After 32 years in the IT industry I’ve seen just about every trick a vendor can play on a prospective client. This is the fifth in a series of the most egregiously bad, deceptive or just plain wrong Stupid Vendor Tricks I’ve seen over the years. (Click here for parts one, two, three & four.)
The protection racket…
In this post we’ll discuss what is, in my opinion, the most pervasive of all the Stupid Vendor Tricks, and I’ll offer some tips on how to keep from getting fleeced by the vendors who employ it.
Look up “Racket (crime)” in Wikipedia. This is the first two sentences of the definition: “A racket is a service that is fraudulently offered to solve a problem, such as for a problem that does not actually exist, will not be affected, or would not otherwise exist. Conducting a racket is racketeering.[1] Particularly, the potential problem may be caused by the same party that offers to solve it, although that fact may be concealed, with the specific intent to engender continual patronage for this party.“ (The italics are mine.)
It ain’t illegal, but…
While I’m not implying that anything illegal is happening, I am emphatically saying that what’s going on with some IT vendors certainly ain’t right.
The racket I am referring to is the practice of extortionate pricing for support beyond the initial period (sometimes one, but usually three years), and it is a routine fact of life with some of the biggest, supposedly “respected” vendors in the IT industry. Here’s how it works:
- A vendor’s hardware and/or software quote includes what looks like a very reasonable price for support for the first three years. And so the vendor is selected and his stuff is installed.
- As the end of the initial three-year period approaches, the customer is shocked to find the cost to continue the exact same level of support is 3X, 5X or even 10X more than the initial period.
- At the same time, the vendor sends an oh-by-the-way quote for his latest & greatest stuff, which would replace the stuff that is already installed. The price for the new stuff, by some miraculous coincidence, is about the same as the price for continuing support on the old stuff.
Sound familiar?
A dose of perspective…
Let’s juxtapose this practice into another industry. In the Tampa area, air conditioning is a necessity of life, especially this time of year. Imagine this: As your three-year initial HVAC warranty is approaching its expiration date, your vendor sends a bill for continuing maintenance, support and repair services, and the price is the same or more than the initial cost of the entire system. Coincidentally your HVAC guy tells you he will happily replace the entire system for about the same price. Absurd, right?
Meanwhile, back at the ranch…
And so the IT customer is forced to make a very difficult decision: pay an extortionate price for continued support on his old stuff, or pony up the cash to forklift it out in favor of the latest & greatest new stuff from this vendor.
To net it out, the support racket is very simple. It is a way to force customers to buy the incumbent vendor’s latest stuff. It amazes me how many customers willingly fall for it, all for the privilege of doing business with vendors who are fond of saying things like “nobody ever got fired for buying from us”. That, I’m afraid, is yet another untruth, because people most certainly get fired for not managing their expense budgets properly.
Protecting yourself from the protection racket is a simple process…
- Get wise to the racket and realize there is a third alternative. Think to yourself, “If this guy wants all this money to either support my old stuff or sell me new stuff, why don’t I take a look at what’s available from other vendors?” When you do, it can be an eye-opening experience. In IT, particularly in the storage and backup sectors where I live, a lot can change in three years.
- After identifying which new products or solutions to consider, do this: When soliciting new proposals or quotes, ask the vendors to quote the cost of support in years 3-5, and ask them to commit to those costs, in writing, as a condition of the sale. You will find that some vendors won’t do it. If so, congratulations; you’ve identified vendors with whom you should not do business, and you’ve saved yourself big money in the down-line cost of owning the new solution.
And so…
In my world, I’ve taken great pains to vet the vendors I work with, and one of the top three criteria is support – both quality and cost. It is one reason why I’ve stayed with a very limited list of vendor partners: Unitrends, NexGen Storage, ExaGrid, Nimble Storage, Gridstore, Veeam, PHD Virtual, Fusion-io and Nasuni. That’s it.
Email me or call me at 888-255-6889 if you’d like to talk about how to get away from doing business with the “nobody ever got fired for buying from us” vendors, and start working with vendors that provide real, honest value, no rackets required.
I found your series “Stupid Vendor Tricks” very entertaining…and SO true! Customers should beware of these old tricks and look for true solution providers.
That is EXACTLY what keeps happening with the owner of my salon with Salon Iris, her scheduling/client management/credit card processor. Slash knee capping extortionist. On the plus side the nifty new update lets you change colours in the iphone app title bar. And other useless “improvements”.