Networking

Managing IT costs: Best of breed vs. "best value"


In reviewing your operations with an aim to control or lower costs related to running your IT department, there comes a time when you might have to have a religious war with some of your staff... do you keep your "best of breed" hardware or do you ultimately replace it with products that meet your needs but cost less?

Instead of simply answering this question, let me explain with a single specific example. In both my current position and in my previous job (both at colleges), I walked into identical situations with regard to the network infrastructure. Simply put, things were relatively bleak. In both cases, equipment was either very close to at beyond the manufacturer's end of life and the organizations were experiencing failures. Fans and power supplies were succumbing to age, rendering edge equipment useless. Even under these circumstances, the colleges were paying quite a lot in annual maintenance. Although maintenance was covering many of the problems and it also provided software updates for the network equipment, it wasn't perfect. After all, even with maintenance, a failure is still a failure and results in downtime.

It quickly became apparent that the situation was untenable. The hardware had to be replaced; remember, much of it was approaching end-of-life and the manufacturer's lifetime warranty support didn't include fans and power supplies beyond a five year period. As such, I started putting together budget numbers for the incumbent manufacturer to achieve the replacement goal. The result: No possibility of getting the necessary funds from existing budget dollars. At this point, there were two options: (1) Work with the rest of the executive team and the CFO to get additional money; (2) Look at alternatives.

I chose option two. To make a long story short, I ended up taking a very hard look at HP Procurve. After doing some analysis of our needs against what Procurve offered, performing reference checks and obtaining quotes from suppliers, the decision was a no brainer. In both instances, I chose Procurve and paid for the entire project through the use of a 5 year capital lease. If you recall, my budget had a line for network maintenance. This line paid for the lease.

The end result is that I chose to go with the "#2" vendor in the market and ended up meeting the needs of my employer within the already allocated budget. Sure, if it was critical enough, I could have secured additional funds to go with a different vendor, but I don't like working like that if it's not necessary.

To be clear, I'm not advocating that you go out and buy the cheapest thing you can. I'm advocating a "best value" approach. When the five-year lease is up on this equipment, I won't automatically move ahead with HP again. I will look at what's available in the marketplace at that time and do the same analysis again.

To be fair, there are definitely considerations beyond hard costs that must be judged. If you make changes like this, also consider the staff training (and angst, in some cases) that may be needed.

The moral: Whenever possible -- and definitely when you need to do upgrades -- do a market and needs analysis.

About

Since 1994, Scott Lowe has been providing technology solutions to a variety of organizations. After spending 10 years in multiple CIO roles, Scott is now an independent consultant, blogger, author, owner of The 1610 Group, and a Senior IT Executive w...

6 comments
laman
laman

The correct approach is to work out the total cost in 5 years time, not just the upfront cost. Scott, you are just spreading the cost over 5 years period, making use of the maintenance fees to cover part of the upfront cost, no magic here. And this is the way when you have budget for maintenance but limited fudning to replace the hardware. If the #1 vendor charges a large upfront fees for the equipment, and minimal maintenance fees for the next 5 years, then the whole things will be different.

jmarkovic32
jmarkovic32

I don't base my purchasing decision on "the best" product out there. I base it on our needs, budgets and capabilities and other factors. I then weight those factors on a scale of 1 through 5 with 5 being the most important and then tally up the score. The higher score gets the purchase. For example, I was looking to replace my old Surfcontrol Web filter product because it was running on old hardware and we weren't using even 1/4 of the capabilities of the system. I expressed the need to have a "fire and forget" appliance solution that fit our needs. The only need we have at the moment is to block bad websites and web services. I evaluated two other products outside of Surfcontrol (now Websense) and decided on the Barracuda Web filter. Was it the best product out there? No, but it fit our needs. It's cost-effective, easy to maintain and has the features we need at the moment. During the evaluation, I fell in love with the St. Bernard line of filters, but I had to supress the geek in me and go for something that was good for the company. The St. Bernard had more features than we would ever use and it was more expensive. But the evaluation chart I made TOLD me what to purchase because it was based on our business needs and not my geek tendency to work with the biggest and baddest technology out there. That's a short-coming of most IT groups, they push for the biggest and baddest stuff out there and turn a blind eye to what the business really needs? As an aside, I also gravitated towards Procurve switches. Why? I work for a non-profit and Procurve has excellent non-profit prices and a free lifetime next day replacement warranty. It's what the business needs demanded. On the other hand, all of my gateway devices are going to be moved over to Cisco appliances. Why? It has the features that our business requires.

robert.sebastian
robert.sebastian

I have been faced with a similar situation. In our case performing a cost analysis proved that purchasing new equipment would result in an annual savings in reduced hardware and software support costs normally allocated to the maintenance of the equipment.

thomas.ratliff
thomas.ratliff

Blindly purchasing best of breed is a disservice to the company. I have been involved in similar projects and the best practice approach is definitely performing a needs analysis. In one global project, impacting 60 sites in 50 countries, the best value approach providing a higher level of up-time and similar performance for critical services was to use PCs vs. Servers for very specific "black box" functions. The cost savings were tremendous.

reisen55
reisen55

American Management has a fetish with outsourcing, and they have not learned that they cannot buy best of breed or best quality or best "whatever hip term" for cheaper, faster, better in Bangalore. They do not understand the importance of Information Technology hardware, software or quality people and see it only as an expense item, particularly those huge American salaries with benefits. Help(less) desks in Bangalore staffed by 50 newly graduated kids (what they really are) reading answers from prepared scripts CANNOT DO A BEST OF BREED JOB PERIOD. Oh, but they do not see that. They do not want to. Aon Group outsourced to Computer Sciences Corporation in 2004 and it has been a disaster: ask the employees. Ask Management and they see it as a shining success. Lowered those costs. Period. Outsourcing is what American management views as best value these days, and an entire career culture has been destroyed.

Scott Lowe
Scott Lowe

There is no magic here at all. And, yes, spreading the cost over five years using maintenance funds is what I did in my situation. That said, the total overall solution is also meeting our needs very, very well and at a MUCH lower cost than it would have been otherwise.

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