Never Let the Vendor Set Up a Server
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@Carnival-Boy said:
O rly? I'll bow down before your greater knowledge of "basic English" then. Pretty much all companies are resellers then because most service providers (I guess NTG is the exception to the rule) will at some point sell some kind of product to go with their services.
Absolutely, most are resellers. There is no secret here. That's why NTG calls itself a non-reseller MSP because being a reseller is so common that the majority of customers simply assume that everyone is one. Reselling has the highest margins, far higher than services, and if it can be lumped with services you get to earn from both.
I know you are trying to be snarky, but I'm not sure how else to explain it. Resellers resell things. If you drive a car, you are a driver. If you teach you are a teacher. It's just the word that is the name for someone who resells things.
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@Carnival-Boy said:
Anyway, let me clear then, I outsource some of my IT work to my reseller. I assume you are ok with this?
Depends what it is. It's generally not a good place to start as any IT of value has decision making tied to it unless you are outsourcing only the most incredibly basic IT tasks that are overseen by others for all decision making. Resellers are called VARs (Value Added Resellers) when they add expertise alongside reselling. But the business model that makes sense for VARs is to use that "expertise" to mostly drive up sales. Not always, but much of the time, so you have to be very, very cautious about how you use them and monitor if they are in a position to be pushing sales higher through setup or recommendations.
VARs should always been carefully overseen by non-resellers (whether that is internal IT or outsourced IT) to isolate what they do to just things that are specific to what they resell or to specific non-decision roles (like script based helpdesk.)
Benchwork (rack and stack, parts replacement, cable cleanup, cabling, etc.) is obviously okay to outsource to anyone.
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@Carnival-Boy said:
@Breffni-Potter, OK, but according to @scottalanmiller the consultant is also a reseller if he sells the server as well the service. What do you do? Do you sell any product?
Let me explain the actual conversation between me and the "reseller"
CB: Hi I want a Proliant DL380, 1TB storage in RAID10. Give me a few options regarding disk size and type, processor etc and I'll pick the bundle I want. I need the server racking up, the RAID array configuring and ESXi 5.5 installing. Please quote for supply of server plus engineering time for the install.
Reseller: OK, here you go.
CB: OK, I've a few technical queries and I'm not quite sure which SAS Expander Card I need as the HP Quickspecs aren't too clear.
Reseller: OK, I've forwarded those queries to HP and this is what they've come back with.
CB: OK, here's the order.The reseller has no idea what I need this server for. The reseller does sell Dell, but I've been buying HP exclusively for about 15 years now, so I'm not going to consider anything else.
And there is nothing wrong with that. Resellers are a critical, necessary part of the ecosystem. Any non-reseller partners of yours (MSP, IT Outsourcer, whatever term applies or you want to use) should be using resellers / VARs for certain parts like you are mentioning. You should be able to tell a VAR exactly what you want to get and they should be willing to deliver it. In some cases, this can't happen because of agreements with their vendors, but mostly it does.
There are two factors to note here:
- On the front end in your example you have already done the legwork and are specifically isolating their advice to a small range of potential outcomes. This is you acting as IT (which you are) to regulate that the salesperson can't really try to sell other things. This is good, but it has to exist. If you lack the "you" layer of IT here, you need a non-reseller to provide this layer or to hire one or whatever.
- This is purely a reseller interaction. This thread was talking about IT work being done by a vendor and, legitimately, this mostly extends to a VAR too, but not to quite the same degree. But the interaction you are demonstrating here is not the same as who is doing the IT setup of the gear. VARs are specifically good for supplying the right parts. Even non-reseller MSPs or whatever need VARs to do that portion for them most of the time.
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@Carnival-Boy said:
I generally prefer to get the services and the hardware from the same place because otherwise if you get the service company on-site and it transpires that the hardware is faulty you could end-up paying twice to get the service company back in after replacement hardware has arrived.
How does this happen? I mean that as a legitimate question as I'm not seeing where you could normally be charged twice.
If you have a warranty, why would you have to pay to get the equipment fixed?
If you don't have a warranty, why would the reseller be brought in to do the repair instead of having the services company do it?
