Disrupted Industries (like “Oil & Gas”) can Maximize Enterprise IT Cost Reductions

While most industries are experiencing significant disruption as a result of the ongoing pandemic news, a few industries are being hit particularly hard due to other, often unrelated factors. As these businesses move swiftly to re-strategize and re-model to better capitalize on market opportunity, overall margin management is paramount in importance to key stakeholders. Variable and seemingly fixed costs are closely examined to create funding for new critical business initiatives – often so that impacts to operating margins aren’t further diminished.

Few departments escape cost reduction consideration. And, in my opinion, no department must be more agile than enterprise IT, when cost containment strategies become mandates. Disruption, by its very definition, necessitates change.

Gartner estimates that the typical IT department spends 15% of its total IT budget on enterprise hardware. Yet, while disruption often impacts capital purchases and IT departments proactively choose to extend the useful life of its hardware (strategically delaying the tech refresh), only 50% of enterprise IT departments are taking the logical next step of re-modeling their hardware maintenance support model to create an impact to Operational Expense (OpEx), as well.

The re-modeling of the hardware maintenance support, is often referred to as “Hybrid Hardware Maintenance,” which is described as follows:

When in-warranty data center hardware are maintained by the OEM, during the warranty  period. But, all or a portion of your post-warranty hardware assets are maintained by an independent hardware support provider (also known as ‘Third Party Maintainer’). Quite often, for networking hardware, warranty status does not limit the hardware owner from choosing a Third Party Maintenance provider for network maintenance.

For hardware assets deemed eligible, cost reductions (from standard OEM pricing) often reach 70-80% savings. But, this can easily translate to a reduction of your Total Annual Hardware Operating (inclusive of “in-warranty”) budget by 18-20%. That can be quite a significant impact and often reaches into the “millions” of dollars saved for disrupted industries, such as Oil & Gas, Retail, Healthcare, etc. Readers from impacted industries can reliably forecast the savings potential by reading this recent XSi blog: Third-Party Maintenance: Reliably Forecasting the Savings Potential.

Lastly, whereas many readers will have a tendency to think only about server and storage hardware assets, there is GREAT potential in driving cost savings within your networking hardware maintenance budgets – especially with respects to the typical Cisco spend. I highly suggest reading: What Cisco isn’t Telling You.

If you’re entirely new to the concept of Hybrid Hardware Maintenance, yet haven’t yet clicked any of the other provided links, I highly suggest that your orientation and research should begin with the ITAM (or Hardware Asset Management) principals of this blog: Hardware Lifecycle Milestone Dates: What are They? How can They Help?

Care to see a Case Study (or two) about how we’ve impacted IT spending within companies experiencing market disruption. Check out these:

If any readers would care to discuss next steps, please visit our Contact Page and submit your details for a speedy response.

About the Author

Brent joined XSi in 2020, bringing with him 30 years of marketing expertise, mostly IT and healthcare. Early in his career, he worked for a few of the country’s leading brand development firms in the Twin Cities, but landed firmly in IT and Independent Hardware Maintenance in 2002. During his IT Maintenance career, he worked at four IT maintainers (Qualtech/QSGI, Top Gun Technology, SMS/Curvature, SSCS), helping two of them from their origins to a recognized and successful business entity. In all instances, he managed the marketing departments, was the primary liaison with industry analysts (e.g. Gartner, IDC) and oversaw all marketing objectives, strategies and tactics. His greatest strengths have been in brand or market positioning and building a solid digital presence. His interests include: prairie restoration and habitat improvement projects, pollinator education, movies, music, craft beer, cooking, cast iron cookware restoration, youth education, fishing, hunting and BWCA camping