Service Contracts & Extended Warrantees, Part Three

SERVICE CONTRACTS & EXTENDED WARRANTEES - Part Three

by Wayne M. Krakau - Chicago Computer Guide, January 1998

This is the third part of my coverage of service contracts and extended warranties. This article covers the practical evaluation of these services.

In the example I have given in Parts One and Two, all of the problems are real, and are based on actual events that my clients have experienced. (All right, I admit that the trivia questions about the Seven Dwarfs and various movies were exaggerations - but only slight ones!) The object was to show that there is a very large difference in the public perception of service contracts and warranties (extended or initial) and the more complicated situation that exists in the real world.

To evaluate these contracts, you must balance their costs against the cost of downtime. (I know this is obvious, but it has to be stated.) This should include such esoteric numbers such as the loss of customers due to lack of service and delivery, the loss of vendors due to missed payments, in addition to the direct costs of having employees either fully or partially idle.

Another factor that is not often considered is the cost of having in-house spares. Even if you have no technical staff, having the right parts around can mean a large time saving in getting your system back up and running. For servers, for example, if you absolutely have to keep your network up, you can use dual servers. In this rather expensive option, a secondary server with a live duplicate of all of your data just sits there monitoring the primary server. If the primary stops working, the secondary server kicks in. With Novell’s persistent client feature activated on the workstations, your employees might notice a short lag in network response, but will lose no data.

Because of the expense, only a few of my clients use true duplicate servers, but almost all of them use what amounts to a bargain version of the same concept. Most companies can make good use of what I call a "primary" workstation - that is a single more powerful computer used for database reorganizations, month-end closings, and other demanding tasks. I simply add extra RAM chips and appropriate disk controller cards to the machine, upgrade to a high-end network card, and the client has a "primary workstation/secondary file server". The only other requirement is to use external disk and tape drives on the primary file server. Even a "civilian" can be trained to swap the disk and tape drives and run the simple batch file needed to turn the secondary server into the primary.

While this doesn’t eliminate the need for a service contract on a server, it may remove the necessity of purchasing an expensive, response-time specific contract. The computer maker’s inexpensive extended warranty, combined with initial or extended warranties on the tape and disk subsystem - normally a well covered RAID (Redundant Array of Independent Disks) system, anyway - satisfies my clients’ needs.

Spares are also handy for complicated devices such as RAID systems and tape changers. For tape autoloaders (also called changers), response time-based warrantees are often very expensive, so I have the client buy a single, non-autoloader tape drive to use while waiting for the repair of the autoloader. For RAID systems, I have the client purchase spare drives. Various controller cards and even motherboards can also be purchased to avoid having to pay for a high-end service contract.

For workstations, I include the inexpensive manufacturer’s extended warranty unless the client requests otherwise. It may not be very cost effective to get a high-end contract on a large number of similar workstations. It is often simpler to just buy one or more extra workstations (and maybe spare parts, too) and let them sit in storage until they’re needed. Just don’t succumb to the temptation to use them for new employees without replacing them, or you’ll lose your safety margin.

Another factor that may help is to avoid proprietary servers where possible. If some of your workstations have the same motherboards or other parts as your servers, you could use them as a sort of spare parts farm. It is quite handy to be able to cannibalize a workstation to get a file server in a pinch.

The same holds true for the drives in your RAID system. If they are standard (and hopefully high performance) drives, you can get replacements almost anywhere.

If you need to purchase a service contract or extended warranty, make sure you know both with whom you are dealing and what you are actually getting for your money. For instance, I make it a standard practice to reveal to the client when I am working in a joint effort with another firm, whether I am bringing in the other firm to my client or they are bringing my company into theirs.

I constantly find that new clients were, at least initially, unaware that they were dealing with multiple companies when purchasing service contracts. (I’ve also seen this type of hidden multiple-company relationship in sales of cabling, programming, and specialized hardware and software.) Even computer manufacturers aren’t always forthcoming with information on who will actually visit the client site when a call for warranty service is made.

Occasionally, I’ve even been asked to lie about myself and my staff being employees of other firms. I’ve declined, even when it meant losing business. (I am in no way saintly - and have witnesses who can prove it - I just have a conscience. Or, as the Church Lady might say, "Ethics aren’t meant to be followed only when it’s convieeeeeeeeeeeeenient.") It seems to be common practice to lie to the client in these situations. I saw that happen regularly in my old mainframe days. You never knew if a contract programming firm was sending you their own employee, an employee of another company, or an independent contractor.

One of the biggest trends in computing is the increase in partnering of firms to provide for their clients’ needs. There’s nothing unethical about it. It’s been done since the beginning of commercial computing. That practice is even a part of the original definition of the term "systems integrator".

I do, however, have a lot of problems with the idea of hiding the fact that a multiple-company relationship exists. If I send someone to a client, that client has a right to know, from a liability, a tax, and an evaluation point of view, what my company’s relationship is to that person. I don’t want my client to find out that I am using a "third party" firm only after he or she sees an unfamiliar name on the truck. That takes away my client’s ability to evaluate the purchase of services or goods prior to delivery of the service or goods. You must be able to independently evaluate the individual companies within this type of joint effort or partnership to make a valid judgment about whether you are going to purchase a service contract.

Even computer manufacturers aren’t always forthcoming on who is providing warranty service for their products. Exactly what is an "Authorized Service Center", anyway? What are the minimum qualifications to be one? Or, if you buy through mail order, who provides the service? Certainly it’s not employees of the mail order firm.

At the very least, you must find out the qualifications of both the people you will speak to on the phone and those who will come to your site to fix your computers. What is their skill level? How much experience do they have? Are the lighter-weight members of the team backed up by more technicallly qualified staff members? What are the criteria for moving up to the next higher level of technical expertise when a problem becomes intractable?

Finally, remember that vendors are not offering service contracts and extended warranties out of the goodness of their hearts - they need to make money. If their offer seems too good to be true - it probably is! Somewhere, somehow, corners are being cut to create an unrealistic offer. You can’t get effective service from a company that is either unethical or out of business!

Š1998, Wayne M. Krakau