Slashing IT maintenance budgets: Sign of the times

In a down economy, some shops are cutting where it really counts -- maintenance -- and are hoping for the best

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"As recently as two years ago, whenever you bought anything -- software or hardware -- whatever the maintenance agreement was, you bought it all," the engineer said. "That is totally seen as a luxury now that can no longer be afforded."

Savings can be substantial. The sporting-goods maker paid $30,000 for one application and another $16,000 for an annual maintenance agreement on the application, but now maintenance has been cut altogether. And, he said, "We're cutting those kinds of things across the board."

Another user, an IT manager in the financial services industry and a board member of The Computer Measurement Group, said that while maintenance cuts are being made at his firm, they are occurring only in less important areas -- in human-resources systems, for instance, or Internet access for employees.

One CIO, Jim Prevo of Green Mountain Coffee Roasters Inc. in Waterbury, Vt., said he's not cutting maintenance contracts at this point, but that he can see the wisdom in it as an approach for some.

"It could make sense," Prevo said in an e-mail reply to a query. In general, maintenance contracts "should be based on business requirements. If the cost of downtime is reduced due to business decline, then it might make sense to spend less for uptime. Also, if you drop second shift [work], for example, you wouldn't necessarily need certain coverage for that shift in terms of help desk or assurances the systems are all working at night."

Halfway measures

The sporting-goods firm has also cut maintenance contracts on the network side. In the past, two providers were paid to maintain network redundancy and zero tolerance for failure. That's been cut to one, and now the company accepts outages of up to four hours under the new, cheaper contract.

The sporting-goods maker also used to have a policy that when an IT manufacturer declared a product had reached the end of its life cycle, maintenance contracts might be continued until a replacement plan was created. "Now the plan is to just run it until it breaks," then decide whether to replace it, the engineer said.

Jack Santos, a CIO executive strategist with the Midvale, Utah-based Burton Group, said that he's not seeing a lot of his clients taking these actions yet. "That's more the exception than the rule" so far, Santos said. "That's not to say it's a bad idea."

He has, however, seen small to midsize firms reduce third-party help desk services for nights and weekends. "Often times employees aren't happy about it, but given the economic conditions if it's the difference between a workforce reduction and an inconvenience, they'll take the latter."

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