Warranties expiring? Featured

7:00pm EDT November 25, 2008

Your company’s data center is a critical corporate asset. The right serviceprogram will extend the life of equipment, minimize indirect costs of down-time, reduce costs of equipment ownership, increase uptime and maximize operations to increase business profitability.

With all that is at stake, you should closely evaluate your options when equipmentwarranties are about to expire. Instead ofautomatically signing an extended serviceagreement with the OEM, it may be to youradvantage to select an Independent Service Organization (ISO).

“In all cases, prices are substantiallylower with an ISO,” says Ed Kenty, president and CEO of Park Place International.“However, price is not the primary differentiator. When looking for an ISO, the number one factor is quality. Yes, you’ll savemoney, but keeping your data centerhealthy and your mission-critical operations up and running will be the primaryconcerns.”

Smart Business asked Kenty to explainthe choices companies have when theirwarranties are about to expire.

What issues are of most concern to IT professionals when facing warranty expiration?

When considering whether they shouldengage an ISO, the biggest concern formany IT managers is risk mitigation. Manyelect to continue on with the OEMs of theirdata center equipment because they perceive these companies as the safe choice.However, the right ISO definitely deliversthe same quality as the OEM, perhaps evenbetter, at a much lower price. In order toavoid having to make hasty decisions, it’simportant to know exactly when the warranties (which usually last one to threeyears) are going to expire on each piece ofequipment.

Warranty dates throughout a data centerare staggered. In most instances, you won’tget a notice from an OEM that a warrantyis about to expire, but rather a bill at thelast minute for a service agreement. Toavoid that, have the OEM come to yourfacility and do a system audit. Maintain alist that shows each piece of equipmentalong with its warranty expiration date.

How much could a company save by contracting with an ISO versus staying with theOEM?

In today’s economy, many companiesdon’t have the capital to refresh equipmentand are increasingly looking to extend thelife cycle of the equipment they alreadyhave. If you can extend the life three orfour years beyond the warranty expiration,for a total life cycle of seven to eight years,and you’re saving 40 to 55 percent per year(say you choose a $450,000 to $600,000service contract with an ISO versus a$1 million contract with the OEM), thetotal savings are substantial.

How is working with an ISO different thanworking with an OEM?

There is a perception in the marketplacethat OEMs offer better service. That mayhave been true 10 years ago, but it’s nolonger the case. Today, ISOs have all thetools they need to offer the same servicesas OEMs. In fact, many OEMs use ISOs assubcontractors to deliver their services.Because OEMs use multiple partners,clients will often see many different engineers working in their data centers. An ISO, on the other hand, will often assignone or two engineers to the account. Thisway, the engineers become extremelyfamiliar with your equipment and are ableto provide consistent, quality service.

In addition, they often have better andfaster access to a wide range of parts. AnISO becomes a single point of contact,which is attractive to an IT manager whodoesn’t want to deal with multiple vendors.This also eliminates finger pointing. Insome ways, ISOs are not much differentthan OEMs: They have 24-7 call centers,they offer the same level of training, thesame knowledge base and the same service protocols as large OEMs. However,service is the ISO’s core competency,whereas the OEM’s primary focus is onmanufacturing and selling new equipment.

What are the main points to consider whenpurchasing hardware maintenance services?

Again, price is not the primary differentiator. You have to ensure the company you’reevaluating has a quality reputation. Reviewits financial status and size, volume of contracts and customer base. Most important,however, is the relationship. You have to becomfortable with the provider and be ableto trust it. Carefully review its referencecustomers in your geographic area. If youhave multiple locations, make sure it hasfacilities across the country and/or aroundthe globe to ensure a quick response evenin remote locations.

Evaluate the quality of its engineers andtechnicians. Will the same people respondto your service calls each time? Does theprovider have access to the array of partsneeded for compatibility with your multi-platform environments? Is it willing to signa nondisclosure agreement to ensure theconfidentiality of your information?

Finally, the ISO should tailor its operations to the way you operate your ITdepartment. Flexibility is the key. Everything from establishing parts inventories todeveloping work schedules to determiningbilling frequencies should be implementedto complement your operation and business practices.

ED KENTY is president and CEO of Park Place International. Reach him at (800) 931-3366 or ed_kenty@parkplaceintl.com.