In either situation, with or without warranty, I don't see how you would be charged twice.
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@Carnival-Boy said:
I like to know that whatever goes wrong there is only one company to blame and one company involved in fixing it.
I don't know if this term extends to the UK but we call this "one throat to choke" in the US.
There is a lot of value here, for sure. But there are alternative ways to get this too. Your service company can front the reseller / VAR and deal with the "blame" on the backend rather than on the front. Then, not only are you dealing with just one throat to choke, but you get vendor management in with the bundle and often you get scale that you lose going on your own.
NTG does this with companies like SoftMart and xByte. You can come to us and want a Dell server. We are a Dell partner but not a reseller. We work with xByte. We have a strong relationship there and both NTG and xByte have a lot of reasons to want that relationship to go well and to keep communication channels wide open. We do the IT layer decision making and recommendations, we talk to xByte and get their deep channel expertise. The two are separate but have a lot of leverage. NTG can also interface directly with Dell for their expertise, but xByte knows we aren't going to undercut them as we never do hardware sales. It requires trust to make it work, obviously we could turn into a Dell reseller overnight if we wanted. Because NTG works with xByte all the time, we are more likely to get aggressive pricing and better support from them both because we are a high profile customer representative and also because we have really good, ongoing communications and support channels with them.
Same with SoftMart. If a customer is doing purchasing through SM but works with NTG, they hop onto the NTG buying group to get into bulk rate prices (making NTG a top ten volume customer of a very large reseller.) This lets everyone in the entire group benefit from the volume - driving prices down for everyone. And because of the volume and continuous transactions (and internal management of overhead conversations) NTG gets faster responses, lower prices and better service than standard customers which gets passed on to the whole group. We can get non-warranty parts in two hours for a lot of gear!! We can get machines replaced faster than the primary vendors can get a person out to a customer location in many markets.
So I totally understand your goal here and think that it is quite often very good. But if you think of the support structure in layers (I need to make a diagram for this) there is always one throat to choke, the question is whether it is internal IT, external IT or handled by not having a selection of vendors and relying on only one.
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@Carnival-Boy said:
@Breffni-Potter said:
It's just so much easier to make a margin on desktops, servers, switches, anything really that many businesses set themselves up around that idea as a profit centre.
Really? I'm surprised. I didn't think there was much margin at all on hardware these days.
Depends. Desktops, laptops someone might make $20 but when you are talking about 100 machines, it adds up. Especially as it is often recurring (every few years.) Servers, expect to make a few hundred dollars per sale for SMB scale servers. There is profit in the OS and hypervisor sales too. It's not just the hardware but the warranties, software, etc.
But the really big money is in other things like storage and other appliances where profits can be in the tens of thousands per sale!! That's why resellers are so often willing to throw customers away on the chance that they can make a storage sale that isn't necessary.
Switches and networking gear has margin. Very little if you sell Netgear, a bit if you sell Cisco.
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@Breffni-Potter said:
@Carnival-Boy said:
Really? I'm surprised. I didn't think there was much margin at all on hardware these days.
Having said that, I once got a quote for HP workstations from my Autodesk guy and the prices were obscene, so I guess he may have customers out there who are happy to buy at his enormous mark-up.You've just answered your own question
- For a brand new office with 20x desktops and a server, you could easily make £1000 just on reseller margins alone.If you don't understand what the price of something should be, you would normally trust your reseller to look after you. I've just had a stack of quotes from different suppliers for something and for a generic Cisco box, they added £100 to the sale price, when Misco and all the others are £100 cheaper.
I've seen quotes that are £400-800 higher compared with the price listed on their website for the exact same product and spec. Because they can get away with it.
And sometimes it is worth it. We don't look for the lowest price, we look for the best TCO. We work with VARs that really do add value. xByte and SoftMart are good examples where we get tons and tons of the "value add" and we would never expect to pay the lowest possible price because we get lots from the relationship. We also know that they tell us when they can't get a good price. SoftMart has told us to just buy parts from Amazon before - because they know that that's where the good prices are. In turn, they know that we aren't going to shop around and aren't going to try to nickle and dime them. They provide a ton of support for us, paying a few points premium to get that is well worth it. Haggling makes everything more expensive too - it wastes time and both sides have to pay for that effort.
