Both SMB's and larger enterprises face a conundrum when selecting managed storage service providers. Customers must often choose between the viability of a newer entrant and the typically less flexible contractual terms from larger, more established players. Because switching costs are often high for such services, due to diversity in technology and processes across offerings, established players can and will attempt to lock users into longer contracts and evergreen renewals while providing very limited price protection over time.
Best procurement practices show users need to take the time to understand how their requirements map to service provider offerings. Once that's done the decision boils down to understanding contract terms and making necessary trade-offs. Contractually, customers should:
- Negotiate more attractive terms, especially from newer entrants from established leaders (e.g. EMC/Mozy). Often users will find appealing incentives from larger companies trying to crash the party (e.g. monthly renewal periods);
- Use such incentives to negotiate the elimination or reduction of one-time setup fees from competitors;
- Negotiate the elimination or proration of early termination penalties;
- Investigate the possibility of obtaining 'Green Rebates' from power companies. Service providers may be willing to offer incentives to customers who qualify for such credits in exchange for PR (e.g. references or a case study);
Action Item: Given the rapid advancement of technologies and never-ending cost reduction in place within large data centers, remote data protection customers should attempt to negotiate the shortest terms possible. In general, customers may very well find that shorter terms, while carrying a higher monthly cost, will result in more attractive pricing, better flexibility or improved service down the road.
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