5 minute readTactics to Control Your Maintenance Spend and Fund Other Initiatives
Maintenance is the foundation of risk mitigation in the technical business world. It would be very risky to implement any technology without an effective method to handle equipment failure. Any failure can impact the operational stability of a system. Most businesses expect systems to be operational with minimal downtime.
Business projects, technical projects and maintenance projects compete with the basic housekeeping and administration costs for every dollar in your budget. Warranty and technical support for your data center are those rare frustrating things that eat up budget but are not often used.
An active IT organization of medium size can spend a significant amount of money every year on OEM Maintenance. Servers, storage, and network equipment for voice, video, and data are all candidates for maintenance.
Looking at the strategy, maybe there are better ways to approach maintenance that will free up cash every year. Using that money to fund upgrades or enhancement projects to replace older equipment would then reduce the total maintenance costs.
Let’s consider a few facts of maintenance:
1) The OEM offers maintenance for equipment
2) The cost of maintenance from the OEM increases as the equipment ages
3) Electronic equipment typically fails early or late in its life
4) OEMs do not want to maintain older equipment and will not support it after EOSL
5) TPM offers of maintenance are usually considered later in equipment life
Complicating matters is that there are no sure ways to predict the life expectancy or failure rates of equipment. MTBF is not a good measurement to use because it’s just an average of time from multiple failure/repair cycles. Service life is another consideration, but it is also flawed. A missile may have an incredible MTBF of a million hours, but it has a service life of around 4 or 5 minutes.
Have you ever considered why maintenance for new equipment is typically acquired from the OEM at the time of purchase? Maybe the convenience, maybe the expectation that the OEM will take better care of defective units, or maybe it’s just easier. Regardless of the reason, this is the area that is worth questioning. If spares are available, is there any reason to pay the OEM more than an independent maintenance provider to do the same thing?
The OEM always offers maintenance for new equipment and is usually interested in getting customers to commit to three or five years at the time of purchase. Sometimes the OEM will offer a small discount, but they tell you the big savings is the pricing lock for the term.
Some will tell you that maintenance fees for the OEM fund the development of new equipment, but do they really? As businesses try to focus on their core strengths and eliminate inefficiency, there could come a day when the OEMs no longer offer maintenance, leaving it to those that specialize in it and make it smooth and efficient for the customer.
Many times, when the OEM renewal comes up, there is significant sticker shock because of the price of maintenance for equipment that is three to five years old. The OEM will tell you that they have to charge more because they need to maintain spares and they need to maintain technical talent that can troubleshoot and support the older equipment. Maybe that’s just a sign of their inefficiency?
So what can you do differently?
First, don’t pay to cover equipment that included a long-term warranty when you purchased it. Sometimes an OEM will offer extended warranties as a promotion. Once you have one, why pay maintenance on the device? Many times, the OEM will miss this and offer you maintenance anyway.
Second, don’t pay to cover the equipment you are going to replace. If you’re starting a project to replace equipment, and have already purchased the replacement equipment, then move the old gear off of the OEM maintenance contract and over to your independent maintenance provider. The savings will offset part of the replacement cost.
What if, when considering the purchase of new equipment, an RFQ for maintenance was also sent out? What if the OEM and a TPM bid for the same service? Would there be savings?
This could save you 30% to 70% off the cost of maintenance each year. If your maintenance went down by 50% this year, what project would you spend the savings on? Even if you did one year of OEM maintenance and then switched to an independent maintenance provider, your year after year savings would really add up.