I don't expect VARs to be rock bottom prices. The VAR bit has value. Pure resellers like Amazon or NewEgg can have lower prices but they can't get you two hour delivery, get the vendor on the phone, look up compatibility, etc.
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$20 a box? It's closer to £30 a box from what I have seen in this market.
@scottalanmiller said:
I don't expect VARs to be rock bottom prices. The VAR bit has value. Pure resellers like Amazon or NewEgg can have lower prices but they can't get you two hour delivery, get the vendor on the phone, look up compatibility, etc.
You'll love this. Unmanaged Cisco switch and they doubled the resell price.
I was not a happy bunny.I agree with the the right reseller does add value.
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@Breffni-Potter said:
$20 a box? It's closer to £30 a box from what I have seen in this market.
I'm sure that that varies massively based on what it is. If you are talking about $400 entry level semi-commerical desktops the margins are tiny. If you are talking HP Z workstations, they are big.
Printers are zero. But ink is huge.
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@Breffni-Potter said:
You'll love this. Unmanaged Cisco switch and they doubled the resell price.
I was not a happy bunny.Ummm...... yeah. LOL That's not going to fly. Unmanaged, should be like 5% tops.
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@scottalanmiller said:
Ummm...... yeah. LOL That's not going to fly. Unmanaged, should be like 5% tops.
It's a shame because they had the most beautiful proposal of the lot of them....
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@Breffni-Potter said:
@scottalanmiller said:
Ummm...... yeah. LOL That's not going to fly. Unmanaged, should be like 5% tops.
It's a shame because they had the most beautiful proposal of the lot of them....
That's where all of the money goes
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@scottalanmiller said:
@Carnival-Boy said:
I generally prefer to get the services and the hardware from the same place because otherwise if you get the service company on-site and it transpires that the hardware is faulty you could end-up paying twice to get the service company back in after replacement hardware has arrived.
How does this happen? I mean that as a legitimate question as I'm not seeing where you could normally be charged twice.
If you have a warranty, why would you have to pay to get the equipment fixed?
If you don't have a warranty, why would the reseller be brought in to do the repair instead of having the services company do it?
In either situation, with or without warranty, I don't see how you would be charged twice.
I buy the server from Company A but the installation service from Company B. Company B estimate 4 hours work so quote $400. The server arrives and Company B start the project. They find that the server is either broken or is missing crucial parts. HP agree to send new parts but it will take 24 hours. Company B has to abandon the project and return the following day (if they're available!). So a 4 hour job now takes 8 hours with travel etc etc. How much do Company B now charge?
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@Carnival-Boy said:
@scottalanmiller said:
@Carnival-Boy said:
I generally prefer to get the services and the hardware from the same place because otherwise if you get the service company on-site and it transpires that the hardware is faulty you could end-up paying twice to get the service company back in after replacement hardware has arrived.
How does this happen? I mean that as a legitimate question as I'm not seeing where you could normally be charged twice.
If you have a warranty, why would you have to pay to get the equipment fixed?
If you don't have a warranty, why would the reseller be brought in to do the repair instead of having the services company do it?
In either situation, with or without warranty, I don't see how you would be charged twice.
I buy the server from Company A but the installation service from Company B. Company B estimate 4 hours work so quote $400. The server arrives and Company B start the project. They find that the server is either broken or is missing crucial parts. HP agree to send new parts but it will take 24 hours. Company B has to abandon the project and return the following day (if they're available!). So a 4 hour job now takes 8 hours with travel etc etc. How much do Company B now charge?
Depends, did you have a project or a time and material bid?
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Do you think that makes a difference?
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Surely instead:
Company A ships the server to Company B.
Company B does a health check and confirms it is good.
No one in their right mind commits to installing an untested brand new server on a project. Even if company A do everything, if you schedule a week-end of downtime, they turn up with the never turned on HP server, and it still takes 24 hours to get replacements from HP, then the project is at risk. Especially with a time sensitive migration, with no downtime projects it's less of an issue but even so.
