This is the first in a series of columns by the members of the Data Center Institute advisory board, a think tank of nine distinguished data center professionals who publish research, whitepapers, and speak at industry events offering insight and forecasting on important data center trends. Carrie Goetz, Global Director of Technology at Paige DataCom Solutions, has been involved in the computing and networking industries for more than 30 years. This global division is responsible for data center and data communications products and services as the newest business division of Paige Electric. Goetz has designed and audited multitudes of data centers for enterprise, colocation, hosting, and cloud facilities. She holds an RCDD/NTS, CDCP, CDCS, is a 1st Degree Infrastructure Mason and a member of the AFCOM Board of Advisors.
Procuring products, data center space, and pretty much anything IT has been done the same way for a very long time. Larger companies are getting savvier when it comes to following their dollars and learning more about their supply chains and the sphere of influence surrounding purchases. Procurement's tasks include monitoring vendors and purchases, but there are problems with the current procurement processes in many instances. Consider these points, which are leading to new procurement thinking:
- Employees use product recommendations to enhance resumes.
- Employees become close with vendors, making it harder to say no.
- Employees may specify solutions before understanding other available options.
- New vendors are difficult to add to current systems, so the status quo persists.
- Vendors already in the system don't have any checks and balances.
- Lack of competition results in price creep (discounts begin to disappear).
- Business partnerships can be one-sided.
- New products are implemented based solely on vendor-suggested configurations, which may not be the most cost effective.
- Vendors provide specifications that unfairly lock competitors out through proprietary items that are meaningless to the overall end result of the project.
- “Or equal” is often viewed as lip service when the original specified product is well known to bidders and therefore no “or equal” is bid.
- Procurement has a hard time evaluating “or equal” and therefore must rely on the original specifiers who may not be impartial.
While this list isn’t exhaustive and doesn’t apply to every environment, a few items on it are worthy of attention. The important thing to note is that employees have at least 40-hour-a-week jobs which leaves little time to hunt for new products, updates to standards, updates to products that may exceed the standards, and products that could exceed currently specified products. When new projects come along, employees can only act based on the best knowledge they have available. This knowledge may come from a single vendor and therefore may not be in the best interest of the company.
To the employee, the vendor is a tool as much as the product set they sell. And while many vendors provide great information, support, and lunches or happy hours, it doesn’t necessarily mean they are the best solution. When vendor products are hard specified, price creep occurs, and discounts tend to diminish over time. As the company-vendor relationship grows over time, employee prejudice toward that vendor may operate against your company’s best interest.
Suppose a vendor has product P and there are 10 competitors in the marketplace. Your employee that is specifying the products for an RFP automatically sources product P because they have a good relationship with that vendor or that vendor’s product. Suppose that vendor provided verbiage for the RFP and maybe even the design, layout, or parts list. Let’s say five out of the 10 competitors in the marketplace have equal or greater performing products. If your employee did a cut-and-paste in the RFP for product P, even if they list “or equal” after that, if product P is well known in the industry, it will be assumed that the “or equal” option is simply lip service to have the appearance of open bidding. If the vendor has done their job, there will be no doubt in the employee’s or bidder’s mind that option P is the best, true or not. If five products are equal, then they are exactly that, equal.
Product P is in because the vendor has made the employee’s job easier. There could be 10 other products worthy of consideration. In some cases, employees will argue on the vendor’s behalf over non-important features like color. Other vendors never get the time of day to prove that their products or services are better or equal.
Let’s also assume Product P is a great resume builder. If the certification to use that product or that product knowledge is a highly desirable skill, then there is further weight and incentive in the employee’s mind to use that product. Whether intentional or not, the resume boost appeal is another level of employee prejudice that is hard for other vendors to overcome. This level of tunnel vision leads to probably the most damaging result, and that is letting the vendor have free reign with design and recommendations.
Employees want the shiny new toys. Not only do they enhance their resumes, they also provide some great experience that helps solidify their careers (both in your organization and outside). To figure out how to specify new toys, we ask the vendors.
We have all seen the articles where vendors have over-specified products to the detriment of their end user. I recall a time in my past life, when I recommended that an end user rethink a certain strategy with switch ports. The employee at the end user had a great relationship with the switch vendor. Sure enough, the company accepted the vendor recommendations across the board and had way too many switches in their data center that could never be utilized. A year later, they had 19 percent port utilization across the entire data center. That means that 81 percent of all their purchases were wasted. Further, the power to run them, the cooling required, the maintenance bills, etc., were wasted on 81 percent of their purchase. The employee was a staunch defender of the solution simply due to that vendor friendship.
When you let the person in charge of the sales quota have free reign, there are many that will take full advantage of it! I have seen the same with over-specified cooling, PDUs, servers, and every piece of equipment inside a data center.
Larger companies work to guard against those relationships by not allowing meals or drinks to be purchased on their employees’ behalf, but there are ways around that system, for sure. Now, I’m not saying that you should keep all vendors at arm’s length. There is some great information to be had out there, and vendors can provide invaluable education. But employees need to be empowered to challenge the norm. Companies need to make it easier to switch vendors or consider new ones. Employees should not be afraid for their jobs if they challenge the norm. That norm may have been set well before half the employees at the company even had input! It is well within a company’s interests to have a test bed and encourage employees to provide like functionality at a savings. Just like it is important to encourage bidders to do the same. This open competition provides checks and balances to company spend and, in many cases, a better overall solution.
Every person that will be impacted by a spend should have not only an understanding of the solution presented but also how it will interact with their environment. They should also have a say in alternatives and have an overall buy-in of the final solution. And don’t forget, complimentary vendors (those that interface with given solutions) can provide invaluable insight, as can disinterested third parties. The bigger you cast the net, the more fish you catch. Companies need to allow time to vet options and make it easier for employees to do the vetting.