In tough economic times such as these, there is always added pressure to reduce IT costs. One of the first things that many IT organizations decide to do is reduce the number of vendors they deal with, on the assumption that by consolidating all their purchasing power around one vendor, they will get a better deal.
But companies such as Netgear would argue that this approach to reducing IT costs is deeply flawed. Instead, customers need to take a hard look at where certain technologies are in their lifecycle.
For example, Netgear today rolled out a series of network-attached storage (NAS) systems that support virtual machine environments, new replication software to simplify the management of storage, and a new switch that provides VLAN connections and quality of service levels for voice and video traffic.
You may not be willing to replace your major vendor in the corporate headquarters with lower-cost alternative technologies. But chances are pretty good that these offerings will do just fine at a much lower cost in a branch office scenario.
According to Drew Mayer, director of storage marketing at Netgear, the core issue that IT organizations need to understand is that as these technologies achieve commodity status, pricing drops accordingly. So rather than continuing to look to vendors with huge amounts of overhead to support, the smarter move is to turn to vendors that can more cost-effectively deliver these same technologies.
There has always been tension between providers of commodity vendors and the innovators in the market. While true innovations deserve appropriate levels of compensation, the law of diminishing returns applies to all things, including and especially technology. So while the phrase Smart IT is admittedly a marketing slogan that Netgear is trying to rally around, there’s a lot of truth in the core concept. In fact, some providers of Big IT offerings, such as Extreme Networks, have come to recognize that fact by deciding to partner with companies such as Netgear.
So the next time your organization is looking to save money on IT, the smarter thing to do is start classifying your vendors not by how much you buy from them, but rather where certain technologies are in their lifecycle. Once you do that, you’ll be surprised how many technologies you are probably paying more for than the going rate simply because you don’t have a relationship with the right type of vendor for that class of product.