• PAAS Advisors

Why Are Companies Migrating to Third-Party Service Providers?

One of the dilemmas that CIOs constantly face is how to reduce cost while maintaining or increasing the quality of services provided by technology suppliers.

For many years, I led a nationwide data center hosting business, with full accountability for its P&L. As such, any opportunity to save 10% or even 5% on a renewal, or on maintenance costs, was systematically sought after by my entire team. Unexpected or unplanned support and maintenance expenses were never part of the plan, and always poised the risk to put my P&L in the red.

When you run a 24/7 mission-critical operation, cutting corners is not an option.

Thus, I was always in the mode of having to find cost-effective remediations. When it comes to support and maintenance costs, there are no free lunches. Some of the on-premises maintenance fees can be somewhat reduced by migrating to the Cloud, but that will not eliminate them. Besides the Cloud, what other options exist to decrease support and maintenance costs without impacting service?

Years earlier, we had worked with a third party, Park Place, to provide hardware maintenance of several “end of support” EMC storage units, at a reduction of more than 50%. Remembering this positive experience led me to investigate 3rd party software providers. I quickly realized that a 3rd party provider could represent an alternative for supporting enterprise-level software at a significant cost reduction of 50-75% from the cost of software vendors, and provide several advantages:

  • a highly qualified level of technical support provided by staff who, for the most part, have spent most of their previous careers working directly for suppliers,

  • a very responsive team whose SLA’s (Service Level Agreements) usually exceed those of the suppliers,

  • nonexistent “mandatory” upgrades or “end of life” of historical versions,

  • a genuine focus on delivering services and support (as opposed to product sales),

  • additional services at little or no additional cost.

My colleague, Russ Ross, former CIO of a major supermarket retailer, had this to say about his experience with third-party software support: “Like most IT organizations, we were constantly looking to reduce our costs without compromising security and reliability. We successfully converted the support of our Finance and HR applications to a third party named Rimini Street. The transition was smooth and the quality of the support we received was excellent. Third-party support is definitely a viable option that should be considered by any cost-conscious CIO these days.”

Third-party providers have proven to be an excellent alternative when:

  • products have reached their official end-of-support and/or end-of-life stage and suppliers are demanding an exorbitant fee to extend any support that goes beyond their deadlines,

  • products are moved into a bundle package,

  • your product roadmap for upgrade is 2+ years away,

  • short-term support is required when existing on-premises environments are migrating to the Cloud.

Clients appreciate options. Third-party providers give clients a viable option to manage costs and maintain a level of control over their technology roadmap. Choosing this option can pose potential issues on the client side, like the increased risk of being subject to a supplier audit, but overall, PAAS absolutely recommends exploring this option.

PAAS has experience negotiating with reputable third-party services companies like Origina, Park Place, Rimini Street, Spinnaker, among others, and can help you navigate these options.

PAAS can assist with advisory services and coaching to explore additional options specific to third-party services. Schedule a consultation today to learn how we can help you take advantage of these services while saving 15-30% on your technology spend.