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3/3/2010
10:58 AM
George Crump
George Crump
Commentary
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Is Out-Year Maintenance Really Motivation?

At some point in the next few years, maybe this year, you are going to switch storage vendors. In the industry we use terms like refresh your storage instead of switch. Sounds less painful. In my blog over at Network Computing I spoke about how you need to be careful of the actual migration of data and who is going to do it. A common motivation to switch is the cost of out-year mai

At some point in the next few years, maybe this year, you are going to switch storage vendors. In the industry we use terms like refresh your storage instead of switch. Sounds less painful. In my blog over at Network Computing I spoke about how you need to be careful of the actual migration of data and who is going to do it. A common motivation to switch is the cost of out-year maintenance.Out-year maintenance is a bill you get when the storage system you bought comes out of the initial service coverage that was included when you purchased the unit. In some ways this is the best case scenario for replacement. You have reached the end of the maintenance cycle for the system but at least this means you received four to five years of service out of the system. The downside is the shock at the cost of the first out-of-warranty maintenance bill and realizing its almost cheaper to buy a new system. Really these bills should come with a defibrillator.

We all know what the strategy is here on the part of the supplier, that you will use this as motivation to get a new storage system. I'm just not sure why suppliers are so convinced that you will buy it from them though. If your storage system has performed flawlessly then I can see you giving the incumbent the advantage, but almost every IT Manager I've spoken with in this situation will open the field up to at least a few other suppliers to see what has changed in the last few years. These out-year maintenance bills can be so extreme that sometimes the response to them is for the customer to do everything they can not to buy that system again.

I think most suppliers don't factor in the total cost of retention of your business when this happens. Instead what should be an upgrade essentially becomes a battle for a new customer. New customer aquizition is very costly for suppliers. There are sales calls to be made, competitive pricing to come up with and of course plenty of lunches and golf outings. Wouldn't the incumbent supplier be better served by offering you a maintenance contract that is more incremental in nature? The IT Managers I know expect out-year maintenance to cost more, they just didn't expect for it to require a trip to the hospital. Besides services revenue is a good thing, keeping customers is a good thing. This seems more cost effective to me.

There could be concern that you will try to get ten years out of the system. I don't get that either. This is technology. You know you need to stay competitive. The IT Managers I speak with that are frustrated by the bills they get for out-year maintenance readily admit they were going to upgrade the system soon anyway. They were often just looking to get another year or two out of their current one. If the vendor would have just maintained them at a reasonable price they would have been able to enjoy more of the advantages of being the incumbent.

Maintenance is just one reason to switch vendors, there are others, and we'll explore those in our next entry.

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George Crump is lead analyst of Storage Switzerland, an IT analyst firm focused on the storage and virtualization segments. Find Storage Switzerland's disclosure statement here.

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