Third-Party Maintenance: Common Use Cases
ReluTech provides post-warranty support (aka third-party maintenance, or TPM) for hundreds of companies throughout North America, and we talk to customers on a daily basis. Over the years, we’ve heard many specific-use cases for which TPM makes the most sense.
Obviously, the common theme is cost savings. Customers want to spend less on maintenance (something that’s necessary but doesn’t bring any new business value) to free up money to invest in strategic projects. Within the ability to save 40-80 percent on renewals, though, we’ve found nine incredibly common use cases that are worth considering as reasons for your organization to explore third-party maintenance.
Here they are in no particular order:
Short-Term and Flexible Contracts
Customers have realized for a while now that OEMs like Dell EMC, NetApp, and Cisco will artificially raise the price of maintenance renewals. Now, they’re also starting to realize how inflexible the lengths of those renewal contracts are.
Maybe you recently purchased Pure Storage and need to migrate data off an EMC VMAX array. The data is so critical that you want to make sure you’re covered on both ends, so you ask Dell EMC for a short-term contract to cover you while you migrate. In many cases, the month-to-month option (if it exists at all) is even more inflated than the 1-year renewal that was previously quoted. With third-party support, you can often get a 6-month, 3-month, or even month-to-month contract without paying a huge premium.
And in the case of ReluTech, we may even be able to buy back the hardware when you’re ready to decommission it entirely. Contract flexibility is one of the major ways companies look to reduce their maintenance spend with third-party maintenance.
End of Service Life (EOSL) Equipment
Lately, we’ve been quoting support for a lot of Hitachi AMS storage systems. This is because HDS has begun the process of notifying customers that that particular product line will soon be EOSL. It’s a solid platform, though, and many companies either want to extend the life of the system simply because it’s running so well, or they know the process of migrating off of it will be complex, meaning they need to buy more time. Using third-party maintenance for EOSL equipment is a pretty obvious solution, and we see plenty of opportunities involving this legacy gear.
Equipment Is Not Fully Depreciated
This is one of those situations where accounting really dictates the refresh cycle. Many companies use a set number of years as their depreciation cycle, and every asset (IT or otherwise) really needs to stick around that long in order to be fully depreciated. Otherwise, the company takes a write-down, which has implications that CFOs don’t want.
Sometimes, an organization will purchase new equipment that comes with a 3-year warranty when its depreciation cycle is 5 years. In this case, refreshing after Year 3 is truly not an option, meaning the company will have to bite the bullet and renew with the OEM… or leverage third-party maintenance in order to fully depreciate the assets without paying outrageous OEM pricing.
Organizations often hold on to equipment so long that it’s no longer supporting critical data, and they’re self-supporting by buying replacement parts whenever something fails. While this can be a viable option in some cases, an organization may simply be doing this because OEM renewal pricing was too high to consider.
Sometimes, these same organizations are shocked to see ReluTech’s price for the same equipment, especially if it doesn’t have to be 4-hour on-site support. Once they do, they realize that a next-business-day maintenance contract is easily affordable, gives them access to certified engineers in case there’s a major issue, and is much less of a hassle than having to source individual parts every so often.
When companies go through a technology refresh, they face a decision on whether to trade in the old equipment or to repurpose it for another environment. As a hardware wholesaler and third-party maintenance provider, we’re big fans of the repurposing option. After all, the equipment is worth more to you—already set up and operating in your data center—than it is to anyone else in the world. Repurposing non-current systems helps you avoid overspending on growth. When you repurpose the equipment for test/dev, DR, or storage tiering, saving 40-80 percent with third-party support is a no brainer.
(By the way, if the OEM has a trade-in program, which is becoming a less common occurrence anyway, then it may appear that you’re getting a great deal of value from your trade-in. However, this may only be because the OEM or VAR is moving money around to make it look like your trade-in is worth a nice chunk of change.)
The Blended Contract
Sometimes, companies very carefully and strategically distinguish systems and environments according to the purpose they’re serving. For instance, a company may determine that mission-critical applications reside on certain servers and storage, whereas anything else goes on a different (and probably less expensive) group of machines.
When it comes time to renew maintenance for both environments, the company can move the less critical systems to third-party maintenance without hesitation while still enjoying the benefits (i.e. access to software updates) in the mission-critical environment. (This use case looks a lot like the “repurposing” use case above when the non-critical systems are a generation or two older.)
Disparate Systems (Co-terming)
As previously mentioned, OEMs are often inflexible when it comes to contract terms. Maybe you have an HPE ProLiant server environment, Cisco networking, and NetApp storage. Three different vendors; three different expiration dates (at least).
In addition to saving money, you can make your life easier by putting all systems that exceed their initial warranty period under the same support contract. ReluTech will allow you to co-term by providing short-term contracts (or extended contracts) where needed so that you only have to worry about renewals once a year.
Mergers and Acquisitions
We talk to companies all the time that have acquired another company and, as a result, inherited a whole new data center full of unsupported equipment—often not even knowing what they have. Sometimes, the equipment is unsupported because the acquired company went into a spending freeze prior to the acquisition, meaning they couldn’t even pay for maintenance renewals.
The parent company usually wants to put the newfound infrastructure to good use—whether that means continuing in its current function or being repurposed for another environment. In these situations, any maintenance bill at all may be somewhat unexpected, so companies certainly don’t want to go back to the OEM, overpay for high-priced renewals, and have to backpay for previous months of non-coverage. Instead, they look to trusted, competent third-party maintenance providers to support the inherited systems.
This is one of the top reasons we hear among customers seeking post-warranty support. Some customers aren’t sure if they want to refresh to another platform, refresh to the current generation of the same platform, or maybe even move to a public cloud or colocation (colo).
Uncertainty causes many companies to put off a refresh decision while they do more research and have more internal discussions. Renewing at a high price for a full year with the manufacturer just doesn’t fit that need. Post-warranty support, on the other hand, allows customers to buy time as they determine their next major refresh.
As you can probably tell, there is some redundancy and overlap in some of these use cases, and as mentioned before, the primary motivation is almost always saving money. It can be helpful, though, to see where other organizations frequently start to see third-party maintenance as a viable option. If any of these use cases sound familiar to you and your organization, ReluTech can help. We can even help you determine which systems make sense for third-party maintenance and which don’t.