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Aug 15, 2018 | IN IT Maintenance | BY Reza Koranki
Is OEM Maintenance a Conflict of Interest?

Who provides your network support? Is it the same company that provides your equipment? For many companies, the answer is Yes.

If the company’s name is on the box, then that company must provide the best support, right?

Before you answer that question, let’s think about a few things.

First, this article focuses primarily on hardware maintenance. For software support, it is common for companies to look outside of the developer provided as part of the license agreement.

Companies like Rimini Street and Spinnaker Support are built on this model. However, it is important to work with a company that both values and respects intellectual property. Recently, Rimini Street was found guilty of violating copyright laws on 93 of Oracle’s products.

1. Is your builder also your inspector?

When you build a new home, the builder is contractually and legally required to adhere to a set of rules, standards, and regulations. Most do not understand precisely how these limits are enacted nor would they immediately recognize it if the builder failed to comply.

That’s why you hire a building inspector.

Building inspectors understand the rules, best practices, regulations, and even contractual language that rule the construction industry. These experts also have the knowledge and experience to recognize shortcomings immediately.

Honesty is a very expensive gift. Do not expect it from cheap people. – Warren Buffett (Click to Tweet)

As the purchaser of the home, you have expectations.

You expect a certain level of quality and for the home to be built using brand new, high-quality materials. You expect the features of the home to function as intended and to stand-up to use for years to come.

You expect a safe, durable home that meets your expectations – even if you do not have the industry-language to spell out clearly, the details of those expectations.

Your building inspector understands how these expectations are translated into industry-language and demonstrated in the construction of the home.  

Now ask yourself…who is responsible for verifying that your network equipment is operating as you expected?

Who verifies that the contractual language of your service level agreements is in your best interest and meets your needs?

Who ensures that both your equipment and support meet the rules, best practices, regulations, and contractual obligations established by the industry?

end-the-it-nightmare

Hint: Your answer should not be the same for each question.

2. What is the primary business of your support provider?

The primary business of an OEM (original equipment manufacturer) is to build and sell equipment; service and support are secondary.

As in most organizations, the secondary business supports the growth of the primary business.

OEM support agreements support the growth of OEM equipment sales.

This is most evident in the setting of end-of-life (EOL) and end-of-service-life (EoSL)dates.

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It is not uncommon for companies to report that the sole reason for the replacement of network equipment is reaching the OEM-mandated EOL or EoSL date. These dates often arrive before the hardware reaches the end of its useful life.

Replacement of functioning hardware not only drives unnecessary spending, but it also increases the risk to the network by integrating a new set of standards and operations and forcing installation downtime.

Maintenance and support costs are widely known to comprise around 70% of the average company’s IT budget, leaving very little room for upgrades and investments in future-ready technology.  - Gartner (Click to Tweet)

3. Do your support cost increases make sense?

As equipment ages, it is more likely to experience failure – a known and accepted fact.

However, is the increased risk of failure consistent with the increase in support costs?

For most OEM-provided support, the answer is No.

EOL and EoSL dates enable OEMs to build predictable revenue by dramatically increasing the cost of supporting aging equipment.

As the equipment ages, the cost of support increases AND the level of support decreases.

Often, software support and software patches are eliminated – leaving the network vulnerable to security threats. In addition, equipment replacement guarantees are reduced as the OEM limits access to EOL and EoSL equipment.

Support of aging equipment decreases by as much as 30 to 50 percent while the price of the support increases by 300 to 500 percent – these figures are inconsistent.

The increased failure rate (caused by the equipment’s age) does not accommodate a three times increase in price and a significant drop in support.

OEM Conflict of Interest

4. Why did you buy new equipment?

Soaring support costs combined with decreasing support often force businesses into purchasing new equipment.

The cost of the new equipment is generally five to ten times the cost of the service level agreement on the aging equipment. In addition to the new hardware costs, there are also new support agreements to sign, which further increases spending.

At each point, OEMs are driving costs up while service, support, and performance remain constant or even go down.

Now, let’s ask the question again… If the company’s name is on the box, then that company must provide the best support, right?

An OEM’s primary business is equipment sales; their entire business model is built to grow that aspect of the company. Providing support is a secondary line of business that enables predictable revenue and drives increasing equipment sales.

While OEM support has its place (especially where entitlements are concerned), in nearly all cases, businesses that leverage OEM support are paying more for less support when compared with high-quality independent and third-party maintenance providers.

billion-dollar-it-maintenance-headache

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