Avoiding the Rubber Stamp maintenance renewal syndrome

As I discussed last time, everything you add to your environment (hardware, software) costs money in recurring fees. Part of the job of the CTO/CIO is to sign dozens of invoices, each and every week, that approve payment for the various elements in your infrastructure that have come up for renewal. And hey, we’re all busy. Anyone who’s been pestered by the company’s usually indefatigable accounts payable department knows the perils of not having signed off an invoice in a timely manner: in other words, you can’t afford to let them languish. Problem is, it’s relatively easy to fall into a “rubber stamp” mode, scribble a quick signature, and move on to the rest of your busy day.

Multiply that by dozens of invoices a week, 52 weeks a year. A few thousand dollars here, a few thousand there: as the saying goes, pretty soon you’re talking about real money. Careful scrutiny of each and every expense takes time and effort, but my view is that it’s one of the major responsibilities of the job. The amount of company expenditures that flow through IT places an important onus on you, the head of technology, to constantly be thinning the carrots, so to speak.

And, especially if you’re new to the company and this job, chances are pretty good that you’re inheriting an essentially unweeded garden. At least, that’s been my experience. Your first year will be one of constant discovery, to put it charitably, as invoices land on your desk and you steadfastly resist the Rubber Stamp Syndrome.

Here are a few real-life examples. I’ll leave the names of the vendors out of these little anecdotes, although your guesses will probably hit pretty near the mark.

When I had just taken over as CIO at one company, a portion of our database licenses came up for renewal. As I pored over the perhaps intentionally inscrutable invoice, I discovered a couple of items that seemed questionable. It turned out that as part of a database software deal several years before, this vendor had included, with the consent of an apparently very optimistic but certainly very gullible head of IT, a few “free” licenses for one of its applications packages. Free, hmmm? Well, free except for the ~20% annual maintenance fee, which had been charged, and paid, for three consecutive years, with no implementation of the package and no plans to implement it. The Rubber Stamp Syndrome had struck. You can bet two things: one, we immediately stopped paying the maintenance fee; and two, we had a pretty unpleasant meeting with the very defensive, “hand caught in the cookie jar” vendor.

Similarly, at another job, I learned that various additional “modules” had been sold to the company years before as part of the company’s ERP solution. Vendors seem to sense when a buyer is susceptible to the “such a deal” sales pitch that I also refer to as “buy five of an item, shrink-wrapped, at Costco when you really only need one.” With software, it’s because those deals have incredible legs, with year after year of Rubber Stamp renewals. In this case, we had never used several of the modules in question, and had no plans to, but yet had been paying thousands of dollars in maintenance every year on those licenses.

Finally, to give a smaller example from a dollar impact point of view: I discovered that my infrastructure staff needed to make regular purchases of back-up tapes. We had been using the same vendor for this for several years, paying about $65 per tape. “Have we compared prices elsewhere?” I asked. Um, no, these are really low-cost items, I was told, and besides, this vendor gives us great service. Well, when you’re buying 50 or 100 items at a time, and can get the same product for $30 per tape cheaper (as it turned out), it’s definitely worth switching vendors.

In a nutshell: it behooves you to ask the following standard and basic questions regarding “legacy” renewals of maintenance and support:

  • Are we happy with this vendor and its product(s) in general?
  • Are we right-sized in terms of the number of licenses, now and for the foreseeable future?
  • Do we really need and use this support? What are our other options? Is per incident support available? You don’t buy the extended warranty (I hope) on every major appliance you purchase; don’t buy it on absolutely every element in your infrastructure either. Don’t buy 24×7 support if a lesser level will suffice. That’s obvious, you say, and perhaps it is: except, of course, if people fall prey to the Rubber Stamp Syndrome.

If you find yourself becoming a rubber stamp, it’s time to get re-energized. Remember, the C in CTO or CIO needs to stand for Cheap.

Comments

  1. Great Quote Peter:

    “You don’t buy the extended warranty (I hope) on every major appliance you purchase; don’t buy it on absolutely every element in your infrastructure either.”

    You should include that one in the list of ‘Peterisms’…
    — John Crawford

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