80% of respondents would purchase maintenance contracts from original equipment makers even though they see little value in what are purchasing - The decision to acquire, maintain or change of IT infrastructure is treated as a routine, by default-strategy, where little thought is given to strategic alternatives which will yield better return on investment.
As the Forrester research report put aptly, even though IT budgets are under constant scrutiny, businesses have defaulted to vendor influence, which has blinded them to the rewards of extending hardware life cycles and third-party maintenance solutions.
Time for a Rethink?
These key findings give room for much thought, and businesses would do well to relook at some of their IT investment strategies. In this regard, there are four key takeaways.
First, the survey showed that 76% of decision makers continue to remain concerned with the growing pressure to reduce costs. With digital technologies becoming intertwined with every business function, organisations are undoubtedly looking to free up financial resources.
The big IT trends in big data and the internet of things will certainly require an IT budget that supports stronger data centers and new vendor maintenance strategies. The solution lies in conceptualizing and deploying new strategies in managing network hardware lifecycles which will ultimately lead to new opportunities for reduced costs.
One best practice strategy is for businesses to take a practical look at what they currently posses and maximize the use of these assets.
Second, the survey showed that more than half of organisations refreshed their infrastructure every three to five years, and even when no new functionality is needed, customers still choose to refresh their networking equipment at their vendor's directive.
There is a emerging belief that businesses would do well to take stock of what they have and not necessarily heed to the desire to refresh their equipment.
Third, most businesses follow the relatively same process when it comes to buying maintenance contracts and refreshing hardware, i.e. they default to OEM-provided information and refresh their equipment without considering its long lifespan.
Defaulting to this cycle should raise concerns with all organizations, especially when companies are looking to make room in their IT budget for the increasing influence of digital technologies in all business sectors.
In this regard, best practice advocates that businesses should attempt to keep a reasonable proportion of their IT equipment running in so far as continued vendor support is available.
Fourth, legacy practices have led to a situation where businesses repeat their IT purchases despite being unsatisfied with their historical contracts. Basically, the survey showed that business saw little return on maintenance services from their OEMs. When asked about the challenges with their existing vendor's maintenance, these businesses said that there were misrepresentations in cost savings, new fees, and inflexible pricing models.
Sign up for CIO Asia eNewsletters.