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@Carnival-Boy said:
@scottalanmiller said:
@Carnival-Boy said:
I generally prefer to get the services and the hardware from the same place because otherwise if you get the service company on-site and it transpires that the hardware is faulty you could end-up paying twice to get the service company back in after replacement hardware has arrived.
How does this happen? I mean that as a legitimate question as I'm not seeing where you could normally be charged twice.
If you have a warranty, why would you have to pay to get the equipment fixed?
If you don't have a warranty, why would the reseller be brought in to do the repair instead of having the services company do it?
In either situation, with or without warranty, I don't see how you would be charged twice.
I buy the server from Company A but the installation service from Company B. Company B estimate 4 hours work so quote $400. The server arrives and Company B start the project. They find that the server is either broken or is missing crucial parts. HP agree to send new parts but it will take 24 hours. Company B has to abandon the project and return the following day (if they're available!). So a 4 hour job now takes 8 hours with travel etc etc. How much do Company B now charge?
I'm confused. The thing that I don't understand is why you have a Company B doing "IT engineering" work as part of "installation services." I don't understand how the issue arises here. Again, I think this is a difference in terms. I think you are using "installation" to mean both the racking and stacking non-technical bench work AND the subsequent IT engineering work. What I'm questioning is why you have those two functions lumped together. That Company A does the "installation" of physically installing the box into the rack and plugging it in makes perfect sense and should be super cheap as they don't even need someone who knows what a computer is to do that work. Hopefully they know how to plug in the ILO or DRAC and put in your address for it. But that's it. Done. The bench work is complete.
Then that company tells you (or Company B) that the racking is done and the machines are accessible. Now the IT people at company B, the skilled people who are party of your IT planning and oversight, setup the server.
If done this way, you get the separation of duties to save money and get focused skills, you get the HP reseller handling any HP issues, you get your IT support without a break in the chain, etc.
I'm not sure what's happening that you are feeling stuck having the OS installation done at the moment of physical server delivery.
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@Breffni-Potter said:
Surely instead:
Company A ships the server to Company B.
Company B does a health check and confirms it is good.
No one in their right mind commits to installing an untested brand new server on a project. Even if company A do everything, if you schedule a week-end of downtime, they turn up with the never turned on HP server, and it still takes 24 hours to get replacements from HP, then the project is at risk. Especially with a time sensitive migration, with no downtime projects it's less of an issue but even so.
Exactly. And this is how it works in enterprise IT departments too. Yes, each of these roles is internal instead of external, but the processes remain the same.
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@Carnival-Boy said:
I buy the server from Company A but the installation service from Company B. Company B estimate 4 hours work so quote $400. The server arrives and Company B start the project.
So if you use all company A, how does this change? If you buy a server through Company A and you order four hours of IT work from them and the server that you get is not ready when you have scheduled them to come out and work sure, they might decide to give you a break because they are handling all of the parts, but in reality there is not really any difference here, for the most part, between them needing to be paid and Company B needing to be paid. Even if you are getting the work totally from Company A they still have to schedule the people and pay them even if the parts are bad. That's why, whether you use all company A, a mix of company A & B or all internal departments we don't schedule next steps until previous steps are done. There is lots of risk and wasted money from big, or even little, unknowns and surprises.
Now when you buy everything from one vendor, you can put more pressure on them, but you are just lowering the margins and making them less likely to want to work with you or you will encourage them to pad more if you aggressively schedule them to do IT work for which the equipment has not been tested yet. Hopefully they would warn you not to have the resources from the IT side all lined up and billing by the hour before the bench work was validated.
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@Breffni-Potter said:
Surely instead:
Company A ships the server to Company B.
Company B does a health check and confirms it is good.
No one in their right mind commits to installing an untested brand new server on a project. Even if company A do everything, if you schedule a week-end of downtime, they turn up with the never turned on HP server, and it still takes 24 hours to get replacements from HP, then the project is at risk. Especially with a time sensitive migration, with no downtime projects it's less of an issue but even so.
There is no week-end downtime whilst this is going on. The server arrives, it is put together and racked up and then the RAID is configured and the hypervisor is installed. It will then sit there for some time before I eventually start installing or migrating VMs on to prior to it going in to production.
