– Tim Peterson, financial advisor of IT Risk Management with Systems Maintenance Services (www.sysmaint.com), says:

When you visit a doctor and tell him or her that you have had a cold for over 2 weeks and all they do is prescribe an antibiotic without getting a full diagnosis about you, they could be really missing something. Hence the title of my report. So is the case today for service organizations trying to help companies in their data centers.

I have been in the IT Service Industry for 25 years and I am still surprised on how many articles I have read regarding Independent Service Organizations / TPM’s that continue to only emphasize saving clients 30-60% on hardware service contracts for IBM, Dell, EMC, Cisco, HP, etc.

This type of selling and marketing was pretty effective 10 years ago due to the extreme costs the manufactures were charging for service. Typical scenarios from a service company would be to obtain a clients current service contract or they may have the actual pricing on what the manufacturing charges for service and simply knock off 50%. “Here you go Mr. Jones; I just saved you a ton of money!”  Over the years many service organizations prospered with this type of methodology. But as time went on a fair amount of these companies either went out of business, or had to merge with other service companies in order to survive.

Today’s IT environment is completely different. Some OEM’s have decreased the amount they charge for maintenance, while others lock in clients for long terms with “no way out” and so on. In most cases the client does not have a complete understanding of what they are actually paying for, so every month or year they simply just issue a new Purchase Order.

Service organizations today should be representing themselves more as a Financial Advisor / IT Risk Management company. This involves a diagnosis. Take the time to look over a service agreement with your client. Hardware maintenance is only a small piece. Pay close attention to the software maintenance as well. Most OEM’s will never explain this piece of the contract.

I have provided two examples for you. Hewlett Packard and Cisco:

Client A is paying HP for software maintenance on their HP PA-RISC or Itanium servers. The future of HP-UX is tied to the Itanium processors. At this point all of the other OS providers including most recently REDHAT have bailed out on Itanium. This leaves HP alone going forward on Itanium. Even there the vast majority of the HP-UX installed base is still on PA-RISC with no plans to purchase Itanium upgrades. If HP had a solid marketing plan for HP-UX they would guarantee investment protection on Itanium upgrades.

The current version HP-UX 11iv3 will execute on only a limited portion of the later model servers. This is a well worn HP tactic to force the installed base to purchase system upgrades they wouldn’t purchase otherwise so that they can run newer versions of the HP-UX operating system.

HP claims the only way to get OS updates is to stay on support with HP.

First, for the PA-Risc systems (all models that don’t start with RX) this is a flat out lie! PA-Risc processors have been discontinued by HP. No new OS versions will ever be produced beyond 11iV3 that will be executable on PA-Risc.
Second, for the Itanium systems (all models that start with RX) the customer has THREE cost savings alternatives to paying per month for software subscriptions that may never be applicable to the current system or ever installed by the customer.
 
–        They can purchase it outright at software.hp.com
–        If they need new OS version they can purchase a used server that would come with the new OS.  (most popular)
–        Why upgrade at all? Instead of investing efforts to update to a new version of HP-UX many customers will elect to switch to other platforms such as Linux or Windows. These decisions are mostly driven by application software vendors and cost savings associated with less expensive support on these platforms.
HP is misleading customers to believe that they need to pay for support to get patches.
HP-UX patches have always been free and available at ftp.itrc.hp.com.
Why? The patches are to fix defects that HP distributed in the software they sold. Freely available patches allow HP to avoid liability. They can simply claim that customers should report problems and they produce and publish patches.
HP is telling customers that only HP has access to ‘diagnostics‘.

HP-UX comes with a complete set of user accessible diagnostics and monitoring software. The ‘diagnostics’ they are referring to are low level component diagnostics. The only reason that one would require these diagnostics are to prove root cause of component failure and attempt to reset or repair board level components.

It is amazing that HP service techs will actually extend customer down time proving that a faulty part is really faulted. They do this instead of just replacing a board because if they send a replaced part back and it proves to be good then the service tech is rated poorly.

Did your client know this?  Probably not, why would HP want to stop charging for updates? 
Client B is paying Cisco for SmartNet on their Cisco 2960 and 3750 switches. Was your client aware that these core switches have a lifetime warranty on IOS updates and can be downloaded by themselves or by the service company at no extra cost? Is your client aware that there are other service programs offered by Cisco that allows you to obtain IOS updates and TAC support other than SmartNet?  Not likely. Cisco thrives on only selling SmartNet.  SmartNet contracts increase every year by an average of 15%!  This tactic is used not only to increase revenue for Cisco but it now puts them in the position to force you to upgrade after about 3 years and you may not need to. 
Now you are starting to sound like a Financial Advisor and not just a price slasher!
This type of methodology will now open the door for you on additional opportunities and gain tremendous amount of respect you with your client.