IT costs have sky-rocketed in the past few years and CIOs face the challenge of operating under several constraints. Budgets and other resources are limited while business needs are changing at a rapid pace. The real test is finding strategic means of meeting key IT requirements and driving business transformation at the same time.
There has been a spectacular growth in the quantum of corporate data over the past few years. This in turn has shifted the focus of IT teams on improving IT infrastructure and capabilities required to host and manage voluminous data. A large chunk of the IT budget is hence channeled towards developing networking facilities, securing hardware components, training IT staff, consultancy charges, licensing and maintenance of software applications. Consequently, business development objectives gives way to maintaining existing IT infrastructure. Hence, a significant portion of the budget is allocated towards maintenance and support. As such, management plans to invest in business development projects requires cost cutting measures.
IBM software prices are shooting up
Software application license fees have shot up incredibly over the past few years. Further, you have to enter into an annual maintenance contract once the license validity period is over. Hence, a large chunk of a company’s IT budget is diverted towards software maintenance contract or client support. For instance, your firm has purchased a software application license. Once the validity period is over you need to invest more in maintenance support. Moreover, the annual maintenance charges are incremented by nearly 20% every year adding up to your IT operating costs.
A closer look at the financial implications provide clear indications on how the operational cost of managing your IT infrastructure increases every year. Let’s consider a scenario where a firm makes a software application purchase and trace the pattern of IT expenses over the subsequent years.
Initial purchase (including license fees) – $10,000
Additional expenses (setup and installation charges – $1,000
AMC charges after license period validity (20% of purchase price) – $2,000
Additional AMC charges (10% increase every year) – $200
So, the total cost incurred by the company is further escalated in the subsequent years when you have to pay an additional 10% increase in AMC charges every year. This trend will continue till IBM refuses to provide support any more. This is because older versions of a software application may be phased out by the company gradually. So, what do you do? You pay more for an upgraded version.
Now, if you want to customize the application to suit your specific needs, support and maintenance costs are further escalated. In certain cases, companies do not provide support services to tailored versions of its software tools.
Third party support service benefits
If you are using IBM products, software maintenance can be expensive, as illustrated in the scenario above. So, the question is how do you control your IT costs. This is where third party support services come in. Third party support refers to authorized service providers for the listed software products. Switching to third party support services makes a lot of financial sense owing to several linked benefits. Let’s see how.
Cost is the key distinguishing factor linked to the use of third party support services. You can save up to 75% on managing your software support and related IT services. You can avail competitive rates for a wide range of software support services adding to your cost savings. Overall, it helps in reducing your total cost of ownership of IBM products in the long run.
Additionally, you can also avail the benefits of a wide range of skilled services offered by the third party service providers. These include application setup, installation, customization, maintenance, licensing, and hosting services. So, third party support services offer a comprehensive package to cater to your range of support services. You do not have to deal with multiple vendors to cater to range of support services.
Third party support contracts deliver value oriented services that goes much beyond just cost savings. These service contracts extend support to out of warranty products or older product versions that have been phased out by IBM. In addition, you can also get the platforms customized to meet your specific requirements. In short, you can extend the life-expectancy of your software application without compromising on service quality and cost savings using third party software support service providers.
Things to ponder before entering into contracts with third party service providers
There are numerous firms offering third party software support services. How do you select the right one?
- Your service provider is certified IBM partner authorized to deal in the listed products.
- Your service provider is just a call away whenever you need help in managing your IT capabilities.
- You are dealing with experts in the required domains.
- You get a tailored deal where terms of service are clearly defined without the scope of any ambiguity.
However, third party software support services cannot replace any bespoke software development or bespoke support agreement in any way. All said and done, third party software support contracts are an efficient means of controlling your IT expenses and channeling your funds to new ventures.
Contact us today to learn more about how to plan your IT expenses efficiently.