Examine your service contracts - Part 1

It seems like the much-hoped-for, long-awaited economic recovery isn't quite happening on schedule. In the meantime, make sure your service contracts are iron-clad.

While there was some good news recently from EMC and Veritas, both of which reported better-than-expected results for the quarter ended Dec. 31, this quarter isn't looking quite so hot. I don't mean for those particular vendors, necessarily, I mean for all of them.

BMC - the systems managment heavy-hitter that entered the storage space - recently surprised the industry by bowing out of the storage management market. Although it will continue to support existing customers, it will no longer upgrade or sell its Patrol Storage Manager software. The company said this was a business decision that made sense given the economic climate, and said it will continue developing and selling its MainView storage resource management software.

Remember, too, that Maxtor not so long ago discontinued its MaxAttach networked storage products. And now it's rumored that EMC is trying to acquire backup king Legato for around US$750 million, though neither side is confirming or denying that. And even if it happens, there's no saying at this point exactly what might happen to Legato's products in EMC's hands.

The point, though, is that in this economic climate, the bigger they are, the harder they could fall. It used to be that everyone knew that working with a startup was dicey, that they could go out of business or be acquired at any time, and either you accepted that risk and worked with them anyway, or you didn't. A larger vendor afforded a bit more security, or so it was thought. Sure, larger vendors are acquired, too, but it's not something that happens every day.

One CIO told me she buys only products that are in the top three in terms of market share. That way, in case of an acquisition, she feels, the product will still get support and service from its new owner, at least for a while.

Still, now it seems that even household names - or what passes for such in the high-tech field – are no longer guarantees of a product's longevity. And customers need to negotiate their contracts with this in mind. Large companies have long had these kinds of clauses in their contracts with vendors, but small and medium-sized firms need to think about this, too.

Unfortunately, small and medium-sized companies don't usually have quite the negotiating power that a conglomerate does. Still, there are things you can do - maybe trade your being a customer reference for some of the contractual suggestions that you'll read about in next week's column. If you're among the first of a vendor's customers, you have a lot of bargaining power no matter what your size. They want to make sure you're happy; their survival depends on it.

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