SMBs: The little IT guy pays the bills that kill

Computerworld - Enterprise Strategy Group founder Steve Duplessie answers reader questions in his weekly column "Since You Asked." This week, a reader asks how to take advantage of growing competition among data center vendors.

Q:  It seems the big data center players are competing on price more than ever. Will that continue, and how do I best take advantage of this? -- N.I., Chicago.

A:  I don't think anything has really changed with regards to the competitive pricing dealings at the high end; it appears to be the same as always.

The core has long been dominated by the three big guys: EMC, IBM and Hitachi Data Systems. That hasn't changed -- they are the only ones with mainframe connectivity. They have always leapfrogged one another over the years from a "who's got the best stuff" perspective, and depending on the mood of the times, have either held the line in terms of discounts or decided to buy back some market share.

Since most of the shops that buy mainframe-attached storage tend to be the giant folks, they have always been the ones with the pricing leverage. If you spend $5 million to $10 million a year on storage, vendors take you serious. That's always been the case.

My cohort Tony Asaro brought up a good point at Storage Decisions in Chicago last week. He said that the people who really pay the price, per se, are the little guys. The big guys get to squeeze margins out of the vendors simply because of who they are and how much they buy. The little guy almost never gets that kind of leverage, and since all those vendors make hefty overall margins, it must come at the expense of the average Joe.

So, I don't think there is anything other than normal stuff happening as far as high-end pricing is concerned.

I'm more interested in what happens if the small and medium shops somehow get together and do some "community buying." If you are in a storage networking user group or any sort of users group, why not ask your peers what their buying plans are for the next three, six and 12 months? I'm guessing you could find some folks with similar plans to your own without much effort, and if four of you get together to make a single buy, you'll have far more leverage.

Tip 2: Never negotiate a long-term deal, always do it one at a time. Sure, it's a bit more work, but this stuff never gets more expensive, only cheaper -- and no matter how big a discount you get today, if you are smart it will still be cheaper next year when it's time to buy again.