IACCM Contract Management Forum

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Vodafone UK
2020-08-26 08:50:46

End of Life hardware costs

Recently, when reviewing the costs built up in a Service & Support contract noticed we had accounted for an "excessive" amount of hardware upgrades. I thought we had overestimated these costs, but we are talking about a 5 year contract and I can see now the rapid evolution of the technology and regulatory pressures to change existing hardware that reached the End of Life. I can see now we had properly estimated those costs.
 •  World Commerce & Contracting  •   2020-08-26 13:13:44
Hi Diego, this is a great story to share. Our research suggests that organizations should undertake a comprehensive 'uncertainty analysis' for any significant contract, especially if it extends over a considerable period of time. The checklist would help identify that, in a situation like yours that involves fast-changing technology, there is a need for flexibility - perhaps provisioning as you did, or otherwise building in periodic reviews to check estimates and potentially revise funding.
 •  World Commerce & Contracting  •   2020-08-27 01:29:42
Hi Diego - Intel co-founder Gordon Moore in 1965 predicted a steady, two-year cadence of chip improvements that would double a processor's performance every couple of years. Moore's Law became more than a guideline for computer processor manufacturing. It's instead evolved into a shorthand definition for innovation at regular intervals, and has become a self-fulfilling prophecy driving the tech industry. Those regular improvements in iPhones, Samsung Galaxy smartphones and various other devices are thanks to Moore's Law. HOWEVER, it is slowing and the dramatic fall in hardware pricing will not continue. HOWEVER, hopefully scale and technology economies will cause telecommunications costs to fall so that the Total Cost of Ownership will continue to reduce as you say.
 •  World Commerce & Contracting  •   2020-08-27 01:32:37
PS IACCM's Contracting for as-a-service Research also suggests that visibility of component costs (hardware, software, comms) is less visible 'in the cloud' and able to be turned on and off on demand. So perhaps the future IT contracts you will sign will have as-a-service as a larger component, so the focus will be on TCO plus the price of flexibility
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