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May 31, 2018 | IN Service Level Agreements | BY Reza Koranki
5 Original Equipment Manufacturer Contract Benchmarks to Monitor for Success

Original Equipment Manufacturers (OEMs), like Juniper, Cisco, and Brocade supply network equipment to businesses of all sizes. Their hardware is used to power internal and customer-facing functions and forms the backbone of many business functions. In this piece we will outline the five original contract equipment manufacturer benchmarks to monitor for success.

A survey conducted by IHS revealed that large enterprises, those that average 13,000 employees and nearly $2 billion in revenue, experience up to five network downtime events each month with each incident costing the company more than $60 million in revenue.

The Cost of Network Downtime

These costs include lost employee productivity, lost revenue, and network repairs. This figure does not include the impact of downtime on external users, such as your customers, or the loss of business that results.

In 2016, a network outage at Twitter that lasted just a few hours caused a 7 percent drop in the company’s stock price. – (Click to Tweet)

Peak Hosting, the former hosting company of Machine Zone who brought us Game of War and Mobile Strike, filed for Chapter 11 bankruptcy after Machine Zone dropped them when a network outage at Peak Hosting caused Game of War to go down for two hours.

Contract equipment manufacturer - original eqipment cost-Arch

Now the two companies are wrapped up in litigation over the event.

How did this happen?

At the center of the debate are claims of frequent outages leading up to the event and Cisco’s Nexus 3000 switches.

Peak Hosting invested more than $35 million in the equipment and blames buggy software, at least in part, for the downtime Machine Zone experienced.

Before the investment, Peak Hosting relied on $6 million in equipment. After winning the $45 million contract from Machine Zone, the company opted to invest heavily in hardware, over maintenance, to support the new project.

The new equipment was clearly not ready for a large-scale implementation and cost Peak Hosting dearly.

If the company had invested even a portion of that budget in securing premium maintenance, the outcome might have been very different. Cisco did not even acknowledge the bugs in their Nexus 3000 switches until a month after Mountain Zone’s filing against Peak Hosting.

How can you future-proof your organization’s network to ensure that it can handle new clients and maintain maximum uptime?

Download the Top 10 Considerations for Network Maintenance Optimization Tip Sheet!

For many, the answer lies in developing robust network maintenance contracts that focus on the needs of the business and not the boilerplate language provided by the OEM.

Original equipment manufacturer contracts commonly focus on the performance of individual components, not the overall end user experience.

Mike Slavin of TPI notes that “Business owners often complain that the performance of IT services is inadequate even though the service level reports have green lights—acceptable performance—across service level metrics.”

Slavin highlights the fact that these agreements are missing critical components necessary to supporting the success of end users.

Equally, and at times more, important than server availability, response time, and network throughput are internal processes, capacity, and access to the highest levels of support engineers, benchmarks that are often missing from original equipment manufacturer contracts.

So how can you future-proof your business’ IT network maintenance contracts?

Start by identifying benchmarks that support your organization's success early in the procurement phase.

1. How is Your SLA Impacting Business?

In the world of enterprise business management, there is always a KPI to monitor.

How is your SLA supporting (or hindering) your progress towards your business goals?

Perhaps your sales team’s KPI is to reduce the time to respond to customer inquiries by 15 percent. A single day of network downtime will negatively impact this goal.

Perhaps your goals are little higher-level, like increase revenues by 20 percent.

Downtime costs enterprise-scale businesses millions.

The same IHS survey revealed that while equipment failures contribute to 40 percent of all reported downtime, problems with service providers and human error account for 25 percent – this percentage is significant when you consider the high price companies are paying for maintenance agreements.

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2. Does Your OEM Maintain Your Network’s Security?

Cyber-attacks are on the rise. In the last year we have seen some of the most significant attacks to date:

Equifax

More than 145 million accounts were compromised when an outdated Apache Struts framework was exploited by hackers.

More than a year later, Equifax is still facing litigation from the US Government and UK Financial Conduct Authority.

Uber

Hackers gained access to Uber’s GitHub repository and then used the login credentials they found to get to servers containing the personal data of more than 57 million drivers and riders. The hackers then demanded $100,000 ransom, which Uber paid.

The kicker?

Uber failed to notify drivers and riders of the attack and is now facing a hailstorm of lawsuits.

WannaCry Attack

Hailed as the “worst ransomware attack ever,” WannaCry compromised more than 300,000 networks in just four days.

The attack encrypted files and then demanded Bitcoin payment for decryption.

WannaCry infected machines and then quickly began scanning for connected LANs and WANs to attack. Entire networks were quickly seized.

So who was hit?

Yahoo!

The data breach that first occurred in 2013 gained new attention when it was discovered in 2017 that the hackers had free range access to every single Yahoo! Account for more than three years.

The attack compromised 3 billion accounts, an amount that is 10x greater than the population of the United States.

The scariest part?

More than 150,000 of the accounts were owned by current and former U.S. government and military employees; including White House staff members, U.S. Congressmen, and members of the FBI, NSA, and CIA.

Rasputin’s Attack

A lone hacker attacked universities for more than a year by gaining access to their databases and then attempting to sell that access on the dark web.

Targets included Cornell University, the University of Cambridge, and many more.

So how can you secure your enterprise network?

Service level agreements that fail to protect your entire network, both hardware and software are common. OEM service level agreements are intentionally complex.

This complexity makes it difficult to understand what is protected and how it is protected. It also makes it easier to overlook areas of the network that should be protected.

A robust asset management program that includes accurate and well-maintained data lists is a great place to start. It gives your IT department the information needed to begin investigating existing maintenance agreements and ensure that every aspect of your network is covered.

3. How well is your support team performing?

Ideally, your maintenance provider is proactively monitoring your network for threats to security and uptime. If this is the case, how often are they thwarting potential events?

