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Negotiating for support

Ezine

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Leverage points
There's no shortage to the excuses vendors will offer for not negotiating service rates. For example, one vendor claims financial reporting requirements prevent it from discounting service contracts because it has to report the full contract value for each reporting period.

"Most people don't think to negotiate. I come from a culture where everybody negotiates everything," says Hacopians, who's already planning his negotiation strategy as he upgrades from ATA arrays to the next generation of SATA arrays. He figures anybody should be able to knock the typical 18% annual service cost down to 10% or less. "It depends on your negotiating skill and your relationship with the vendor," he adds.

InteleNet Communications is also planning to purchase the latest generation of arrays packed with even more sophisticated features. EqualLogic is ratcheting up the pressure on InteleNet to buy support. "We may look at their support offering," concedes InteleNet's Stein. "A lot of it depends on how directly we can work with their firmware." But Stein adds that EqualLogic will have to cut its support prices if it hopes to lure InteleNet into a service program.

Storage vendors that maintain a third-party distribution channel automatically have negotiating room built into their support pricing, which allows the channel to add its markup. Ken Martig, director of IT infrastructure at a biotech company, usually purchases a three-year

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service program on top of any warranty. He recently turned over support contracts for approximately 30 infrastructure vendors, including ONStor Inc. and Sun/StorageTek, to Seattle-based Support Solutions Inc. Martig pays the same price as he would without the VAR. However, "Support Solutions does all the legwork and takes care of renewals," says Martig, which saves his IT group a big hassle.

If you're having trouble negotiating a lower service rate, you can try to negotiate other aspects of the service program (see "Pull the right negotiation levers"). "You may have better success negotiating a faster response time, say two hours rather than four hours," says Brian Schwarzentruber, a senior consultant at GlassHouse Technologies in Framingham, MA. Vendors usually charge a premium for the faster response. Or you might negotiate an extension of the free warranty period.

You can also apply negotiating pressure by bringing in more vendors and third-party providers. "I always go to multiple vendors," says Hacopians. As noted earlier, when IPAC switched its Sun service program to a third party, it didn't take long for Sun to come back with a more attractive offer.

Despite what most vendors claim, storage support costs are negotiable. "You have to consider everything--the acquisition, service and support, and operating costs," says Hacopians. Only then will storage managers get the best price.

This was first published in May 2007

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