SMARTnet Cost Reduction in Response to Cisco’s Restrictive Policies

SMARTnet cost reduction – are such strategies even possible any longer? For many IT infrastructure and networking professionals, the move by Cisco Systems to brand their licensing policy “Smart Licensing” has seemed a bit ironic. For those naturally inclined toward cynicism, it was downright obvious. Cisco very well could call it “Clever as a Fox Licensing.” Call it what you will, but I am aware of a number of companies who find the policy infuriating. For those of you who don’t know what I’m getting at, it is as simple as this: Cisco recognized what they must have considered a problem, and being a large and powerful company they set out to solve this problem. In this blog, I will discuss the nature of Cisco’s “solution” to their problem, how their solution shifted that problem to the consumer, and how an independent support company is presenting the marketplace with a high-value remedy to Cisco’s “solution,” while providing SMARTnet cost reduction in the process.

This is the nature of the problem that Cisco had: the equipment they designed and sold worked extremely well, was extremely stable and lasted a long time. Here’s why Cisco considered this a problem, many clients found traditional SMARTnet maintenance to be really expensive and rarely used. They began to question the value received. Making things worse (for Cisco) was the growing popularity of Third Party Maintenance (TPM) for network equipment. The basic value of TPM service is rooted in high-quality and cost-saving service derived from advance preparedness, technical expertise and efficient processes. Given that Cisco’s support services were estimated to bring the company around 90% profitability, it’s no wonder that these TPM support providers could offer SMARTnet cost reduction, and still have an attractive business model. So, of course, Cisco had to do something.

An article written by XSi’s Grant Patten, “What Cisco and Traditional TPMs Don’t Want You to Know: Why We Need a Better Maintenance Solution,” explains this entire situation in great detail. But basically Cisco tried to make it almost impossible for its customers to either self-support or work with an independent support provider. Under Cisco’s new rules, nearly all components and/or entire units are registered to the original purchaser. While a license transfer is possible, it is often prohibitively expensive and the process was made intentionally tedious. The combination of this restrictive policy, and the punitively expensive transfer gimmick pretty well solved Cisco’s problem, and the HUGELY profitable business model was restored – at the customer’s direct expense.

But there is really good news! There is a solution designed to work within the framework imposed by Cisco that brings back the possibility of SMARTnet cost reduction while STILL achieving compliance. You can check out the details of the program, Cisco Lifecycle & Asset Assurance, by clicking that link. But the basics are this, XSi enables clients to save in two ways: SMARTnet cost reduction via traditional Third Party Maintenance techniques, and by enabling clients to buy a much lower level of SLA entitlement from Cisco – while retaining the critical parts delivery SLA, as provided by XSi, that the client requires.

It is a very thoroughly thought-out program that can provide impressive overall SMARTnet cost reduction. Anyone who is frustrated (or worse) at what has been occurring with Cisco the last couple of years really should look into this program. You will be glad you did!

Care to Read What Gartner Says About Independent Hardware Maintenance?

Click Here to read our bi-annual newsletter and access the latest Gartner report about Independent Hardware Maintenance for data center and networking assets.

About the Author

Mark came to XS International after a decades-long career at a similar and closely aligned service organization. For the last 24 years he has helped numerous Enterprise IT professionals understand their data center hardware support options to maximize hardware asset ROI and combat OEM FUD. The true nature of service to others has always been very important to Mark, as has pride of work quality. Mark resides in Houston, TX with his two children and the love of his life, Laura. Personal interests include: church choir, golf, tennis, playing music (piano and bass guitar) and singing, literature, movies, cooking (frequently with cast iron) and sailing.