Gartner: Cisco users act now to dodge service fee hike

Users of some older Cisco Systems gear should act quickly to extend their service contracts or face paying higher bills after the vendor restructures its maintenance pricing on July 1, Gartner says.

The analyst firm says the 5 to 10 per cent maintenance contract pricing increases for older router product families -- such as the Cisco 4500/4700 and 7500 -- as well as increases of up to 20 per cent on Cisco's Content Family Engine products can be avoided if customers extend their current maintenance to lock in current maintenance contract rates.

While Cisco is upping some of its hardware maintenance contract pricing, enterprise users could get as much as a 15 to 35 per cent break on pricing for its Software Application Support and Software Application Support plus Upgrades programs.

Geoff Johnson, Brisbane-based vice president and research director Asia-Pacific region with Gartner, said while firm numbers are not yet available for the local market, there has never been a better time to source equipment or services or re-negotiate contracts such as maintenance given the dramas affecting the global telecomms and networking industries.

"However, if users mindlessly chase discounts at the expense of support, the talent that they need will not be around when they need it. This outcome is in neither the vendors' or the users' interests," he said.

"While this is a perfect time to re-negotiate contracts, it would be really dumb to focus exhaustively on price cuts or discounts alone. The most valuable outcome for users at this time is to ensure that the enterprise has all the networking capacity, resources and capability it needs to deliver on its business strategies. Go for sufficient or extra support and up-to-date Service Level Agreements rather than a relentless pursuit of price cuts. Next year as the industry recovers, enterprises will need and value support and reliability," Johnson said.

Gartner says customers should look into third-party maintenance offerings if they are looking for deals on maintenance costs, but the analyst warns that putting one degree of separation between its enterprise products and the manufacture could cause enterprise customers to lose some control over how technical and maintenance issues are escalated through Cisco support.

In general, Gartner says companies should negotiate maintenance rates for products before purchasing, and they should always opt for multiyear deals to increase discount levels.

Gartner also says that maintenance contracts for chassis-based switching and routing products should be looked over carefully. If companies are not using only the most complex and advanced modules and configurations of a product, they could probably go with a less expensive maintenance plan, the analyst says.

Users should also look into eliminating maintenance contracts all together for commodity network gear, such as simple Layer 2 switches or hubs that run in stable environments and have simple software images running on them. In some cases, keeping a spare device could be cheaper than the maintenance contract, Gartner says.

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