- March 20, 2018
- Posted by: John Cole
- Category: AHEAD, Data center, ELA, TCO
IT leaders are faced with a difficult problem. On the one hand, enterprise businesses are looking at their IT departments to help drive growth and digital transformation; while on the other hand, IT budgets are stretched thin, making it burdensome to keep pace with these demands.
The road to digital transformation is riddled with blind spots—whether in the form of hidden infrastructure costs or obstructed views of multi-year, total cost of ownership (TCO). In a recent webinar I hosted, a whopping 92 percent of attendees responded that they’d been blindsided by a maintenance bill.
So, in this do-more-with-less world, how can you identify these sunken costs to fund modernization within your organization? While this is by no means an exhaustive list, let’s start small and identify five hidden costs to help make this your last maintenance bill blindside:
Lack of Insight into Future Expiring Maintenance
A challenge we see with customers is that they most typically need to submit budgets three months before their fiscal year starts. As a result, they don’t have visibility into items that may be expiring at the end of the following fiscal year. So, they have no future outlook beyond what is expiring in the next 12 months in terms of renewal quotes.
A solution to this problem would be requesting a full Install Base Report (IBR) from their vendor account team. Keep in mind, this isn’t a soft audit or maintenance renewal report, but a report that lists your hardware and licensing purchase history, regardless of how the assets were procured, whether through a VAR, OEM or directly from the vendor. These reports provide visibility into all purchased assets, end dates of support contracts, projected maintenance costs when current terms expire, and promotional products you may not be aware you own.
Multiple Invoices and Maintenance Reports From a Single Manufacturer
Most manufacturers have multiple product lines, and often those product lines have resulted from acquisitions of smaller companies. Unfortunately, as they’ve acquired those companies, they haven’t always integrated them into a single customer experience, so you may get a maintenance bill from a manufacturer for their traditional products, but you often get separate maintenance bills in completely different formats from some of their acquisition product lines.
For example, you’ll receive an invoice or report from Isilon or Data Domain, which are both Dell EMC products, but the format could be completely different for each one, along with the company that issues the report or bill. The same goes for AppDynamics within Cisco—it’s hard to stay organized and on top of maintenance and spend if you’re receiving data from different sources.
While this is a challenge that likely won’t be remedied any time soon, a lot of this comes back to that Install Base Report or any sort of consolidated report working with your account team across all product lines and services. Manufacturers are absolutely able to provide this, but sometimes there’s pushback as it’s a ton of work. So, that’s oftentimes why people turn to partners like AHEAD, because we’re willing to put in that work to cut through the noise.
Fragmented Billing and Organizational Structures Across Consolidated Companies
Just like vendors have gone through mergers or acquisitions—in all likelihood—so has your own company. This means that maintenance bills and reports come to you separately across different entities. For instance, separate entities and acquisitions within our client base may have different company codes or Site IDs and therefore, may receive separate bills. For instance, if I’m a parent corporation, I get all of my invoices—but subsidiary “1” or “2” may have legacy agreements with the same manufacturers still under the subsidiary name.
So, how do I get a holistic view of my enterprise knowing that my view of the world doesn’t necessarily match what my manufacturers’ systems say? A piece of advice I’d have is—when you’re requesting your Install Base Report from your vendor—list all of the company’s entities and subsidiaries, as well as ensure that all countries and locations are included in that inventory.
Maintenance Data is Typically Unaudited or Incorrect
What resides in the manufacturer’s systems is often a point-in-time snapshot of your system when it was acquired or configured. It’s not usually representative of further system upgrades or changes, and these omitted details can cause customer service issues since some portions of the asset may not be renewed.
For instance, if I bought a storage system in 2015 and then added more memory or disk drives to said system in 2017, that purchase may not have been updated accurately in my manufacturer’s records. So, there’s typically a technical consolidation or a technical true-up of what the maintenance team is expecting versus what’s actually running on the floor.
Another real-life scenario would be system components transfers that occur. Sometimes you take parts from one system to another, sometimes systems get moved between locations, and sometimes systems get transferred between entities—but just because it’s a line on a maintenance report doesn’t mean that line is correct in terms of quality, and it may not be a system or license that’s in use anymore. This begs the question: Are you paying licenses on systems still providing value? The manufacturer has no way of knowing that I necessarily turned something on or off, so this can result in missed upgrades or inaccurate billing.
Here’s my advice (that’s easier said than done): When you get your install base and maintenance reports, you need to validate and match those lines to systems that are actually running on your environment. In case you do notice discrepancies in billing, sometimes you’ll need to provide technical proof back to the manufacturer of what you’re running versus what they were expecting to charge you for.
This process is incredibly time-consuming, which is why AHEAD has a whole host of tools that allow us to run inventory assessments and technical read-outs of environments to demonstrate what’s actually in use.
Your Maintenance Data Doesn’t Include a Future Outlook
With different teams invoicing at different times, this makes it extremely difficult to build an operating budget. And, if you don’t build an operating budget for maintenance, there’s no basis on which you can build a budgeted-based TCO in order to shift maintenance dollars to CAPEX.
There are several questions that you should be asking when planning your operating budget:
- How long is the asset going to be in service?
- Am I growing or shrinking as an organization?
- Are there assets in facilities targeted to be shut down or moved?
- Am I undergoing application changes that I’m expecting to update or change my environment around?
- And of course, what’s my overall use case?
A maintenance bill is just a single point in time—it’s the difference between a balance sheet and an operating budget. But, until you understand what your expected future costs are, it’s hard for you to intelligently consider alternatives that may be more cost-effective.
For example, if I have a system that’s three years old that I’m expecting to run for two more years–and I’ve got a maintenance bill to pay for those two years–but I’m out of capacity on that system and it’s no longer keeping pace with my requirements, then I need to find a different alternative, either through replacement or complementing the asset with other resources.
So, it’s all about having a multi-year strategy and roadmap for what your goals are as an infrastructure and operations team. This will allow you to identify opportunities for savings that map up with your expected spend. Once you do that, you can start to take advantage of the various licensing structures. Do multi-year agreements make sense? Or do targeted platform replacements make more sense?
The bottom line is just because you’ve got a maintenance bill, that doesn’t mean you have a holistic view of your overall infrastructure spend. You’ll need to dig deeper, and AHEAD is here to help your organization cut through the noise.
We call this process “Harvest to Invest” and can help you uncover your committed costs for both the current year and future years, then formulate a plan to “harvest” significant savings–savings that fall to your bottom line or into new initiatives that drive your top line. Contact us below for a complimentary baseline assessment to help develop a complete picture of your IT infrastructure spend: