This article originally appeared on SearchDataCenter.com.
When looking at technology today, there is a fine line between penny wise and dollar foolish. I have received numerous questions concerning the best products for various
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applications. One thread
holds true throughout many of these: "I need something inexpensive." These tend to be the same
companies that do not hold technology in the highest regard, but rather view it as a necessary
evil. There is not a company on the planet that could continue to function without its data and/or
intellectual property.
There are several products on the market for any application. Some are, of course, going to provide better service than others. This is not to say that all of the lower priced products are inferior or that all of the higher cost products are superior. There are several differentiators that should come into your decision factors. These are not based on MTBF (Mean Time Before Failure) or MTTR (Mean Time to Repair), which are basic considerations that should be examined closely. One caveat on the above is that you must examine the MTTR and MTBF for each and every component, not just the overall chassis or base system. The cards that go into systems may not carry the same ratings.
Other factors that do not always come into play include:
- Value added services
- Education and Transfer of Knowledge
- Vendor support
- Lead times
- References (not from the vendor)
- Warranty periods and warranty coverage
- Training provided to the installer or reseller you select to do your installation
- Interoperability
- Day two services
- Money spent on R&D
Each of the above will make your life easier down the road. Who knows, you might even be able to take a vacation without your cell phone or pager! A vendor scorecard should be developed when you are doing your product evaluations, and each of the above should be included with a weighting factor. Weigh each of the above based on the need for your organization.
In the example below, we will compare two core switches for a data center application. Vendor A is a significant market leader. The perception is that their product will be the best because they sell more than others. However, Vendor B has come onto the scene with a litany of other services. Their switch is also well received in the market place but is less expensive than Vendor A's. You must justify your decision to the CFO and a purchasing team. The purchasing team is going to be focused on price. The literature between the two companies states the same basic capabilities. Competitive literature gathered by the evaluation team will be used to assist with the evaluations. (Note: pricing in this example is based on averages, and this is generic, that is, not referring to any one company in particular).
| Criteria | Vendor A | Vendor B | Weight | Comments |
| Chassis | 65,000 | 45,000 | 3 | Based on cost alone |
| Cards | 12,000 | 8,000 | 3 | Based on cost alone |
| MTBF | 100,000 | 200,000 | 3 | Clue to lifespan |
| MTTR | Overnight | On site spare; purchased to allow for lower MTTR | 4 | As a function of downtime; this is a cost avoidance figure |
| Value Added Services | Seminars, global installation referrals, etc | Will provide on site tech from manufacturer | 5 | As a function of installation cost |
| Education and transfer of knowledge | Class costs 3,000 | Training to be provided by on site technician | 3 | Day two operations; can we manage this internally? How much is the training to accomplish this task? Beware that free, on-sight training may not be sufficient for your needs. |
| Vendor support | 24 x 7 call in; vendor owned | Varies based on installer; manufacturer as backup | 6 | Support when things go wrong is VERY important; what if the company doing the installation goes out of business? |
| Lead times | 8 weeks | 6 weeks | 2 | Important to your project deadline, but can be accommodated with advance knowledge. |
| References | 90% positive | 80% positive | 6 | Check these from sources other than the ones the vendor provides. Look for press releases, information from users groups, etc. |
| Warranty periods and coverage | 3 years paid for parts and labor; Applications assurance | 3 years free: parts only | 4 | Add cost to your dollar figures, weigh features here |
| Installer training | Mandated certification levels required | Not required – no program for value added resellers | 6 | Your system will not work if improperly installed. If they do not have adequate training for your support avenues, you will also have poor support. |
| Interoperability | Standards based, independently verified | Standards based, independently verified | 4 | You may not ever hook other equipment to this that is not from the same manufacturer, but why limit your possibilities? |
| Day two services and support | Online and via phone; no cost if under warranty | Online and via phone for a fee per incident | 6 | If you are lucky, you will never need support on day two, but how many lucky people do you really know? |
| Dollars on R&D | 7% of profit | 10% of profit | 3 | This will dictate upgrades and future products. |
| Participation in the standards processes | Yes | No, but supports the standards | 5 | This will help determine if the standards are being interpreted correctly and will also speak to interoperability. |
For each category and the others on your ROI/TCO calculations, rate the information given and multiply by the weighting factors you determine are most important to your daily operations. For instance, in the table above, we would assign each vendor a 1 or 2 based on win or loss. The winner gets a 2 and the loser gets a 1. Multiplying by each weighting factor will allow you to decide on factors other than price alone. While Vendor A is quite a bit more expensive than Vendor B, at the end of the day, they are far more cost effective. You could also assign a grade value to each category and multiply the grade by the weighting factor. This is particularly useful when you are evaluating multiple vendors.
There is a reason that some equipment is more expensive than others. Programs for end-users, installers/resellers and sales training will provide many benefits after your initial purchase. These programs cost manufacturers money. All of the fees for these additional benefits are part of a manufacturer's cost of doing business. While you may pay more up front, day two and beyond you will begin to realize savings over a commodity priced product with no additional services. Some companies price products at a low price to attract dollar conscious only end-users. The following years usually show a marked increase in support dollars. Over time, it does prove to be a penny wise and dollar foolish decision.
This is not an exhaustive list of factors to consider, but certainly the ones that may not fall directly under an ROI/TCO calculation based on price to performance only. These are, however, many of the factors that will assure that you will have proper support and guidance through a business partner, not just a component manufacturer. Remember, there are many behind the scenes costs that will bring you peace of mind and keep you from having to brush up on a resume. If you buy the least costly components based on price alone, your follow on support and services may alter your TCO so severely that it can become the more expensive solution in a very short period of time. OOOPS!
This was first published in May 2005