If your organization has taken a reactive approach, how quickly is the team responding to requests for support?

What is the quality of the response?

When your network is experiencing an event, millions of dollars and the reputation of the company is at stake. Does your OEM technical assistant center take it as seriously as you do? Especially if you’re not Verizon or AT&T?

Or, is resolution slowed by requests for contract-related information, prescribed, one-size-fits-all troubleshooting, and finger-pointing?

Monitoring response time, time to restoration, and time to resolution will help your organization gauge the effectiveness of your OEM support.

If support continually falls short of your contract agreements, reach out to the OEM to request refunds or even restitution for significant losses that result from inadequate support.

4. Does replacement hardware work?

Next day and same day hardware replacement is great, as long as the hardware you receive works.

Many OEM’s have notoriously high dead on arrival rates.

Instead of receiving a working piece of equipment and restoring network service, your teams are back on the phone troubleshooting another piece of hardware and then eventually waiting for yet another replacement to arrive.

That’s why this such an important benchmark to monitor. When the OEM fails to supply a working replacement, the entire event starts back at zero, doubling or even tripling the length and impact of the event.

5. Is downtime due to an original contract equipment manufacturer contract increasing? 

As the size of the organization and its network grows vulnerability increases.

If your OEM maintenance contract costs are expanding in concert with your growing network, it only makes sense that your downtime metrics should remain consistent or even go down.

Why?

Contract equipment manufacturer costs increase because the number of assets or the level of coverage or both increase. This means that as your network grows, your organization should not expect downtime to increase. In fact, as more assets are identified as critical to the operation of the business, your downtime should decrease.

For ecommerce sites that generate millions of dollars an hour, it is not uncommon to see uptime requirements of 99.9999 percent.

Alternatively, your organization may have different uptime requirements at different times of the day. For example, during the business day (8 AM to 5 PM, Monday through Friday) uptime requirements may be 99.99 percent.

During the weekend, this requirement could drop to 99.95 percent or lower, allowing your provider to decrease monitoring and reduce your costs.

Can You Decrease Maintenance Costs Without Compromising Uptime?

Yes!

Most OEM service contracts are not written in the best interest of the organization.

Instead, the original equipment manufacturer contracts are full of unnecessary coverage, including coverage of equipment no longer in use, double-coverage, and over-coverage. Each of these situations drives up maintenance costs while leaving some hardware without proper coverage.

As a result, the cost of maintaining the network continues to increase, yet downtime does not decrease.

Maintenance costs represent 15 to 25 percent of total enterprise IT costs each year. - (Click to Tweet)

Proactive monitoring of OEM contract benchmarks allows your organization to identify areas of inadequate performance and correlate those areas to contract deficiencies.

Armed with this information, you can enter into SLA negotiations confidently and create a support agreement that meets the needs of the organization.

How to Build a Network-Friendly SLA

The first step in creating a support contract that meets the needs of the network is to define the network.

Many companies struggle to maintain accurate inventory lists. Mergers, acquisitions, hardware retirement, and networks that span the globe make it difficult to understand exactly what is online, how critical it is, and how it is covered.

Accurate asset lists are critical to optimizing your support agreements. Many OEMs offer a solution that will scan networks and identify assets, but these scans often miss equipment and are unreliable.

More importantly, scans like this do not highlight retired hardware that may still be eating up support dollars.

What’s next?

With an accurate reflection of your network, analyze your existing agreements to understand how each piece of equipment is covered. If this sounds daunting, you are not alone.

Understanding what you own and how it is used is one thing.

Understanding the fine-print of OEM-generated support agreements…that is quite another.

To navigate these murky waters, organizations often partner with an independent provider to perform an unbiased assessment. As a disinterested party, your assessment provider impartially reviews your equipment, network needs, and existing agreements to identify gaps and over coverage.

Equipped with the results this analysis, your teams can enter into maintenance agreement negotiations with a clear understanding of the business’ needs.

That’s not all…

A clear understanding of your network needs combined with a transparent look at your maintenance contract will reveal opportunities for further savings through independent service providers.

Maintenance provided by an independent support team offers many benefits to complex, enterprise-scale networks.

How?

First, enterprise-scale networks are often built of hardware and software from a variety of sources. A strictly-OEM driven support approach inevitably means multiple providers with differing requirements, support procedures, and original equipment manufacturer contracts.

And what happens when an event spans more than one OEM? How open will the OEM support teams be to collaborating to resolve the issue?

An independent network maintenance team provides a single point of contact. When your entire network is covered by one agreement, accessing support is simple and streamlined.

This single-point approach also makes it easy to negotiate original equipment manufacturer contract details and monitor the performance of the team.

Need more reasons to consider an independent support provider?

An independent support provider continues to support equipment that the OEM has deemed obsolete.

OEMs consistently release end-of-life dates on equipment that can remain functioning for several more years. In fact, the end of OEM-provided support is often the sole driving force behind network equipment changes.

Not only does this drive-up costs significantly, but it also introduces risk.

As Peak Hosting found, newer is not necessarily better. Enterprise –scale networks are a compilation of servers, switches, routers, gateways, modems, hubs, and much more, all working in concert to deliver information and support critical business processes.

The replacement of any (well-functioning) piece of equipment is an opportunity for downtime and new software defects.

Bottom line?

Service level agreements are complex.

An original equipment manufacturer contract is complex.

Enterprise networks are complex.

Ensure success in your enterprise by following these original equipment manufacturer contract benchmarks. If your team does not have the expertise or the time to unravel your support, hint; unless your team has worked with 100’s of networks - they’ll be unable to know the patterns, work with someone who does. Your future self will thank you.

Download the Top 10 Considerations for Network Maintenance Optimization Tip Sheet!

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