Magazine Article | August 1, 2003

You Should Be Better Served

Source: Field Technologies Magazine

With hardware and software margins dropping, vendors and integrators are working to increase revenue from services. Let them.

Integrated Solutions, August 2003
Tom von Gunden

Remember when you would pay as much as $20 for a pocket calculator with basic functioning? Now, you're likely to see one show up as the free prize in your kid's next box of Cracker Jacks. And, don't even think about the $700 you dropped for that 27-inch TV a decade ago - or the $160 you could grab it for today. As is the case with electronic products in the retail consumer space, IT products usually drop in price point. That's what happens when widespread adoption, i.e. market saturation, turns innovation into commodity. The trend is somewhat true of software, where open systems designs and vanilla configurations have led to lower price, off-the-shelf offerings. It is especially true of hardware. Just consider, for example, the savings had you purchased that NAS (network attached storage) box three days ago instead of three years ago. Thousands? Tens of thousands?

But, instead of lamenting your losses, consider what you have gained. With declining margins on products, many vendors and integrators will be ramping up their value-added services to retain your business and pad their revenue. Sure, you'll pay for those services, but so what? If you're willing to regularly spend $100 in your favorite restaurant, you can greatly increase your chances of getting excellent service if the consumables cost only $60, leaving you, the big tipper, a full $40 to cover "value-adds." How much less attentive would the service be if you dropped the same hundred bucks, but $95 went for the meal?

Don't Fear The Pitch
So, you should embrace the likely increase in service offerings coming at you from your vendor and systems integrator partners. Of course, some caution is always advised. You should consider carefully which services you need and which you don't. For instance, vendors may offer extended years of SLA (service level agreement) support for their hardware. But, before you sign a contract with a new vendor partner based primarily on duration of support, consider your typical or anticipated hardware upgrade cycles. What good is a five-year support contract if you regularly change out your servers and storage units every three years?

VARs and systems integrators are increasingly likely to offer not just project implementation support but ongoing "managed services" to help you with the long-term rollout. But, consider other cost factors before you sign on to have them frequently monitoring your site or hosting your apps. For example, if you have already spent considerable amounts on software automation tools to manage your hardware, you may not need constant, keen attention from your integration partner.

That said, when you do pay for additional services, you're likely to "get what you pay for" in the most thorough sense of the phrase. Remember those shrinking margins? Remember that need to keep you as a customer?