Safe Driver Discounts for Technology

Automobile insurers have long seen the sense of giving drivers an incentive, in the form of safe-driver discounts, to avoid taking risks when they’re behind the wheel. In health care, more and more payers are rewarding doctors for the quality of care they deliver and not the quantity. Aligning incentives with outcomes makes good sense.

Vendors of technology should follow those examples and revise their pricing models for yearly hardware and software maintenance contracts. If they rewarded customers who adhere to best practices, they would essentially pay customers for their performance.

As a CIO of multiple companies, I have to sign off on a lot of maintenance contracts every year. These contracts have a list price, and there’s usually a discount that the manufacturer passes along to the value-added reseller (VAR). The VAR decides how much of the discount to pass along to customers. No extra consideration is given to customers who abide by the vendor's best practices for the implementation and management of its products.

But why not? Why not give technology buyers the equivalent of a safe-driver discount? If customers were given incentives to hire highly competent internal staff, follow all the vendor-recommended configurations and install all the latest upgrades, life would be better for both the vendor and the customer. The vendor would receive fewer support calls and requests for emergency priority service. The customer would get higher reliability, better performance and lower maintenance costs.

Five years ago this month, we experienced a devastating network outage that led me to change a lot of our practices. Before the outage, my only incentive to adopt best practices was fear of downtime. The cost of support was certainly not a factor. We could make hundreds of support calls and send out an SOS during numerous high-priority emergencies, and the cost would be the same as it would be with a spotless performance record. The outage led me to replace much of our infrastructure, enhance my support team and ensure that our engineering practices are world class. We now place an extremely low burden on our vendors, but our maintenance discounts for all the technology we operate today don’t reflect that.

Here’s my idea. Vendors would give each customer a yearly technology safety rating, starting at, say, 100 points. If you miss an upgrade, 10 points would be deducted. Deviate significantly from a recommended configuration and you lose another 10 points. Make a support call that’s due to your lack of appropriate IT staffing and more points are taken away.

Discounts would no longer be arbitrary. Instead, they would be a direct function of the yearly safety rating. The harder a customer worked to avoid calls for help, the less the maintenance would cost. The best customer of the year could even be rewarded with completely free maintenance.

Of course, there are potential problems. Vendors could abuse the system by defining best practices as the elimination of all competing products, or they could take away points if customers didn’t buy all the optional add-on software they recommend. But such tactics would defeat the spirit of this proposal. Any vendor that adopted them could expect a good deal of pushback from customers; hopefully, they would see that such transparently cynical ploys have no real value.

So let me publicly ask my good friends at Cisco, EMC, Dell, HP and IBM, What do you think? You'll find that my driving record is exemplary.