The Financial Benefits of Third-Party Maintenance: Beyond Cost Savings

Organizations with a significant hardware-based infrastructure need cost-effective maintenance. Third-party maintenance (TPM) can help lower those costs, especially for aging legacy equipment that’s too expensive to maintain with the original equipment manufacturer (OEM), if at all. But here’s the thing—the financial benefits of TPM go well beyond mere contractual cost savings. 

With the right partner and a good contract, enterprises can essentially increase their bottom line through multiple routes, such as a reduced carbon footprint through longer lifecycles. The other seemingly non-material benefits also indirectly provide financial relief. And that’s what we’ll explore in this article. 

The True Cost of OEM Maintenance Contracts

OEMs typically offer maintenance and support as separate, additional services. They’re not always included in the price of the hardware. These contracts are expensive to begin with, but their overall cost through the equipment's lifecycle only seems to increase. 

Here’s how most enterprises continuing to maintain their equipment with the vendor end up paying so much more than they had initially anticipated: 

• High renewal costs: OEM support contracts may need to be renewed every year or so, and those renewals can be higher than the initial cost you paid for maintenance. The gist is that OEMs charge a higher price for maintaining older equipment because it’s riskier (it may not even be that old). 

• Shorter hardware lifecycles imposed by manufacturers: Although this tactic doesn’t directly increase maintenance costs, it pushes enterprises to increase their capital expenditure (CapEx) to refresh equipment. Some vendors are proposing that equipment be replaced in as little as three years. 

Stuck in a Refresh Cycle Dictated by your OEM?

• Limited flexibility in service agreements: Another significant cost disadvantage of OEM maintenance is that it’s not as flexible. You can’t pick what’s covered. You must pay for what’s offered. And depending on the expertise at hand, not all companies may need full-fledged maintenance contracts. This lack of flexibility in coverage terms leads to more expensive contracts. 

Cost Savings vs. Total Financial Impact

If you compare the maintenance pricing between OEM and TPM providers, the latter will come out cheaper in most cases. In certain cases, it may even be your only option – using pre-owned or legacy equipment. 

Of course, those cost benefits are great, but the financial benefits are even more profound if you look at the big picture. Here’s how:

Reduced TCO

With TPM, you essentially bring down the total cost of ownership (TCO) for hardware, especially big-ticket equipment like servers. Besides paying for the actual device and any software licenses, you also need to pay for updates, on-site support (for those complex issues), and eventual replacement in case of total failure. You may also need to pay for the equipment’s disposal at the end of its life. 

A flexible, comprehensive TPM service provider like OneCall can bring down the TCO through flexibility by charging only for the services you need. Similarly, all the maintenance services can be bundled in one contract, which makes contract management simple. All that helps you save money every step of the way, so long as your equipment is part of your infrastructure. 

Less Downtime

Another way to look at the financial impact of TPM is downtime prevention. Any critical equipment being out of order means fewer resources at your disposal and, in the worst case, outright downtime. 

Downtime is expensive in every aspect. The latest numbers on the cost of downtime are in the thousands per minute. That may not be the case for every business, but it’s something to consider. 

OEM maintenance also provides this benefit but at a much higher cost. 

Increase ROI

If you view TPM expenditure as an investment and compare it with what you’d spend on OEM contracts, the former comes out with a higher return on investment (ROI). You spend less to get more out of your equipment. You can certainly use it for longer (more on that later). 

Increased Operational Efficiency & IT Agility

Having a reliable TPM provider, like OneCall, leads to more seamless operations as far as equipment use is concerned. There are fewer hiccups with the performance of the hardware, as updates are installed timely. If push comes to shove, the hardware can be replaced just in time to keep your business processes running smoothly. 

Another way TPM helps enterprises increase efficiency is by allowing more vendors to choose from. Companies can take the ‘best of the breed’ approach and embrace a multi-vendor environment with backups for all with the TPM provider. It can reduce dependency on a single vendor for both the actual equipment and its maintenance. 

