Why the Internet of Things (IoT) Makes Owning IT More Expensive

The days of paying for an internet-connected device only once — when you first buy it — are disappearing. To receive the firmware and security updates a device needs to function as designed, you’ll soon need to pay extra if you aren’t already.

Manufacturers are now passing along the costs of developing and distributing updates to you — some are even charging for warranties. Here’s what’s happening and why:

The old way: warranties and free patching

Historically, when you bought a piece of IT hardware, it came with a warranty and, if you chose, a maintenance or support contract. If something happened to the device within the specified period of time, the manufacturer would repair or replace it for free. If a switch broke, for example, you shipped it back to the manufacturer, they confirmed the problem was their fault and not yours, and they sent you one that worked. If you also had a maintenance contract, the manufacturer would attempt to fix it without you having to ship it back.

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Now that malware targets so many more things — like firmware on switches and a whole host of devices that didn’t used to be connected to the internet including cameras, security systems and doorbells — keeping IT devices secure and operational is more complicated. And more expensive.

The new way: support subscriptions

Today, rather than including warranties and selling one-time contracts for support and updates, manufacturers are selling those services through annual support subscriptions. To receive the security updates for your switches, for example, you now have to purchase a support subscription that you pay annually. Some manufacturers are commingling warranties with support subscriptions as well, so to get the warranty you must subscribe to the annual support contract.

A lot of customers aren’t too happy about that – why do we need to pay for something that we used to get for free? The reaction is even stronger when the customer has many devices to cover.

Why manufacturers are now charging extra

From the manufacturers’ point of view, it’s costing them a lot more to keep devices updated. Old devices in particular need to be updated often to keep out malware that specifically targets vulnerabilities in older technologies. This is part of the reason you may have noticed that manufacturers are also moving to shorter life cycles for network infrastructure components — it’s too expensive to develop patches for all of the vulnerabilities. The support plan is typically developed at the same time as the technology. Consider how Microsoft deals with Windows updates and end of life.

Subscription model across the board

If you think about how IT has moved from traditional hardware to the cloud, from boxed software to “as a service” subscriptions, and from devices controlled by buttons to devices controlled with smartphone apps, it’s easier to understand how the technology you buy is part of IoT. Software-defined everything, or SDx, is converting technology hardware into practically disposable commodities because software is now running the show.

But this doesn’t change the fact that it’s rarely a good time to take on an extra expense, especially if it’s hefty and unexpected. If your organization is accustomed to paying $1,000 for firewall and, all of a sudden, you need to pay an additional $300 each year for the privilege of using it, you’re probably going to notice – and respond in a way that makes the most sense from a business perspective.

How to budget for the subscription model: don’t outspend your risk

As you plan for how to manage the new subscription model, don’t believe everything you hear about risk. Unscrupulous sales people may try to exploit your fear. Managing risk is critical, of course, but managing risk that doesn’t exist is a waste of money.

For example, if you have an organization with a large campus that has a lot of switches, the new subscription model for maintenance of those switches may cost you 25% or more than it has in the past. Is it worth it? To justify the increased cost, first consider what each switch is used for. Is it critical to doing business or are there some switches on your campus that can go down for a day or so without too much repercussion? Or what would happen to your operations if a switch went down just for the length of time it takes for your IT team to swap it out with a spare?

Once you’ve fully considered what you actually need for your business, consider your options, including:

  • Keep a couple of spares on hand — this could be much cheaper than the cumulative annual maintenance contracts
  • Ask about contracts with lower service levels
  • Buy new, fully covered devices if your current devices are older
  • Research less expensive devices that do the same thing and meet your needs
  • Find out which competitors have the most reasonably priced maintenance contracts

Your IT hardware and maintenance costs are important business decisions. You don’t necessarily have to accept what’s offered or agree to increased pricing.

And the decisions you make this year may need to be reevaluated next year. That’s how fast things change in technology.

Just 10 years ago, Leapfrog would update firewall firmware for our clients once a year. Today we do it every 15 minutes, which means to maintain security we are now updating hardware 35,000 times more often than we did in 2008.

Not only do we stay on top of every aspect of network performance and security, we also help our clients identify the most appropriate lifecycle management practices and the point at which they’ll outspend their risk. Best practices are different for different industries — a financial firm has different business needs from a restaurant or a nonprofit, for instance — and for individual companies within those industries. Our clients appreciate that we work with them individually to find the right balance to meet their business goals and ensure they have the correct hardware, software, patches, antivirus, remote access, and other IT solutions. They also like that we’re standing by to help them make good decisions as technology gets more complicated.

If you’re interested in partnering with a managed IT services provider that believes in aligning your IT with your business objectives, please contact us today. We’re here to help.

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