When a company budgets for data center equipment, a new enterprise storage system is typically the largest purchase. The expense is worth justifying, however, because the company’s most critical data and applications are stored and protected by this system. Many purchases even include multiple systems to provide speedy recovery at various locations.
What is the issue? Storage vendors build extra perks into a humongous transaction, and customers reap the rewards. The issue is these vendors force customers to repurchase everything again in 36 months.
Whether the cost is $2 million or $20 million, that new enterprise storage system includes 36 months of prepaid support and maintenance, which usually makes up 30 percent of the total purchase price. Since it is prepaid, it also comes with a hefty discount.
Discounts are attractive, but once the initial 36 months are up, the time comes to renew the maintenance and support. The quote from the storage vendor for the next round of support, however, is only for 12 months and it comes with no discount. In fact, the renewed quote for only 12 months is often significantly more expensive than the original 36 months.
How is this possible?
According to vendors, their cost to support the hardware on that extremely reliable storage system is much higher now than when originally purchased.
Feeling not great about the 400 percent cost increase on a new quote, sales representatives will say that for the same price as a few years of support, you could get a whole new system. And, wouldn’t you know, they will offer to throw in 36 months of heavily discounted, prepaid maintenance. Seeing circles yet?
A never-ending cycle.
This 36-month tech refresh was started by storage vendors decades ago to force new sales opportunities on their existing customers. These customers have tolerated this practice from their vendors for years, but it’s becoming worse than ever.
Systems are now substantially larger and more expensive than when this sales tactic first started — and storage requirements have quadrupled. When we had to do these tech refreshes 15 years ago, the amount of data we needed to migrate to the new storage systems was about 50TB-100TB. Now capacities are in the Petabytes, and migrating a Petabyte can be a nightmarish task.
Customers say the tech refresh situation is so bad now that they start to budget and plan for the new purchase, migration and subsequent tech refresh within 18 months of the original purchase.
Why do people put up with this?
Some companies continue the cycle because they joined a company somewhere in that 36-month period and inherited someone else’s nightmare. Some are not fully aware of their options.
Independent IT solution providers can help. If you find your company with an upcoming 36-month tech refresh and don’t want to get overcharged, solution providers can aid in negotiating a more than reasonable support contract.
When the time comes to purchase or upgrade a storage system, they’ll help structure an agreement that eliminates the elusive 36-month tech refresh once and for all.
About the Author
Vince Zappula has provided information technology solutions and services since 1990. He has worked with over 100 Fortune 1000 companies to eliminate common industry challenges. Along the way, he has helped fast growing startups leverage cloud services and design an infrastructure that scales.