The $5 Million Trick: How Your Money is WastedBy: John Honovich, Published on Feb 25, 2013
Wasting money on unnecessary, gold plated equipment is a common risk, especially among deep pocketed customers. Vendors know this and realize that if they can convince users that certain features are 'mandatory', their sales can increase robustly.
This soon to be classic article titled, "Why a one-room West Virginia library runs a $20,000 Cisco router" is a great case study. You pretty much know where this one is headed and, frankly, it's zero surprise to us.
On the one hand, you have to congratulate them for the skill and resolve to pull this off. On the other, this screws customers, leaving them stuck with far over priced and unnecessary equipment.
The State of West Virginia, the recipient of this equipment, has released a damning and insightful report into the many egregious mistakes made in contracts for Cisco equipment.
The Classic Mandatory / Not Needed Feature
Perhaps the juiciest element was how West Virginia came to select such over priced equipment for one-room rural libraries. Here's the money quote:
"The [Cisco] engineer told the auditor he was simply following the state's instructions, which required him to spec out a proposal using only routers with "internal dual power supplies"—hence the 3945s. As the auditor dug into the story, demanding to know when this exact request was made, the Cisco engineer said it originated with the state Department of Education. But the engineer was "unable to provide the legislative auditor with any e-mails or other documentation" to this effect." [Emphasis Added]
This happens all the time, and it may not even be the vendor's direct cause. Some feature that is a nice to have for such a site, like internal dual power supplies, becomes a mandatory requirement. Even if the vendor did not suggest it, they certainly are not going to object because it often forces selection of a much more expensive product line. Moreover, vendors have every motivation to convince users that additional features should be required.
Cisco and Surveillance
Cisco taking advantage of its customers is not news to the surveillance market. In a classic 2009 public relations gaffe, Cisco's then surveillance spokesman bragged about targeting customers who 'will buy anything with 'Cisco' on the box.'
On the positive side, from what we have seen with the new Cisco video surveillance team, they have a more ernest and positive take on delivering customer value. On the other, their new positioning still makes them very limited to the high end of the market, increasing the risk that Cisco house customers will be pushed overpriced, unnecessary solutions.
Nonetheless, every user should beware of this risk from any manufacturer or reseller, especially the unnecessary mandatory feature trick that can cause massive, unforeseen, increases in cost.