DoD Sequestration

 A lot of my friends are involved in the Military and in Defense related businesses. They are getting quite concerned about the effects of the DoD sequestration and what it will do to the economies around the bases and facilities where there may be huge layoffs.  It will be an anxious few months as we wait to see what happens. In these conversations with my friends, and as the owner of a third party support business, I have identified three ways the DoD could minimize the effects of sequestration and reduce their ongoing IT expenses. 

First, the DoD should require that their IT vendors give them license transferability on all of their software and firmware products. This would allow the DoD to move their licenses around to other departments and facilities and thereby reduce their costs of upgrades and support.  License transferability is provided to leasing companies from the manufacturers to protect the leasing companies’ residuals; why shouldn’t the DoD receive the same financial benefits?

Second, the DoD should require all service and support bids be opened up to qualified third party independent support organizations rather than restricted to the OEM service and support organizations. Currently, the DoD support and bidding process favors the OEM’s and this costs the DoD a tremendous amount of money. The manufacturers systems of opportunity registration further restricts competition amongst their dealers, and the lack of open bidding supports inflated pricing by the OEMs.

* "The Federal Government spent $2,034,269,948 on new equipment while only spending only $9,114,676 on refurbished. A resounding 99.6 percent of Federal IT dollars was spent with OEMs and OEM authorized resellers."

* "Still others [OEMs] issue fictitious list prices. These can be a much as 200 to 300 percent higher than what they will charge a good customer, i.e., they can offer the perception of huge discounts to end customers while asking independents to pay much higher list prices for the same product or part."

Third, Congress could require that the DoD maintain IT systems for a 7 or 10 year life. This would force the IT vendors to extend their product life cycles or encourage the manufacturers to  partner with legacy service companies to take over the extended support  contracts for their older systems. If fully implemented, this would encourage manufacturers to concentrate on technological improvement while service companies focus on providing outstanding technical support, creating an environment of both IT innovation and sustainability.

So there you have some good solid savings that could come out of the DoD Sequestration situation without affecting our Military readiness at all. Perhaps this could turn out to be an opportunity for the DoD to become a more efficient organization in the way it acquires and maintains the IT equipment that it purchases and maintains.  While it seems unlikely, there exists the possibility that at least one segment of the DoD bureaucracy can be changed into an affordable and efficient organization.

A great article Independent support

Jeff Klein, a  long term customer of Zerowait's, recently wrote an article for tech zone about independent third party support and refurbished parts for legacy Information Technology equipment.  It is a well written article and I think it is worth your time to understand the issues involved. Here are some interesting excerpts.

* "The Federal Government spent $2,034,269,948 on new equipment while only spending only $9,114,676 on refurbished. A resounding 99.6 percent of Federal IT dollars was spent with OEMs and OEM authorized resellers."

* "Still others [OEMs] issue fictitious list prices. These can be a much as 200 to 300 percent higher than what they will charge a good customer, i.e., they can offer the perception of huge discounts to end customers while asking independents to pay much higher list prices for the same product or part."

Jeff's article ends with this :

"The solution is simple. Corporate IT buyers must join with their independent suppliers to demand that manufacturers:

 1. Stop their attacks on independents.
 2. Call on the U.S. Department of Justice to commence hearings to  determine if AGMA is in violation of anti-trust laws.

Without coordinated action, competition will continue to be curtailed, prices will rise, choices will be limited and free trade in America will be a little less free. "

 http://www.techzone360.com/topics/techzone/articles/2012/07/24/300192-how-americas-top-oems-trying-crush-third-party.htm

A busy week in Australia

Over the last few days I have been in Sydney, Australia visiting with our staff and clients here. Zerowait Corp. PTY has been in Australia for just over 18 months and we have quite a few customers in the media and financial services business sectors here.  Every time I come here I am more impressed with the engineering and technical staffs of the companies we visit. There is a lot of ingenuity here, and our Simplstor Products and  independent NetApp support are doing well here.

Last night I was at a gathering of VFX folks in Newtown at the Marly bar and I was talking to folks about robotics and developments in camera technology for film and animation. The VFX community here includes customers of ours in the commercials business, movie business, and the TV business, and I really enjoy coming to Sydney for these evening gatherings. I wish that we could put events like this together in the USA. As mentioned previously in this blog the Aussies have great beer and it is hard not to enjoy a few of them when you are out in the evening with customers and friends.

Laurence Jones, who runs our office in Lane Cove West has pulled things together over the last year and a half  and set up an excellent office. Our business in  Australia is  doing really great thanks to his efforts. It is really pretty amazing to think back to November of 2010 when one of our customers asked us to set up the  Australian operation and to see that  18 months later we have a growing business that is gaining more customers every month.

Finally, I can't say enough good things about our Attorney's in Sydney. As an American, dealing with the rules and regulations of setting up a company in Australia and keeping things consistent between the two countries  different business law systems has been an education.  After 18 months we have finally gotten things figured out.  Based on what we have accomplished we expect that over the next 18 months we will  substantially increase our business in Australia.

Uncertainty and manufacturing decline

Over the last few months the Zerowait‘s customers have been telling us that their budgets are uncertain and that they would be putting off new equipment purchases for a while. There seems to be an inverse correlation between the growth of our NetApp legacy support business and the reported drop in USA manufacturing activity. July 2, 2012 http://online.wsj.com/article/SB10001424052702304211804577502543898983040.html By KATHLEEN MADIGAN The U.S. manufacturing sector contracted in June for the first time since July 2009 as new demand crashed, according to data released Monday by the Institute for Supply Management. The ISM's manufacturing purchasing managers' index plunged to 49.7 last month from 53.5 in May. A reading above 50 indicates expanding activity. As Business and Economic uncertainty increases, more customers are seeking a reliable and dependable source for affordable enterprise storage support and upgrades. Zerowait has been providing high availability service and support to NetApp users for over a decade and we have grown into an international company through the recommendation and referrals of our customers. The caution lights are on, and CFO’s are putting storage budgets on hold. That means affordable alternatives must be found and Zerowait is the logical choice for many customer looking for a safe harbor in these unpredictable times. If you are in a quandary, and trying to work through your puzzling budget process, why not consider a Zerowait support alternative for your NetApp equipment? Zerowait has the answer.