Lagos. February 5, 2013: The price on the bottom line of your ICT maintenance contract is often not what you actually pay for support. This is not because your service provider is billing inaccurately; in fact, it has more to do with costs incurred by your own organisation’s internal teams and structures.
Brent Flint, Middle East and Africa Services Executive at Dimension Data, points out that the bulk of support-related expenses fall outside the scope of traditional support offerings. The goal should therefore be to reduce total cost of support by recognising and eliminating ‘hidden’ expenses, and not to cut down on externally provided services that you might later regret discontinuing.
Many vendors, many processes
One example of a hidden cost, says Flint, is the expense incurred in managing the support processes of different vendors. “These processes are never the same for every service provider. So the more vendors you have, the more intricate your support environment is to manage. And the more complicated this management is, the more mistakes are made and the more downtime occurs which, in turn, drives up your operational costs. At the same time, your organisation would require more service vendor management, which means more work for your procurement department, more effort to keep up with vendor research, and more contract management and renewal complications – all of which add to your total cost of support.” By reducing the number of vendors in your environment, you can lower your total cost of support.
Which level of service?
“Some of these hidden costs are inversely related to the type of service contract you have in place,” adds Flint. “The simpler and cheaper the contract, the more costs are carried internally. For example, should an organisation decide not to buy a premium level of service but opt for a simple ‘break-fix’ service instead, a large degree of management is required on the business’ side to initiate and ensure the proper delivery of the service. The internal support team would, firstly, need to be aware that a piece of equipment has malfunctioned, which implies the need for some form of monitoring as well as an internal help desk. The internal team would then have to determine if the equipment is under contract and, if so, with which service provider.
Again, this takes time and effort, and the more out-of-date or incomplete the organisation’s asset register is, the longer and more involved this tracking process becomes. “When the call to the break-fix service provider is then finally made and the new equipment is installed, the business still has to ensure that the equipment’s service to the organisation is restored and runs as smoothly as before. The result of this is that businesses spend far more on ‘cheaper’ break-fix services than they realise. Using a service provider to restore equipment as opposed to delivering a simple ‘break-fix’ service might seem like it costs more, but the organisation would need far fewer in-house administration and engineering resources to ensure maximum business continuity.” Freeing up your internal support team by relying more on a service provider’s capabilities can lower your total cost of support.
On foreign shores
Another cost that’s often overlooked by international organisations is foreign service tax liabilities. Flint explains: “If a chosen service provider isn’t large enough to have billing entities in all the countries in which an organisation has a presence, it incurs a foreign tax liability for procuring services in those geographies. That’s a factor that many businesses forget.
Choosing a service provider with coverage in the countries in which you operate can lower your total cost of support. On the other hand, an area in which businesses tend to under-spend is in service entitlements. Best practice in determining which service levels you need is to categorise your locations by availability requirements. The highest service level requirement might be for your data centres, which would need a 7x24x4 entitlement to ensure maximum uptime for business-critical systems and processes, whereas a satellite location might need only an 8x5xnext business day entitlement owing to the location’s lower importance to the overall business. When we do the location versus- support analysis with some of our clients, we often find that their service level coverage is not the right fit in many locations. In a few cases, the service level may be set too high but, more often than not, organisations have opted for cheaper options with less support than they really need.” Right-sizing the service level to the requirements of the location can lower your total cost of support.
Short on skills
One of the most important reasons why organisations need external support services is because they lack the required in-house technical skills. Exacerbating this problem is the general shortage of technical skills worldwide, as well as the more pronounced lack in developing geographies into which international organisations might want to expand.
Flint believes, however, that the most impactful factor contributing to skills shortage is the pace of technological change. Given the day-to-day pressures of in-house IT support teams in ensuring maximum business continuity, not much time or budget is left to channel into up skilling employees on the latest advances. “For example, when IP telephony first emerged, there was a distinct lack of expertise and knowledge in this particular area,” says Flint. “The same would probably be the case as the market moves towards adopting the new software-defined network approach. Knowledge and expertise can only be gained over time and, therefore, always lag behind the introduction of new technologies. The problem is also that the variety of different technologies involved in organisations’ estates is so wide that they simply can’t afford to skill up each time there’s a change or new development in the market.“ Using shared, skilled resources of a service provider can lower the total cost of support.
While certain smaller, often localised, service providers may be able to offer some of these proactive components, Flint believes large, multinational organisations would do better to consider partnering with a global support provider that can offer several such elements in combination and at scale, which would save costs. “Most importantly, the service provider should be able to deliver these services consistently and reliably around the globe.” If you’re a large, multinational organisation, leveraging a global service provider’s scale can lower your total cost of support.
Whichever of these steps you choose to lower your total cost of support, these choices will deliver a simpler, more consolidated and more proactive overall support environment, with fewer hidden costs to think about.