Extended Equipment Lifecycle & Asset Optimization

Aside from cost savings in yearly operational expenses, TPM saves the most money by maximizing the lifespan of the equipment. OEMs deliberately cut support for their models older than two or three generations to push customers to refresh. The new models may be better performing and advanced, but the existing hardware may be working just fine. However, the lack of support causes enterprises to spend a big CapEx sum on refresh. 

TPM can support equipment that has reached or has already reached the end of service life (EOSL). It allows businesses to continue using equipment for a couple of years or even more, depending on the model and its condition. That delays the CapEx spending by that duration. 

Now, that doesn’t necessarily mean the company saves all that money. It may still need to be refreshed later on. However, those delays in CapEx spending can compound over time. 

Sustainability & ESG Benefits of TPM

A less explored cost benefit, which isn’t exactly financial per se, is sustainability. If not sold or recycled, legacy equipment may end up as e-waste. That isn’t good for the planet and business. With an increasingly climate-conscious consumer base, enterprises risk reputation damage and even fines with a waste-causing high carbon footprint. 

TPM targets the problem at its core by promoting a circular economy. You use the equipment as much as possible and then sell it to another user or have it recycled. This can also help companies meet their environmental, social, and governance (ESG) commitments. 

Sustainability is a big part of the whole TPM support concept, as it helps businesses realize the core principles of circular economy and reduce their emissions along the way. 

How OneCall Helps Save Money 

OneCall, PivIT’s TPM product, is designed with savings in mind—both OpEx and CapEx. With a vendor-agnostic, hybrid-friendly approach, OneCall maintenance offers the flexibility modern enterprises need. Regardless of your enterprise's size, niche, and complexity, OneCall can be molded into a TPM contract that works for you, not against you, unlike regular OEM offerings. 

OneCall provides immediate cost-saving benefits with maintenance contracts often thousands of dollars cheaper than OEM. Plus, you get greater financial advantages like the ones discussed in the long run: the extended refresh cycles, increased flexibility of terms, and reliable backing (with some of the shortest service level agreements in the industry). 

When you get in touch with OneCall, our maintenance experts devise the maintenance strategy that works best for your business. Considering your IT assets, architecture, business model, locations, and vendors, we create a cost-effective maintenance strategy vital to your business continuity plan. 

How The OneCall Team Breaks Down the Best Maintenance Strategy For You!

Are you convinced TPM is the solution for you? Contact us to schedule a consultation!

FAQs

How does TPM compare to OEM support in terms of cost?

TPM is generally more cost-effective than OEM support, especially for older or EOSL equipment. TPM providers offer flexible contracts, which allow businesses to pay only for needed services. On the other hand, OEM support often involves higher, standardized fees.

The actual savings can vary case by case, depending on the equipment in question and the provider. 

Can TPM support multiple vendors?

A key advantage of TPM is its ability to support hardware from various vendors within a single contract. This simplifies support management and reduces the need for multiple OEM agreements.

Can using TPM void OEM warranty?

Going with a TPM during the OEM warranty period could risk voiding that OEM warranty, depending on the OEM's specific terms and conditions. Once the OEM warranty period expires, using TPM will not void any existing warranty. 

OEM warranties can be managed with a hybrid maintenance approach, where the vendor can still maintain under-warranty hardware, and the rest is covered by TPM. That’s the approach of OneCall.

Can TPM improve IT budget flexibility?

TPM enhances IT budget flexibility by providing predictable and often lower maintenance costs.

This allows businesses to reallocate funds towards strategic IT initiatives rather than being locked into expensive OEM contracts.

When is the best time to switch to TPM?

The ideal time to switch to TPM is when OEM warranties expire or equipment reaches its EOSL. Also, you should consider switching to TPM should be considered if cost savings and flexible contracts become a business priority or if you need support for multi-vendor systems.