Why shifting away from OEM support contracts is a better business decision
In the twenty-first century, it’s safe to say that IT hardware has become a commodity. In fact, an influx of new equipment models floods the market seemingly on a daily basis. However, with technology companies focused on new technology, what does it mean for IT organizations tasked with maintaining the status quo?
Key Takeaways
- OEM manufacturers are financially incentivized to prioritize new equipment sales over maintenance, often pricing extended warranties intentionally high, since inventory turnover requires far less infrastructure investment than building out global maintenance and support operations.
- OEMs frequently welcome third-party maintenance providers taking over support responsibilities, since it offloads costly infrastructure like parts logistics, technicians, and call centers while still preserving brand loyalty through the broader hardware ecosystem.
- When evaluating a third-party maintenance provider, businesses should assess three critical factors: reachability (SLA structure and support availability), availability (how close replacement parts actually are geographically), and serviceability (the technical expertise and certification of the engineers who show up to do the work).
- Choosing a third-party maintenance provider with poorly trained support staff or parts stored far away can leave a business worse off than staying with OEM support, making due diligence in the vendor selection process essential rather than optional.
- Outsourcing IT maintenance to a qualified third-party provider is a smart financial decision that reduces hardware costs, improves business continuity, and strengthens the overall customer and brand experience, provided the provider is chosen carefully.
Though I have never met anyone in IT who wouldn’t like the latest and greatest pieces of hardware to add to their company’s arsenal of gear, the reality is that swapping out slightly old for brand new isn’t exactly the most prudent financial approach. Maintaining equipment to ensure that it continues to run is a reality that most of us must live with.
However, maintaining IT equipment for what many see as the long haul is, in fact, counter to that of the OEM market. Many equipment manufacturers have created a world in which replacing a piece of gear is, in many cases, cheaper than maintaining it—extended warranties being purposely priced too high for most to consider.
The reason? For manufacturers, inventory turnover is, by far, their most important goal. It represents the most profit with minimal effort and minimal infrastructure costs—nothing more than sales and shipping. Whereas the maintenance of IT hardware products translates into increases in an OEM’s own business infrastructure: everything from parts logistics and technicians in multiple geographic regions, to call center support, internal process management, service techs, and associated management platforms for warranty work—the list goes on.
Take all that into consideration and the customer is left with little to no choice—at least, so it would seem. However, in this particular case, OEMs are actually happy to pass the maintenance and support off to third-party companies. Although it may impact the bottom line as it pertains to net new sales, the offset of maintenance infrastructure costs paired with the potential of brand loyalty is worth the support of the after-market world.
For end-user customers, however, not all is created equal when it comes to a third-party maintenance and support provider. The issue that many will face comes down to three main categories: reachability, availability, and serviceability.
Reachability is the simple one. What’s the SLA structure that is offered? For instance, if you want 24/365 support, does the company offering that support have people answering the phones all day, every day? Additionally, do they have the right people answering the phones? Having someone take a call who has little to no idea what type of gear one is referring to will have more of a negative impact on support than a positive one. When choosing a third-party support company, make sure the techs are actually certified engineers.
Second, availability is paramount. If a part needs to be replaced, where does that part actually reside? If it’s halfway around the world and five business days away, then the support offered does little to nothing in the case of an emergency. The lesson here is to make sure the parts are stocked within an acceptable geographic distance. And if that’s not an option, at least make sure the company offering support can supply alternatives, such as temporary replacements or on-site spares for high-failure hardware.
Finally, there is, of course, serviceability. The engineers that show up to repair, install, or run diagnostics on the company’s critical equipment need to be knowledgeable regarding the particular OEM. When deciding which third-party maintenance company to use for service, make sure you are asking the right questions. For instance, “Can you describe the on-going certification and education process of your service engineers? Will we have a dedicated primary engineer? Are your engineers trained in all aspects of IT hardware? Do they understand network infrastructure to ensure business integrity?” Asking your potential provider these questions, and ensuring their answers are true, will surely save your company the time, money—and potential downtime—you would otherwise risk as a result of working with unqualified service engineers.
In all, outsourcing third-party maintenance and support is a smart and economical decision to make. It can save an incredible amount of money by reducing all associated hardware costs, and it can lead to improved business continuity, resulting in a better brand experience for all. The moral here is simple: choose wisely.
FAQs
Why do OEM manufacturers prefer selling new equipment over maintaining existing hardware?
OEM manufacturers prioritize new equipment sales because inventory turnover requires minimal infrastructure investment beyond sales and shipping, while maintaining hardware long-term requires building out extensive parts logistics, regional technician networks, call center support, and internal service management systems. This is why extended warranties are often priced high enough to make replacement seem like the more financially sensible option for customers, even when the existing equipment is still functional.
What should businesses look for when choosing a third-party maintenance provider?
Businesses should evaluate three core factors: reachability, meaning the strength of the provider’s SLA structure and whether knowledgeable, certified engineers are actually answering calls; availability, meaning how quickly replacement parts can reach your location without being stuck halfway around the world; and serviceability, meaning the technical expertise and ongoing certification of the engineers who will actually perform repairs and diagnostics. Asking direct questions about a provider’s engineer certification process, dedicated support structure, and hardware expertise before committing helps avoid costly downtime from an unqualified provider down the line.
Why are OEMs often willing to let third-party companies handle maintenance and support?
OEMs are generally willing to pass maintenance responsibilities to third-party providers because it allows them to avoid the substantial infrastructure costs associated with global parts logistics, technician networks, and long-term support operations, while still benefiting from brand loyalty tied to their hardware. This arrangement works in favor of end customers too, since qualified third-party maintenance providers can often deliver more cost-effective, responsive support than an OEM’s own post-warranty service structure, which is typically priced to discourage long-term equipment use.
Is switching to third-party IT maintenance a financially smart decision?
Yes, for most businesses, switching to a qualified third-party maintenance provider is a financially smart decision, since it reduces the inflated costs associated with OEM post-warranty support while extending the useful life of existing hardware. The savings come with the caveat that provider quality matters significantly. A third-party company with poor reachability, distant parts availability, or undertrained engineers can create more problems than it solves. Choosing a provider that meets rigorous standards across reachability, availability, and serviceability delivers genuine cost savings and improved business continuity without sacrificing support quality.
