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Guest View: The hidden costs of support

Sunil Desai | May 17, 2013
Sunil Desai, Director for Managed Services at Dimension Data Asia Pacific, points out that the bulk of support-related expenses fall outside the scope of traditional support offerings. It is important therefore to identify and eliminate 'hidden' expenses.

The price on the bottom line of an ICT maintenance contract is often not what organisations actually pay for support. That's not because a service provider is billing inaccurately - it has more to do with costs incurred by the organisation's own internal teams and structures.

The bulk of support-related expenses fall outside the scope of traditional support offerings. The goal should therefore be to reduce the total cost of support by identifying and eliminating 'hidden' expenses, rather than cutting down on externally provided services that actually deliver value.

Many vendors, many processes

One example of a hidden cost is the expenses incurred in managing different vendors' support processes. These processes are never the same for every service provider, and the more vendors an organisation has, the more intricate the support environment becomes. This increased complexity leads to mistakes being made, and possibly to downtime which, in turn, drive up operational costs.

At the same time, organisations require more service vendor management, which means more work for the procurement department, more effort to keep up with vendor research, and more contract management and renewal complications - all of which drives up costs.

Which level of service?

Some of these hidden costs are inversely related to the type of service contract an organisation has in place. The simpler and cheaper the contract, the more costs are carried internally. For example, if an organisation has decided to not buy a 'restore' level of service and have opted for a simple 'break-fix' service, a large degree of management is required by the business itself, to initiate and ensure the proper delivery of the service.

The internal support team firstly need to be aware that a piece of equipment has malfunctioned, which implies the need for some form of monitoring and an internal helpdesk. They then have to determine if the equipment is under contract and, if so, with whom. This takes time and effort. And the more out-of-date or incomplete an organisation's asset register is, the longer and more complex this tracking process becomes.

When the call to the break-fix service provider is 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. As a result, businesses spend far more on 'cheaper' break-fix services. A 'restore' service level on a support contract might seem to cost more, but the organisation needs far fewer in-house administration and engineering resources to ensure maximum business continuity.

On foreign shores

Multinationals also have to consider the cost of support in their satellite markets: not every place enjoys business-friendly tax regime, and foreign service tax liabilities might be incurred

 

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