Businesses of all sizes and in every industry are facing unprecedented challenges. They need to reduce costs and deliver increased value to win new customers and to keep their existing customers. Information technology budgets, in particular, have been the target of cost-cutting initiatives.
Our economic environment and resulting business climate has motivated corporations to consider solutions and services that in the past were regarded as low priority or having too much risk. Utilizing third-party firms for technology equipment maintenance services is one example.
Smart Business spoke with Frank Eagle, vice president of Channels and Marketing at Park Place International, to learn more about the perceived risks of technology maintenance services provided by third-party firms.
What are the most common concerns that companies have when considering a third-party services firm? What should a third-party firm do to address these concerns?
One of the most common concerns is, If I use third-party maintenance services for a portion of my data center, I may lose my hardware discount from the original equipment manufacturer (OEM).
To address this concern, a third-party maintenance services firm should simply provide the facts: Based on our experience with more than 900 customers, the OEM will become more competitive in its discounting of hardware when it sees a services partner in the account. What you should expect is better discounts and an increase in the level of attention from the OEM.
Another common myth is, Because third-party maintenance support is so much cheaper than the OEM, I must be sacrificing something.
A third-party firm can address this concern through an explanation of its business model as compared to the OEM’s. Because of the significant investment OEMs make in hardware research and development, their business model is designed to recoup their investment through the sale of new hardware. Often, a third-party services firm has partnerships with the major OEMs so you do not sacrifice anything at all. By virtue of being purely focused on providing maintenance (data center servers, storage and tape back-up), a third-party services firm’s cost structures are lower than that of the OEM, which results in lower maintenance costs to you.
Another common myth is that, Third-party vendors cannot provide software support.
Many third-party services firms can offer technical support for all major OEM operating systems, and have access to all publicly available firmware, updates and upgrades to operating systems software.
Also, most OEMs will split hardware and software maintenance. This allows software maintenance to be purchased by a customer separately covering operating system upgrades. We also recommend if you do move away from the OEM for software maintenance, you should obtain all software updates that you have paid for during your service contract. A third-party services firm will assist with the installation of updates if they need to be applied.
How has the economic environment affected the way companies have used third-party maintenance?
Many third-party services firms are experiencing rapid growth and are focused on increasing staffing to provide support for an increased customer base.
In the past, many large corporations did not consider third-party maintenance services because they were refreshing their hardware platform with the OEM every three years. Now most — if not all — of these companies are under such severe budget constraints, especially for information technology, that they are actively pursuing third-party maintenance options.
In this environment, what are the primary benefits of third-party maintenance services?
A 30 to 50 percent decrease in maintenance services costs compared to OEM pricing is at the top of the list of benefits companies receive when working with a third-party services firm. At the same time, you do not sacrifice the quality of service. Many third-party firm engineers were previously employed by the OEMs and have the depth and breadth of resources to solve the most difficult problems.
By working with a third-party firm, you control the lifecycle of your technology investments rather than being dependent on the OEM’s product lifecycle that is designed to drive the timing of your investment.
Third-party maintenance services allow budget reallocations by freeing up budget dollars that can be used to hire or keep the IT personnel you have or to purchase additional products and services. Remember that using a third-party maintenance services firm reduces the amount you are paying today, so you are reducing an already approved budget.
What advice would you give companies considering third-party maintenance services?
In today’s competitive business environment companies must rethink every aspect of their cost structure. With a third-party services firm you can significantly reduce your maintenance services costs without sacrificing quality.
Companies need to select a firm that has a state-of-the-art support infrastructure to provide service that is the same as or better than the OEMs. Look for a company with 24×7 call center support and a global supply chain with access to a robust parts inventory. Some third-party maintenance service firms actually provide parts to OEMs for their service contracts. They have a broader range of sources for parts since they are not bound by the same sourcing process limitations as OEMs.
Frank Eagle is vice president of Channels and Marketing at Park Place International. Reach him at [email protected] or (440) 991-3163.