Many products with digital parts are sold with “strings” designed to lock buyers into high-margin post-purchase contracts for such things as “Support”, “Maintenance”, and “Upgrades”.  Some contracts are so intertwined into the purchase that buyers are forced to replace fully functional equipment on a schedule dictated by the manufacturer.

Cloud services, be they private clouds, public clouds, or even traditional hosted services are themselves just as vulnerable as ordinary data centers to infrastructure problems of water, power, access, and adequate disaster backup.  Hurricane Sandy has taken an unexpected toll on Cloud services, highlighting the importance of picking the physical location of the underlying assets.

In what seems to be a battle to the end, Oracle and HP are going to trial in the Itanium lawsuit at the end of this month.  Both sides attempted to convince Santa Clara County Superior Court Judge, James Kleinberg, to hand them a win before trial. But Kleinberg denied those motions in a tentative ruling on Tuesday, May 1st.  He urged both sides to “give serious consideration to settlement,” and called the case, “extremely challenging,” adding that he did not know how it would turn out.  Oracle lawyer Dan Wall said at a court hearing that a settlement “isn’t going to happen.”

Upon reviewing Hewlett-Packard’s financials, it’s easy to see why the company turned around and sued Oracle last year after the database vendor decided to pull support for HP’s Itanium systems.

Oracles shares fell as much as 13% as Oracle reported it missed its 2Q earnings and losing $20 Billion of Market Cap and Sun sales were off by 10%.

How Procurement Professionals can Protect Themselves from changes in vendor service policies:

Why should Procurement care?

Procurement and Strategic Sourcing Executives are tasked with making prudent selections of qualified vendors. This includes analysis of the financial stability of the vendor, the analysis of the product(s) viability in the marketplace, and the options for long‐term support from other than the OEM. This last option is particularly important. A vendor with no competitors is difficult to control, and the organization can be “held hostage” to unpleasant policy changes or poor service. Anyone with Oracle (Sun, StorageTek) equipment has learned this lesson recently with budget‐killing consequences.

On 10.1.2011 The Service Industry Association (SIA) released a grading system that allows IT end-users to use as a guide when considering how to approach onsite software and hardware maintenance as well as hardware break-fix on their IT equipment.

Why do manufacturers like Cisco, IBM and HP declare products EOL and EOS?

* Photo Courtesy of New York Times

There are many reasons why OEM’s declare equipment End-of-Life and End-of-Service including:

(This is part 1 of a complete series on Budget Planning in 2011 and beyond)

With a new calendar year comes a new fiscal year, a new set of goals and budget challenges for every department in your organization. While CTOs, CIOs, CFOs, and other c-level executives are working together to maintain or improve vital business services, many of the executives focusing on IT budgets make the understandable mistake of limiting their analysis to capital investments and purchasing decisions. However, more progressive professionals, those looking to get more control over their costs in the long term, are looking to other expenses to keep matters under control.

IT operating budgets continue to stagnate or shrink, decisions makers in the IT world are looking at independent IT dealers as a way to cut both investment and maintenance costs. They’re continuing to find that OEM solutions, while robust, are often cumbersome and expensive. But, as purchasers and managers begin to survey the independent IT dealer market, their commitment to third party or alternative vendors can begin to waver. Letting go of brand loyalties can be difficult, even if you know that it is holding your organization back. There are excellent alternatives for the more expensive brands including: IBM, HP, Sun, SGi, Cisco equipment and others.