There is a problem with the traditional maintenance model.
Studies have shown that an average company spends a whopping 8.2% of its yearly earnings to cover its IT expenses. In this world in which IT is the cornerstone of all business operations, someone was bound to find a way to profit.
That someone was your average OEM (original equipment manufacturer).
For OEMs, IT maintenance and support contracts represent a significant source of revenue. In fact, according to Gartner, maintenance sales and Cisco support create a $7 billion market by themselves in North America.
However, this is coming at the expense of the companies. Not only are businesses overpaying for IT assets while leaving gaps in the service coverage for integral IT components - these contracts usually don’t deliver on their promises:
The technical support request is generally too time-consuming, awkward, and difficult to navigate.
Because there are no specific contract IDs for all individual IT assets, getting help with any kind of maintenance can seem overwhelming. Most companies will arguably experience a lot of hiccups in every step of the process, from configuring and troubleshooting to replacing a key component in the IT infrastructure.
A lot of organizations also have problems tracking these service contracts. They are finding it challenging to maintain an accurate asset database while making sure coverage is available for different assets within their infrastructure. Lastly, most companies fail in tracking proper credits when devices are shut down from the infrastructure.
To top it all off, OEMs are often rapidly jacking up maintenance prices and introducing End-Of-Support and End-Of-Software updates that make an organization’s IT infrastructure obsolete. Combine all of that and you’ve got yourself an IT-shaped hole that is slowly leaking a company’s hard-earned cash.
The promise of third-party IT maintenance
A study by Gartner revealed that due to high maintenance costs enforced by OEMs, 80% of total IT costs occur after the initial purchase. For instance, they regularly increase hardware maintenance by 15% per year for the first five years. It’s even worse regarding end-of-life products for which maintenance prices can sometimes increase up to 100% annually.
The solution?
Third-party maintenance.
In contrast to the traditional maintenance model, the goal of third-party maintenance is to help companies gain full control over their IT assets and reduce maintenance costs through the implementation of a fully integrated system.
Third-party maintenance providers achieve this by offering services focused on removing complexities in an average IT infrastructure. At the same time, they provide companies with a customer-friendly service that has no problem supporting the complex, modern-day multi-vendor IT environments.
This cost-cutting method, designed by supply-chain and network experts, can assist organizations in making the first steps toward disconnecting from the policy-driven models enforced by OEMs.
The main benefits of implementing a third-party IT maintenance model
Minimizing operational expenditure and cutting costs is the main imperative in the world of business. By leveraging the services of premium third-party maintenance providers, companies can:
- Cut costs: The third-party model helps organizations save 50-80% of funds when compared to the OEM maintenance approach.
- Streamline processes: This model makes it easy to administer procedures and systems that help companies track contracts and their start and end dates, service-level agreements (SLAs), milestones, IP addresses, node names, etc.
- Manage contracts: Companies can edit and delete contracts.
- Decrease workloads: With improved contract optimization and easy database cleanup, the workloads of IT staff will be significantly decreased.
What do the experts say?
Leading IT analysts are aware of the pitfalls of traditional maintenance agreements. Thus, they have recognized the superiority and advantages of the third-party maintenance approach.
Here’s what they had to say:
Forrester Research
Leveraging third-party maintenance solutions unlock longer hardware life cycles for companies. With traditional OEM contracts, companies are under the influence of when OEM decided to discontinue service. Third-party maintenance providers are extending the life of the IT infrastructure, helping companies realize significant cost savings and time from having to implement new systems or upgrades before they are truly needed. In a day and age where IT budgets are already tightly constrained, third-party maintenance is freeing up IT capital to be used to grow businesses.1
Accenture
As our clients look at various ways to optimize their IT cost structure, increasingly, third-party maintenance options for hardware support look like a no-brainer. The quality of third-party support options continues to increase, offering not only significant savings but potential global coverage. Most enterprises want a direct global support model, and as a result, often look to their largest hardware supplier to manage global hardware support; however, no single supplier has a truly global support model. Although these large hardware providers are ideally suited to provide support for their own hardware, the reality is that most companies have a diverse mix of gear (i.e., servers from one vendor, storage gear from another, networking gear from a third) not to mention a mosaic of data center software. The primary supplier will end up using third-party services to support the hardware/ software outside its own brand or in certain geographies where it lacks coverage. This prime/sub-contractor model results in higher costs for the enterprise, and potentially lower service levels. This begs the question, why not go to a third-party maintenance option directly rather than rely on the primary OEM?2
What do these services providers generally offer?
A third-party maintenance provider first completes a comprehensive audit of the company’s infrastructure and conducts a review of all SLAs.
After that, they use asset management strategies to ascertain whether the company has any essential assets without coverage or if there are any decommissioned assets remaining in contracts.
By using the results from the audit, technical engineers then examine the lifecycle of company IT assets to determine the most-suitable IT roadmap. Some maintenance providers break down the IT structure further into different categories, such as:
- Hardware that should stay under the existing OEM maintenance agreements - things such as complex assets, software subscriptions, and emerging technology tend to be placed in this category.
- Hardware best suited for a hybrid approach with third-party services supported by OEM software updates for bug fixes - assets that are deployed correctly fall into this group.
- Hardware best suited for a third-party maintenance agreement - the assets that end up placed into this category are usually hardware past end-of-support, end-of-software updates, as well as assets that receive network or free software updates.
Generally, when working with third-party maintenance providers, all the company IT assets are covered under a single contract that covers everything instead of multiple maintenance contracts with various vendors.
The same streamlined approach also translates to the tech support center. If any vendor-specific issues need solving, companies can contact every certified technician they require by calling a single number.
The bottom line
There are many things organizations can achieve by switching to a third-party maintenance model. The IT costs alone are worth it, but companies can also receive near-instant tech support and raise the bar regarding operational efficiency.
Many new third-party maintenance firms are paving the new path by identifying bloated IT costs, installing asset tracking systems, and improving the efficiency of IT assets. They help manage all the areas of IT infrastructures in enterprises from the moment they are purchased until the moment they are decommissioned.
When compared with traditional OEM services, the third-party options exemplify transparency while achieving cost savings with an analytical and synergistic approach coupled with high-tier customer service.
In the end, third-party maintenance providers help organizations break away from the traditional way of doing things by giving them a taste of the future - a future that is more flexible, comprehensible, and affordable as opposed to obsolete OEM-driven models.
1. Challenging the status quo on maintenance contracts and refresh cycles to lower costs
2. Accenture Spend Trends Report Q3 2014
