Are Systems Support Costs Out Of Control?

By: Eric Wolferman Editor's note: This "Digital Input" column originally appeared in the Sept. 17 print issue of E&P.

For newspapers today, IT support is vastly more complex than ever. Automated pagination systems have added magnitudes of intricacy. Computer-based processing of graphics has added new layers of hardware and software. Database-driven systems for classified advertising and financial information require specialized skills to operate and maintain. The amount of software and hardware has increased immeasurably in the past 25 years.

Along the way, we also experienced the open-systems revolution. Systems that once came in a single package, more or less, now comprise a labyrinth of network, Wintel, Macintosh, and server components. Software applications, too, are being constructed from commercially packaged operating systems, database engines, and off-the-shelf software programs.

We reaped the cost benefits that come with materials targeted for mass consumption, but we forfeited the comfort of a single-vendor caretaker. The proliferation of computer-driven processes and the interchangeability of pieces and parts have forced us to redefine the concept of support.

Each layer of automated processes -- operating system, database-management system, and production application -- requires its own support.

It is not uncommon for support and maintenance agreements to run well into the millions of dollars for a large or midsize newspaper. And that's in addition to the cost of in-house staff required to maintain the systems.

So how much is too much? What are we getting for our ongoing investment in support agreements?

Most agreements offer updated software releases, access to telephone support, and on-site house calls in case of emergencies. Some offer a regular maintenance program, plus fixing specific problems. Many offer different levels of service, often named for precious metals -- bronze, silver, gold, platinum, etc.

Do we get our money's worth? Vendors frequently sell support for a percentage of the cost of the installed software licenses. Support may also be sold on a per-user basis. Either way, we are often paying for something that might happen rather than something that does.

One colleague suggested the value of support is equivalent to the potential loss of revenue that would result from a failure. That sounds good, but it still doesn't adequately address what is a reasonable price for support.

The value equation for support is complicated by the needs of the vendors who provide it. What happens if revenue from agreements is not enough to maintain the personnel necessary to support the product? Should the vendor view its support operation as a profit center?

Some suppliers view support operations as a break-even business, part of the obligation of providing technology. Others view it as a crucial source of revenue during difficult times. There are older newspaper system suppliers that are relying, in part, on such revenue to keep the company afloat while they transition to new products. In the end, the appropriate cost for support agreements is a delicate balance of affordability for the customer, adequate revenue to sustain the vendor's support efforts, and reasonable value for the money paid.

Support contracts are a necessary part of the cost of ownership. But today there are so many software and hardware components requiring support arrangements that the cost is becoming prohibitive. It is difficult to justify capital investment in a system when it means adding as much as a million dollars to your annual operating budget.

There is no universal formula to determine the fairness of support agreements. There are simply too many unique factors involved with each system or software purchase. But one thing that might help is more candor on the part of suppliers in justifying the price of their support. Vendors should more thoroughly explain the philosophy of their support strategies and detail how the price balances against the resources required to sustain the effort.

Frank discussions about support costs may not make them any easier to stomach. But a clear understanding of the value equation can at least make it taste better.