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By Scott Hirsh

Now that the tech bubble has deflated, we are once again in a buyer’s market. For those of us who are savvy negotiators, this doesn’t change a whole lot. We’ve always managed to get a pretty good deal on hardware and software. But despite the ubiquity of bargains, there is one area that has been difficult, if not impossible, to negotiate: maintenance and support.

Support, be it hardware or software, is the big vendor gravy train. One software company I was very close to as a customer admitted in an IPO road show that their support revenue was what made it possible to go public. For them, support had an 80 percent profit margin, which is about as close to printing money as it gets in business. So in these times where buyers rule – and where most companies are again aggressively cutting costs – what can be done about support costs?

Support Is All About Risk

Vendors typically charge between 15 percent and 20 percent of license list price for support. So even if you can wangle a freebie here and there (as I did), your vendor will still nail you on support. Furthermore, if you decide for whatever reason to let support lapse and then need to reinstate it, most vendors will insist that you pay back support. In other words, support costs add up and they’re hard to avoid.

Eventually vendors will use support as the stick to get customers to upgrade. Especially in the case of hardware (e.g., HP), sticking with an old model will cost you dearly in terms of support. What the vendor is trying to tell us, without being explicit, is that its costs for maintaining many generations of its products is prohibitively expensive, so please buy a newer generation of product that is less expensive for us to keep under maintenance. You too will find that your total cost of ownership goes down. And, by the way, we get to sell you more stuff and realize revenue.

When support for your old HP 3000 hits the roof, you have several choices:

• Drop vendor support and take care of yourself.

• Contract for third-party support.

• Try to negotiate a more reasonable deal with the vendor.

The main issue in the above choices is risk. How important to your business is the hardware or software in question, and how much exposure will your decision cause? Clearly, if the system in question is a crash and burn sandbox, the decision is not nearly as complex as that affecting your ERP server. So right away there are some obvious worst practices.

Worst Practice 1: Assigning the Same Risk to All Support Decisions

Some of us take business relationships with vendors personally. That’s both the positive and negative of our close-knit e3000 community. I have heard many a lament by my fellow System Managers regarding the outrage of support bills. So to reinforce what you already know, a reminder:

• It’s not personal.

• Everything is negotiable.

• The less critical the hardware or software in question, the more negotiable the price.

Now that we’ve got that out of the way, you must sort out what in your shop is critical and what is not. If a product is not critical you should treat maintenance and support differently than that of critical products. Allocate your limited budget where it’s needed most.

Worst Practice 2: Ignoring the Total Cost of Ownership

IT assets are not pets; they’re not treasured family heirlooms; they’re not even your trusty axe Lucille, man. They’re business assets that serve their time then depreciate their way out the door. As someone who updated operating systems only after family members were taken hostage by the HP Response Center (only a slight exaggeration), I am well aware that change is risk and risk is bad.

However, facts don’t lie. Older mission critical systems eventually cost more overall than a new replacement. It’s our job to do our homework, put together all the numbers for management, and then make our case. As I’ve said before, if a rational presentation of the facts doesn’t sway your management, welcome to the Dilbert Zone. And good luck.

Part of the total cost of ownership, however, may be the cost of third-party support vs. primary vendor support. That brings us to another Worst Practice.

Worst Practice 3: Overlooking Third-Party Support

My experience with various third-party support organizations – both hardware maintenance as well as software support – has been quite good. Again, you must assess your risk, but provided you get references and factoring in regional variations in support quality, the third-party option is extremely viable.

I am amazed at the number of shops that automatically dismiss third-party support as either fly by night or lower quality than primary vendor support. However, the third parties I know have withstood the test of time and are comprised of veterans of the primary vendor. For those nervous nellies out there, auditioning a third-party on something non-critical – say, printers or test boxes – is a great low-risk way to get acquainted.

Worst Practice 4: Overestimating Your Abilities

I know system managers who used to make their own memory boards. So maintaining their own systems is no sweat. That’s great, as long as:

• Nothing ever changes.

• You always have backup as knowledgeable as you.

• You keep spare parts on hand

Sure, roll your own for the small systems in the lab. But be realistic when it comes to mission-critical systems.

Worst Practice 5: You’d Rather Fight than Switch

If you’re using a software package with exorbitant support costs, how about switching to a lower-cost option? This was common at one time with terminal emulation software, and there are lots of other examples. Obviously, some products are easier to dump than others. However, you can certainly make the point to your vendor that from this point forward, all your new licenses will be for a competitor’s product. That usually gets someone’s attention.

Worst Practice 6: You Find Negotiating Awkward or Distasteful

I won’t sugar-coat it: Technical people are terrible negotiators. As an end-user, I heard that from vendors I banged heads with. And now, selling stuff to my former peers, I see it first-hand. Okay, it’s a generalization — and you yourself always get the best deal of anyone on the planet. So I’m talking about the other guy. But what I’ve seen among my fellow system managers is:

• We hate to say no.

• We’re afraid of hurting our vendor/friend’s feelings.

• We avoid confrontation

If the above describes you, be honest about it and involve someone in your organization who is a real pit bull. Again, everything is negotiable and you can probably get what you need (within reason). Compare notes with peers at user group meetings and conferences. Asking a fellow system manager what they paid for support is not as personal as asking them their weight. This is business, and it is your responsibility to use any legal and ethical means necessary to meet your budgetary objectives. This assumes you want to salvage your vendor relationship. If even your best effort fails to achieve a satisfactory result, you must eventually consider alternatives.

Worst Practice 7: Avoiding the Tough Decisions

When all else fails, when all the alternatives have been exhausted, we must confront the unthinkable. Knowing up front what the worst case is can help sharpen your focus. The tough decisions include:

• Phasing out the product entirely

• Switching platforms for a particular application

For mission critical hardware and software, this is truly a difficult decision. But alas, in the last few years of consulting I have witnessed several shops go through the decision making process for their managed care software, deciding to migrate out of their current application, all the way off the HP 3000 to another software vendor. This was due in no small part to support costs (although functionality and interoperability were also factors). As HP 3000 System Managers, this is truly the last resort, but it is still an option. Smart vendors know when to compromise. Now, so do you.

Scott Hirsh (scott@acellc.com) former chairman of the SYSMAN Special Interest Group, is an HP Certified HP 3000 System Manager and founder of Automated Computing Environments (www.acellc.com, 925.962.0346), HP-certified OpenView Consultants who consult on OpenView, Maestro, Sys*Admiral and other general HP e3000 and HP 9000 automation and administration practices.