For those readers growing up in the 1970s, you are probably familiar with the commercials for Fram oil filters. For those who don’t know, they featured a grease covered mechanic talking about how changing your oil filter for a few dollars would prevent far more costly car repairs later on. The tag line was a very convincing: “You can pay me now, or pay me later.”
I was reminded of this recently when hearing about how a particular data protection vendor did something like this to a customer. Basically they put the customer into a “pay me later” situation by offering a highly discounted product upfront, and now that “later” had arrived the customer was faced with a huge bill for expansion. They are not happy about it. This is a far too common practice and something you need to watch out for carefully.
Before getting to the specifics, let’s set the stage with a little data protection history. In the past, data protection meant backup to tape, and you bought that from two vendors. One was the backup software vendor, and the other the tape library manufacturer. Neither could provide you with the full solution.
Then backup started to move more to disk, and disk hardware vendors came into play, competing with tape. A host of new companies sprang up offering VTL and deduplication appliances and their success lead to the big disk vendors snapping up many of them.
As backup-to-disk continued its rapid growth, it became apparent that for software and hardware to work well together and be easy to implement, it made sense to offer both. Some of the disk array vendors already had backup software, so to compete, the standalone software companies started to partner with hardware manufacturers to offer backup appliances.
That brings us to today, when a good percentage of the data protection products sold are hardware/software combinations. It makes sense from a user’s standpoint, but it also means you can end up buying everything from a single vendor, and that’s where things can get tricky.
Your data protection solution is not a fun thing to replace, because it touches all the servers in your data center. This creates a built-in incentive against changing if you don’t have to. But many users are changing because their older solutions don’t work any longer. Vendors have a strong incentive to win the new business because it usually means they will remain in place for years to come.
This creates a perfect storm for a simple bait-and-switch. Offer highly reduced pricing on the initial sale to get your products in place, then come back a year or two later and slam the customer on expansion costs. The situation is further aggravated when vendors deliberately undersize initial capacity by citing overly optimistic data deduplication numbers. This brings the day of reckoning much closer and what you thought was a good three years of future capacity can end up running out in less than a year. (To be fair, data sizing is more art than science, and your data mix can change rapidly. Under-sizing can be an honest mistake, but when you see a consistent pattern of it you have to wonder.)
This is what I saw recently, when a customer was complaining about the huge costs presented to him to expand some systems, far more expensive per terabyte than the initial sale. The customer is furious at the vendor, but they also now have to make a hard choice. Switch products and go through another change-out cycle, which they did only 18 months earlier, or cough up the money to the vendor.
Maybe this kind of practice is just Sales 101, but I find it not much better than a stock boiler room scam. What to do about it?
First, be aware that it isn’t uncommon. If a vendor is offering some incredible discount it may be designed to hook you for a costly expansion later. Second, ask some questions. “This price is great, but can you put in writing what you are going to charge me for expansion capacity over the next three years?” Ask for a price commitment upfront. Why not? You’re the customer!
Of course, the sales rep can push back saying they can’t guarantee pricing over the next few years. Your response: “Sure, I understand that. Then I want my contract to say that expansion pricing will be no more than 10% of what you’re charging today.”
By doing this, you put the burden on the vendor to normalize their current offering and make it more realistic. If you take the “pay me later” aspect off the table it removes the vendor incentive to undersize and undersell. Sure, you may pay more now, but it can also mean saving a great deal more in a year or two and avoiding expansion sticker shock. Plus, it’s always better to buy the right amount of capacity up front to avoid dealing with an expansion project sooner than you’d like.
Here’s a final but important piece of buyer’s advice. I’ve seen customers purchase the solution that was their technical second choice because it came in at a lower price. But then they got hit with the “pay me later” cost hike. Ultimately, they ended up spending more in the long run to get the product they liked less and that was less effective for them. It’s not easy to resist short-term budget advantages, but you have to think long-term when it comes to data protection. After all, you can pay for it now, or you can pay for it later.