at the center of your (value adding) operations, I would like to add a sixth question:

    To what extent is the IT/hardware in your organization shifting from support to value adding and strategic?

    Dependent on the answer, this question could change your perspective of IT investments as purely ‘Support Costs’ to ‘Strategic Costs’ or as necessary investment for an important pillar of your organizational strategy.

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