Deploying Storage Spaces Direct – Part 35 – Did you say #S2D for Free? #MVPHour #StorageSpacesDirect .@MS_Ignite

Eliminating Maintenance Contracts will pay for Storage Spaces Direct!

One of the games our industry has played for as long as I have been around, is with maintenance contracts. These contracts are the lifeblood of most of these organizations as they generate run rate revenue well beyond the initial sale. If you don’t read the fine print in your contract most vendors have clauses written into them that allow them to increase the MSRP (Manufacturers Suggested Retail Price) at a reasonable rate each year. Or in some cases they can just raise it as they see fit. So here is some simple math for you: Initial Purchase of $100,000 with first year maintenance not included. Now you think to yourself that the maintenance should always be based on your purchase price of 100K well you are wrong “Dead Wrong”. In that support contract remember it said that maintenance and support is based on the MSRP not the selling price. So, the vendor baited you in and you bit the hook on their massive discount they provided you. It is very common place to have a discount level of 50 % or higher especially in the storage business. With that assumption let’s say that the vendor did indeed give you 50 % off and the list price (MSRP) was $200,000. This means that the maintenance is based on 200K not on 100K. Also, many vendors have stopped including the first year’s maintenance free in the product. In order for us to get into this solution in the first year it would actually cost us:

Example Purchase of the other guys Hyper Converged Solution:

Initial Purchase        $100,000

1^st year Maintenance    $ 40,000

            ==========

Total 1^st Year        $140,000

        Wait it gets even better because, remember that little clause in your support agreement that let the vendor increase the value of their product over time. So, let’s assume the following for year’s 2-5:

Increase MSRP by 5 % per annum reasonable inflation, right???

            2^nd Year MSRP = $210,000, 3^rd Year MSRP = $ 220,500, 4^th Year MSRP = $231,525, 5^th Year MSRP = $243,101

            Now remember you pay 20 % per annum and if you opted to buy only 1 year upfront. And continue to purchase in 1 year increments this is what it looks like.

            2^nd year Maintenance    $ 42,000

            3^rd year Maintenance    $ 44,100

            4^th year Maintenance    $ 46,305

            5^th year Maintenance    $ 48,660

        The total cost of this solution is:

            Initial Purchase        $ 100,000

            Maintenance 5 yrs    $ 221,065

                        ========

            Total            $321,065

I humbly ask all of you readers out there that have had to pay what feels like extremely high maintenance and support costs to read the fine print. In this particular case the above vendor has more made more than double the initial purchase price of 100K. So, ask yourself this question: Did you really get that 50 % discount? The way I see the math I sure don’t think so.

 

So what happens when we purchase regular old servers from Dell and Build Storage Spaces Direct??

Microsoft will fully support these certified builds like the ones that Dell has in their Dell/EMC Ready lineup for Storage Spaces Direct.

Let’s have a look some real pricing for a recent Dell Storage Spaces Direct Order. This was for a 4 x Node Dell R730XD S2D Solution – All Flash. This order is actually in line with everything that comes in here: This order has nothing more than the typical Dell Pro Support.

This pricing below is the actual customer discount and your discounts with Dell will vary. We will just take the price below of 150K including taxes for a 4-Node deployment as an example for what we learned about above.

    QUOTATION

Quote #:    

Customer #:     

Quote Date:     05/16/2017

Date: 5/16/2017    Customer Name:    Customer X

Thanks for choosing Dell! Your quote is detailed below; please review the quote for product and informational accuracy. If you find errors or desire certain changes please contact your sales professional as soon as possible.

Sales Professional Information

SALES REP:         PHONE:     1-000-0000000

Email Address:         Phone Ext:     00000

QUANTITY: SUBTOTAL     GROUP TOTAL:

GROUP: 1    4    PRICE:Can$35,691.59    Can$142,766.36

The only part of this price that would increase in years 4+5 would be the Dell ProSupport + the additional 2 x years of Hardware Warranty. Anyone who has ordered this in the past for Dell or HPE knows that this doesn’t cost that much and it is a far cry from the 20 % per annum that you are pay for the other guys solution.

If we compare the 2 x solutions one final time:

Solution # 1 = $321,025.36 including maintenance over 5 years (221,025 of which is maintentance)

Solution #2 = $ 150,000.00 I have included a buffer to pay for Warranty and ProSupport for years 4+5

Cost of Maintenance of Solution 1 = 221,025

Cost of Solution #2 = 150,000

Net Savings ============= $71,025.00 (Just off the Maintenance Alone)

Net Net Savings ============= $171,025.00 (Initial Purchase Price and Maintenance)

It’s pretty hard to argue with free isn’t it. So, instead of going out there and paying full price for other solutions you should really start looking at Storage Spaces Direct today. Be a Hero to your company and just make the smart choice.

Happy Learning,

Dave

This was originally posted by Cristal Kawula – MVP: http://www.checkyourlogs.net/?p=20301

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