As the nature and essence of broadcast systems continues to migrate away from proprietary hardware solutions and onto standard off-the-shelf IT hardware, more importance is placed on the software layers riding atop those commodity platforms.
But beneath that exceedingly simple phrase hides a plethora of after effects that have quickly changed the way that vendors operate, systems evolve, operational capabilities appear and on the way capital and operational budgets are arranged.
It is hard to deny the intrinsic ability to leverage software solutions on ever more powerful standard hardware. In addition to the lower initial system cost, major functionality fixes or enhancements can often be accomplished with a remotely deployed upgrade.
Other advantages accrue from this hardware commonality. From a maintenance standpoint, your staff can focus on one common platform. Redundancy is often accomplished for a fraction of what it would cost if one was dealing with proprietary hardware and if your need for throughput increases, you can often replace the box with beefier hardware and cascade your older box down to less demanding applications.
But, (and you know there is always a but!) not everything in this new software environment is advantageous. Depending on software layers often means a longer deployment and testing period, especially in highly integrated multiple vendor systems. Since the upgrades are easier to perform, they also become easier vectors for changes that occasionally disrupt operations. Finally, the issue of ongoing service and support really takes on a different dimension than normally found in previous generation systems.
A VICIOUS CIRCLE
It is, in a way, a vicious circle. Using commodity hardware lowers the barriers of entry into a new field and also allows vendors to rapidly deploy new software-based functionality. After all, it is easier to set up a new company of software developers than to fabricate custom silicon or FPGAs. This combination of new and often well-capitalized players and fast deployment capabilities invariably leads to more competition in a particular field, substantially increasing market pressures. Soon, more aggressive product cycles ensue and the next thing you know, the pre-deployment testing stages shrink noticeably.
As these products hit the marketplace and encounter the inevitable break-in period, the number of issues rapidly escalates and, concomitantly, so does the need for additional support staff and voilá, the perfect recipe for higher service and support costs.
It would be easy, but unfortunately a bit naïve, to look at the way things used to be and immediately place the blame on these new darned software vendors. In the old proprietary hardware model, one paid for these support and replacement costs upfront in the form of exorbitant equipment pricing.
The margins on some of these products were so high that manufacturers could easily support these types of products at no additional charge for many years without breaking a financial sweat. A similar phenomenon took place in the information technology arena about 20 years ago, and I still remember the howls of discontent as my IT colleagues and I underwent this painful transition.
The truth is that, by and large, we are all equally guilty in this situation. We are willing participants in this digital media juggernaut that we nowadays call "broadcasting." The constant demand and appetite for new functionality and the stringent deadlines that often accompany them, can only be met by a furious pace of development.
On the other side, major integration projects with dwindling capital budgets constantly increase the pressure to aggressively negotiate upfront each and every deal down to the last dollar.
Don't get me wrong, I'm not shedding a lot of tears for broadcast vendors and their profit margins, but it is important to realize that the service and support landscape in this industry has drastically changed as the industry itself has evolved into a software-driven environment.
COMPETITIVE VALUE
The question that we should be asking isn't whether or not one should have to pay 10, 12, 15 percent of their initial purchase price in annual service and support fees. Believe it or not, in certain IT niche markets that can go as high as 23 to 25 percent.
The important questions become-is my organization getting the business advantage and competitive value from my ongoing investment in this particular application? Is this vendor responsive to any ongoing issues that require prompt attention and quick resolution? Can we count on this vendor to continually improve its product in order to keep abreast of relevant industry trends?
Because in this day and age, the last thing you want from a vendor, especially a strategic supplier, is an inability to properly support the product that you just bought or, worse yet, the inability to remain a financially viable concern.
The broadcast world and the financial models of its vendors continue to change and so should one's understanding of the shifting dynamics of upfront margins versus ongoing support revenue streams. Just make sure you don't hammer or get hammered on both sides of that equation, because in the long term those deals are lose-lose propositions.
Count on IT.
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