New Study Reveals Businesses Unknowingly Pass Up On Big IT Cost Savings
Independent Research Firm Recommends Challenging the Status Quo on Hardware Refresh Cycles and Maintenance Contracts to Lower Costs
Santa Barbara, Calif. ─ May 14, 2013 ─ Despite an overwhelming effort by businesses to reduce unnecessary IT costs, many organizations miss out on big IT cost savings each year by prematurely upgrading networking infrastructure and insufficiently scrutinizing ongoing maintenance contracts. A new commissioned study conducted by Forrester Consulting on behalf of Network Hardware Resale, revealed that although an overwhelming number (76 percent) of IT decision-makers are concerned about the pressures to reduce costs, many are unaware of the available options that exist for alternative maintenance contracts and are unduly influenced by vendors regarding hardware refresh cycles.
According to the study:
- Up to 79% of organizations refresh their wired networking infrastructure every one to five years guided by industry averages that originate from the vendors.
- Vendors set the end of life agenda resulting in the sometimes unnecessary and expensive replacement of IT equipment -- that still carries market value and has 20 plus years mean time between failures.
“After surveying 304 IT decision-makers, Forrester found that even though IT budgets are under constant scrutiny, businesses have defaulted to vendor influence which has blinded them to the rewards of extending hardware lifecycles and third-party maintenance solutions,” according to the Forrester Consulting study.
Forrester study findings:
- End of Life (EoL) equipment is prematurely retired: 85 percent of respondents admitted that they would have kept their legacy networking equipment if the vendor continued to support it.
- OEM maintenance services have little return on investment: More than 80 percent of organizations buy maintenance contracts from their equipment manufacturer even though they see little value in what they are purchasing and express discontent over misrepresented cost savings, new fees, and inflexible pricing models.
Third-party maintenance options are widely unknown: Only 21 percent report that they have leveraged competitor third-party bids when negotiating service and maintenance contracts, while 80 percent claim they would leverage third-party maintenance if they found it to be more affordable than their current contract [see Figure 1].
“Every CIO should make it a priority to read this report,” said Mike Sheldon, President and CEO 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 -- helping to ease worries about tightening IT budgets without sacrificing quality.”
To achieve greater value and maximize the ROI of network infrastructure they have purchased, Forrester Consulting suggests organizations implement the following key recommendations:
- Keep what’s working within an existing infrastructure to avoid premature and unnecessary upgrades.
- Don’t pay for software updates if there are none, or if they are available for free. Organizations should carefully scrutinize ongoing maintenance contracts in order to find valuable Operational Expenditure (OPEX) savings.
- Put maintenance contracts out for competitive bid, not just to different resellers, but also include third-party options.
- Put metrics in place to reward value, quality, and longevity, not just resiliency.
The study and its findings are explored in further detail in the Forrester study, Challenging the Status Quo on Maintenance Contracts and Refresh Cycles to Lower Costs. Click to download PDF.
Mike Sheldon, CEO of Network Hardware Resale, will conduct a webinar on this topic featuring Principal Analyst, Andre Kindness of Forrester on June 19, 2013 at 2:00 PM EST. Click to register.
Forrester Consulting surveyed 304 IT decision-makers across eight countries (Australia, France, Germany, India, Japan, Singapore, the United Kingdom and the United States) to evaluate the challenges that organizations face in working directly with OEMs and the value of working with a third party. Survey participants included decision-makers in executive positions, finance, information technology, and procurement. Questions provided to the participants asked about the overall business situation, how vendors are selected, upgrading solutions, end of life, and maintenance. The study began in January 2013 and was completed in February 2013.
About Network Hardware Resale
Network Hardware Resale is the world's leading provider of pre-owned and new networking and datacenter solutions. Headquartered in Santa Barbara, Calif., the Company is an independent reseller of pre-owned equipment from Cisco, Juniper, HP, IBM and other manufacturers and is a Premier member of Dell's PartnerDirect Program. Network Hardware Resale also offers NetSure™ Maintenance Program, a complete and customizable network maintenance solution and affordable alternative to traditional OEM maintenance. The Company offers IT asset recovery, Network Monitoring and technical support services as well as a complete line of OEM and branded optical transceivers, memory, cables and accessories. Founded in 1986, Network Hardware Resale provides global organizations quality and reliable networking and data center equipment, solutions, and services with access to personalized technical and sales support from its Santa Barbara, Dallas, New York City, Amsterdam, London, and Singapore locations. For more information, visit www.networkhardware.com
 Challenging the Status Quo on Maintenance Contracts and Refresh Cycles to Lower Costs, a commissioned study conducted by Forrester Consulting on behalf of Network Hardware Resale, May 2013