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Vendor influence blinds enterprises from cost savings: Forrester

Caroline Ng | Aug. 2, 2013
Hardware refresh cycles and maintenance contracts could be the silent culprits of hidden costs, controlled by vendors.

Under vendor influence, enterprises are spending unnecessarily on premature hardware upgrades and costly maintenance contracts, according to a new study by Forrester Consulting.

The survey is conducted on 304 IT decision-makers in Australia, France, Germany, India, Japan, Singapore, the United Kingdom and the United States to evaluate vendor influence on companies.

"Every CIO should make it a priority to read this report," said Mike Sheldon, president and chief executive of Network Hardware Resale. "Businesses of all sizes need to know that there can be incredible value and cost savings with a reliable third party maintenance service provider."

According to the new study, although IT decision-makers pride cost savings as top priority, many are influenced by vendors, and are oblivious to cheaper third party maintenance solutions and the rewards of extending hardware lifecycle.

The industry averages created by vendors for networking infrastructures have resulted in 79 percent of organisations upgrading every one to five years.

Such predefined end-of-life agenda often means unnecessary and expensive replacement of IT equipments that have otherwise, a market value of 20-plus years mean time between failure.

The findings also showed that 85 percent of respondents would have kept their legacy networking equipment if vendors continued to support it.

Despite the chagrin of most organisations for misrepresented cost savings and inflexible pricing models by vendors, more than 80 percent continue to buy maintenance contracts with them.

This irony could be due to a lack of awareness for third party maintenance options in the market.

Only 21 percent reported that they have leveraged third party bids when negotiating maintenance contracts leaving the overwhelming majority settling with the status quo.

But given the knowledge of lower costs solutions, 80 percent of respondents said they would switch to third party maintenance to save costs.

To maximise return on investments of network infrastructure, the independent research firm recommends companies to:

  • Avoid premature and unnecessary upgrades by keeping working equipments.
  • Scrutinise all maintenance contracts to find valuable Operational Expenditure (OPEX) savings.
  • Place a competitive bidding for maintenance contracts for third party options and resellers.
  • Place metrics to reward value, quality and longevity, not just resiliency.

 

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