How to Buy a Smarter Maintenance Contract

Scott Liebelt, SVP and Director of Marketing

 

You need the equipment that runs your business to operate at its highest level. Software issues or broken parts can put your operation at a stand-still; because of this, maintenance contracts and support agreements are a vital part of your equipment’s life. But do you know if you’re getting the best option for your business when you sign on the dotted line?

Many businesses choose the Original Equipment Manufacturer’s (OEM) maintenance contract without questioning whether or not it’s the best fit for their organization. Understanding a service agreement and being able to communicate your needs can save you time and money. In this article, we’ll identify why OEMs want you to choose their plans and some alternative maintenance options to consider for your next maintenance contract.

Why the OEM Wants You to Stay

Typically when a business purchases new equipment, they have the option to add a standard, or sometimes extended, warranty for that hardware. The manufacturers of your equipment want you to purchase their maintenance warranties for a variety of reasons, none of which are necessarily in your best interest.

OEMs make a warranty look good to customers through convenience and this after-purchase promotion is often treated as an upsell opportunity for the OEMs enabling them to increase their profit; keep a customer’s business for the life of the contract; and eliminate third-party maintenance competitors.

For many businesses, these prepaid contracts are unnecessary and added costs that appear cost effective but don’t offer the flexibility of possible alternative maintenance offerings.

Alternative Maintenance Options

Maintaining your equipment so that it provides the optimum output for your business over its service life should be the focus of your maintenance contract. Here are some alternatives to consider when choosing the support agreement that best fits your business.

PURCHASE THE BASE OEM WARRANTY.

Many OEMs will offer a “standard” or “base” warranty for their hardware for a short amount of time, often a one to three year period. If the equipment is a new model or has new software that will require updates as they are announced by the OEM, signing a base warranty to cover the equipment during this early time is beneficial. If the equipment is mission critical, purchasing a third-party maintenance uplift to 24x7x4 support will save you a lot of money while still entitling you to all updates and bug fixes.

 

After the base warranty has expired, this would be the most optimal time to make a full switch to a third-party maintenance provider. The vast majority of firmware updates are released in the first year of a product release and are almost nonexistent after 3 years.

NEGOTIATE WITH THE OEM AT THE TIME OF HARDWARE PURCHASE.

Often, when a business makes the initial equipment purchase, they will agree to the terms and conditions of the warranty or extended support contract. As with anything in a structured service agreement, EVERYTHING is negotiable. As a customer, you have the right to negotiate your maintenance contract with the OEM.

So what should be negotiated? For starters, request software and hardware support costs as separate cost structures. Many OEM’s bundle this cost as a selling strategy but you have a right to see it separately. This will give you more leverage if and when you decide to part ways with the manufacturer. Next, negotiate with the OEM to have access to critical firmware releases for the life of the asset regardless if it is under an OEM support agreement or not. In too many situations, the OEM will lock down firmware entitlements if the customer chooses a different support strategy. This is an obvious effort to eliminate competition and instill F.U.D. (fear, uncertainty, and doubt).

POST-WARRANTY SUPPORT IS ALMOST NO RISK TO YOU.

Coming to the end of your maintenance contract doesn’t mean that it’s time to replace your equipment even if it’s designated end of service life.  This is one of the best times to transfer your support to a third-party maintenance provider. By this time, parts have flooded the market, bug fixes are rare, and experienced third-party technicians have been trained.

Understand Your Needs

Your priority should be to make sure that your equipment is protected. Understanding your business needs will help define what your maintenance contract should look like. While an OEM warranty might sound like the best route, it’s important to understand all of your other options. A third-party maintenance provider is an agnostic option to support the needs of any business during the life their equipment.

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