Woods says that Mellon has even sold off some business lines to drive down maintenance costs. "Some of the businesses that we divested had fairly heavy maintenance requirements," he says. To further keep maintenance costs in check, Woods leverages as much of the technology across operations as he can. "To the extent that you can leverage systems in different parts of the organization, you're going to minimize your maintenance."
Al Ball, a technical platform systems administrator at Delaware Investments in Philadelphia, says his firm removed disk drives from maintenance coverage and implemented a disk drive hot-swap program to keep maintenance costs down. "We keep a variety of drives ... on the shelf to use as hot-swaps rather than paying for maintenance for them. We also have a few of the smaller servers on the shelf to serve as hot-swap rather than keep those common smaller servers on maintenance," he describes. For non-mission critical systems, Ball avoids buying a "warranty uplift," opting instead to go with the standard warranty. He also keeps a detailed, up-to-date list of hardware for which he re-evaluates the coverage every quarter.
Outsourcing is another way that firms are keeping maintenance costs in check. In fact, Richardson Partners Financial relies on the strategy. Stan Eng, senior vice president and chief technology officer, says that, in starting from scratch, the firm "made a conscious decision to buy versus build." That includes using an application service provider (ASP) for its portfolio-management system from Montreal-based Croesus Finansoft.
Scott Stennett, vice president of technology at Richardson, says that if Richardson had built the portfolio system itself, it would have had to swallow the costs of upgrades and maintaining the system. By using an ASP, it spreads the cost of maintenance across the ASP's customer base, making it cheaper for Richardson to maintain, he says.
When it comes to leasing software, "due diligence and negotiating a good contract are critical to controlling future software costs," Delaware's Ball notes. "Many, if not most, software vendors have gone more to a lease model for their software. Contract negotiation is key. Figuring out the necessary customization ... to the software before it is leased gives you a chance to negotiate when you have the most leverage."
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