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Michael Petrov
Co-Founder, CEO
5/7/2012
Wasteful Spending!

 I am constantly advising our clients and other IT organizations to consult with us before making any decisions. Questions do not cost anything, however questions are the significance to cost saving. Unfortunately in a lot of cases TCO for IT departments has a cost of stupidity component.

One of the examples as I mentioned in previous blogs, Telco relationship, cross connects, ISPs, even though it sounds very simple may be very complicated, and can cost a lot of money.
I don’t want to just give details about an IT manager trying to save money, and falling to the first Telco cold call. Per se when Telco is talking to me, and quoting me on the price, first thing that comes to mind is how much more in hidden charges the client will be paying at the end. I am just curious why clients don’t ask and negotiate with Telco providers to deliver what they are promising.

So normally the deal unfolds like this:
Telco : we have a great promotion. You have your servers in New York and in Boston. How much do you pay? 
IT ; $3000.
Telco:
we can do it for $2600. 
IT: OK. Good. I can save 400. 
Telco
: (delivers their solution on time if you are lucky). 
IT
: Wow, great. How do I switch now?
Telco:
Connect and test. Then switch.
IT: Where are the ports?
Telco:
You have to ask building to cross connect us. 
IT: Building management, we need to connect to the  Telco.  
Building 1
: no problem. What are the specs for the cross-connection?
IT: 100Mbps, RJ-45, Cat-6.
Building 1:
No problem – 260 per month for one run.   
IT: wow, and this is on one end. On another end I know that the building management charges only setup fees. I paid once for that old cross connection so I will pay the same one time? 
Building 2
: we stopped doing one times charge and start billing on a monthly base, but the good news is that you don’t have to pay one time charge anymore. The charge for this connection is 220. But if you want, we can get you a fiber cross connect so in the future you can push more. 
IT: Good idea. Let’s do it.  
Building 2:
Done – here is your fiber hand off. Now you have to either use a media convertor or have equipment in your LAN that is capable to receive fiber
IT: I don’t have a media convertor, no fiber
capable equipment. There will be more investment in hardware…

Certainly it sounds absurd; but this is how it unfolds. This can go on and on during the switch over, and agreement with the building.

So my question to the IT community: Why do most clients let Telco say: connect to us. Why shouldn’t they be accountable to provide a full solution, and deliver it right into your rack?

The second question to the IT community: Why are providers allowed not to disclose all additional charges and related expenses?

   

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