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In this article series, we are unpacking ideas and strategies for reducing the duplicative cost of running data center infrastructure while building and provisioning one’s cloud infrastructure (also called the Migration Bubble). This article in particular investigates the most under-scoped portion of the program: hardware refresh cycles as they relate to consolidating, repurposing, or evacuating hardware during your journey to the public cloud consumption.

That said, extending the life of data center hardware seems counterintuitive to the acceleration of cloud adoption. However, it is a positive lever to pull during an IT transformation. OEMs have a selling strategy that is likely one of the simplest, yet most effective, in all corporate go-to-markets. Unfortunately for their consumers, it is designed to burden them with capital debt and leave few options before the hardware kits are fully depreciated.

Hardware capital purchases are typically depreciated across a five-year, straight-line schedule. OEMs sell that hardware with three years of OEM warranty for hardware support, which is included with the purchase. This leaves a two-year gap in service for the end user with limited options: they can either purchase an expensive annual support contract from the OEM or buy new hardware with three years of OEM support included. Both options are not financially optimal, leaving a revolving door of debt piling onto balance sheets with few options to break the cycle.

With a hardware lifecycle management strategy designed to extend the life of hardware until full depreciation, the art-of-possible is exposed and the process of breaking vendor lock-in can begin. And this time, fortunately for consumers, the path to separation is simple and easy to implement.

Below are two of the most effective paths to freedom from capital debt related to hardware and the seemingly endless refresh cycle:

  • Move hardware support contacts to the ReluTech Elastic Maintenance Program at the expiration of the OEM support. Our program is designed to mirror OEM SLAs and offers a guaranteed reduction in service fees of >50% and is offered monthly. This allows companies to decommission assets by serial number on demand.
  • Lease or buy previous generation hardware for excess capacity or during migration transformation. ReluTech has the world’s largest inventory of certified, pre-owned hardware and offers this at a fraction of new purchase cost. We offer configuration and operating system specs that are identical to virtually every segment of data center infrastructure: serversstoragenetwork, midrange, and mainframes. No need to be forced into purchasing expensive new hardware by the ambiguity of an OEM EOSL notification.

In three simple words, the OEM’s sales strategy is broken and cloud adoption is promoted: HARDWARE. REFRESH. AVOIDANCE.

So how is third party maintenance better than OEM support?

Rather than increase your costs by 70%, TPM can lower your costs up to 70%. So, that’s a good start… by the way, the cost of maintenance will not go up year over year for the same level of service. Why would it? TPM providers are not in the business of selling new hardware you don’t need!

Let’s talk about flexibility

OEMs typically have rigid contract terms and do not allow for short term agreements (3 months, 6 months, etc.), whereas TPM providers offer short term contracts with monthly and quarterly options. This flexibility gives customers the ability to add items as they fall off expensive OEM contracts. For those moving to the cloud, flexible short-term contracts also make it easier to decommission and remove assets from maintenance contracts as needed.

Why ReluTech?

We offer our customers a customized solution for their specific needs; spare parts to stock (onsite or offsite), flexible SLAs designed around the customer’s timetable, the ability to support multiple manufacturers, and technicians who have worked on multiple generations of hardware.

Don’t buy equipment when your current environment is running great! Pay for your specific needs and don’t overpay for unnecessary services. Do what’s best for your company, not what’s best for the OEM!

 

Check out more of our blogs here!

Source: Gartner Inc. (2021). HOW THIRD PARTY MAINTENANCE PROGRAMS ARE REDUCING IT EXPENDITURES. Gartner. https://www.gartner.com/imagesrv/media-products/pdf/XSI/1-5YQUH4Q/XSi_Third_Party_Maintenance.pdf.

ABOUT THE AUTHOR | THOMAS HODGSON

Thomas Hodgson is our Sales Manager here at ReluTech. His top priority is managing our maintenance team with a mission of driving customer success through data center maintenance plans and hardware solutions. Outside of the office, he enjoys activities with family, exercising, playing golf, cooking, and attending weekend Braves games.

Get in touch with Thomas: thodgson@relutech.com

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