IT Vendors Need More Pricing Transparency
May 23, 2013
I recently assembled Network Computing's SDN vendor comparison, a buyer's guide on software-defined networking hardware and software. A key component of any buyer's guide is pricing, because it affects everything from the perceived value of a specific feature set to a buyer's ROI calculus. It's hard to compare products when the bottom line is a black hole, but that's the situation we ran into with a number of vendors as we reviewed their submissions to our guide.
Finding enterprise IT equipment prices has never been as easy as looking up products on Google or Amazon, but there's no reason it has to be so complicated.
- Forrester Study: The Total Economic Impact of VMware View
- HP Newsletter with Gartner Research: Maximizing Your Infrastructure through Virtualization
A favorite vendor tactic is the "starting at" number. One SDN software vendor initially provided only the vaguest guidance about a subscription model starting at almost $10,000 per month, with no indication of how the product is licensed--whether by number of nodes and/or feature bundles--or what's included in the base price. Even car companies put the entry-level model number and features on a window sticker.
When we pressed this vendor, we finally managed to pry out the fact that licensing fees are based on the number of controlled switches and that the starting price was actually a fraction of its initial quote, running about $25 per switch per month.
Another vendor, whose submission was not published due to an utter lack of specificity, said it prices its product case by case, with customers required to contact the company for a customized estimate. This implies to me that they haven't really figured out a pricing model and are essentially making it up as they go.
Perhaps this is understandable for a startup, or a company rolling out a new product, but it's equally understandable why an IT manager wouldn't want to do business under these conditions. Evaluating and pricing IT hardware and software shouldn't be more tedious and less transparent than getting a quote from a contractor on redoing your kitchen.
Indeed, the worst offenders are software products; switch vendors, admittedly a far more mature and competitive market, were forthright about providing model numbers, port counts and list prices.
In the vendors' defense, one factor behind their hesitance to share pricing details is the immaturity of the SDN market in general and their product offerings in particular. Many SDN hopefuls appear to be rushing product announcements and pre-production demos to get ahead of competitors in the great SDN gold rush for mindshare and industry buzz.
Several said they hadn't yet set price figures, but would do so later this quarter. We plan to hold them to this commitment, because without firm numbers, the products look like vaporware. Any product without prices, model numbers and detailed specs should be viewed with a healthy dose of skepticism.
Our experience with the SDN guide is in stark contrast to an earlier cloud computing (IaaS) product comparison, in which vendors provided enough pricing detail for customers to make accurate estimates of their monthly bills for a given compute workload and pool of storage capacity.
This illustrates a vast difference in business practices and pricing transparency between traditional, big-ticket IT infrastructure of enterprise hardware and software--which is typically purchased on multiyear refresh cycles--and the new generation of pay-as-you-go cloud services, which can be procured in an afternoon, upgraded as often as needed and turned off at the customer's convenience.
The sense of entitlement bordering on arrogance of some enterprise IT suppliers, as illustrated by VMware President and COO Carl Eschenbach's reference to Amazon as a mere bookseller, is smashing head-on into a new generation of customer-focused competitors, many of which grew out of the consumer, not enterprise, market. They take no business for granted.
In our SDN comparison, Plexxi set an example of clarity and simplicity others would do well to emulate. The company provided us with this pricing information: "The Plexxi Affinity Topologies is included with Plexxi Control, which costs $5,000 per controlled switch. The switches are $64,000 for Switch 1 and $85,000 for Switch 1x, plus maintenance charges of 10% to 18% of purchase price." That isn't so hard, is it?
Kurt Marko is an IT pro with broad experience, from chip design to IT systems.