CIOs – and more recently procurement executives – have been chasing IT hardware cost savings for years (not to mention the OEMs attempting to eek every basis point of margin out of the supply base). Having been involved in IT sourcing projects earlier in my career – actually for a large OEM – I can attest to the often advanced market design elements that go into the typical sourcing or category decision involving large hardware buying efforts. But might services be a better place to look for savings?
Accenture's recent Q3 Spend Trends Report suggests that the opportunities for savings from third-party hardware maintenance are often significant – and have not necessarily been fully explored. There is also a misalignment of provider perception vs. actual capability. As Accenture observes, “While quality of third-party support options continues to increase, offering not only significant savings potential, but better global coverage.”
Further, “Most enterprises want a direct global support model, and as a result often look to their largest hardware supplier to manage global hardware support; however, no single supplier has a truly global support model. Although these large hardware providers are ideally suited to provide support for their own hardware, the reality is that most companies have a diverse mix of gear (i.e., servers from one vendor, storage gear from another, networking gear from a third) not to mention a mosaic of data center software.”
Moreover, the authors point out that the supply market is actually turning to third-party sources for services delivery (as the concept of “one throat to choke” exists on paper only across hardware support). Given this, Accenture recommends regardless of whether an organization is “considering outsourced support for the first time, or re-examining existing agreements, be sure to consider third-party options. Despite complexities such as unbundling existing hardware and software maintenance agreements, the savings potential can be substantial (30-60%), not to mention the benefits of inventory management services, flexible SLAs, and other benefits.”
Spend Matters Key Takeaway: Don’t let your hardware vendor gobble the margin of buying services to fulfill services delivery on their own. Go directly to third-party services providers for hardware services and support savings.