Third-party maintenance (TPM) is a model of hardware support for IT assets, including server, storage, and network equipment. The market for this service has matured substantially over the past decade owing to two main reasons:
First and foremost, the ballooning cost of technology expenditures. A 2020 Flexera survey found that companies are spending an average of 8.2 percent of revenue on IT. CTOs at these firms are under tremendous pressure to reduce these expenses and extend the operating lives of their tech assets.
Which brings us to reason number two: modern tech equipment is quite durable and can function effectively for years and years. But manufacturers limit their service support for a limited window, in part so they can push for pricey replacements. (Like how your mobile provider is also telling you it’s time to upgrade your iPhone.) As such, there’s a huge market for providers who can service equipment, no longer supported by the manufacturer.
Both of these factors explain why third-party maintenance has emerged as such a promising service option. This piece will break down exactly how TPM works, detail some important pros and cons, and identify situations where TPM can really save you money while providing superior service.
What is third-party maintenance and why does it matter?
We’ll answer this question directly, but first a quick bit of history.
Third-party maintenance as a service model dates back to the 1960s, as major computer manufacturers (namely IBM) were reluctant to service systems that included hardware components they hadn't produced. Two other factors contributed to the model's growth: the U.S. government began buying rather than leasing computer equipment and manufacturers began following IBM's lead and "unbundling" service offerings.
TPM really began to flourish in the 1980s, as more and more large companies were creating in-house computer networks and seeking out independent providers to service them. One of the early leaders in the space was Sorbus, which employed 2,200 people and generated $118 million in revenue when it was acquired by Bell Atlantic in 1984.
The same dynamic that produced companies like Sorbus in the 1980s still exists today, and if anything has been amplified. Large organizations that require substantial amounts of IT equipment—think servers, computers, data storage devices, routers, etc.—continue to purchase directly from manufacturers (like Dell, IBM, or Cisco), who offer discounted prices for bulk sales. In the industry, these sellers are known as original equipment manufacturers (OEM).
The purchasing agreements from OEMs typically offer a service level agreement (SLA) that provides some level of maintenance during the duration of the warranty and even into a post-warranty period. This is so-called OEM maintenance, and it's pretty much the default service option for organizations large enough to purchase enterprise IT equipment.
Just like in the 1960s, third-party maintenance (TPM) is an alternative to OEM maintenance in that it involves support from an independent service provider (hence "third party") who can offer a similar level of maintenance and tech support beyond the parameters of a strict warranty agreement.
Why would a business consider using TPM instead of OEM service?
Well, let's consider what OEM maintenance is actually offering.
OEM maintenance is essentially factory service from a technician who knows the equipment inside and out and only uses OEM parts and components that align with the warranty standards. Which sounds great, right? And it certainly can be, but if you've ever had your car serviced at the dealership, you know the drawbacks to this model. It can be hard to get maintenance scheduled exactly when you need it, and service tends to be pretty expensive exactly because they're only using factory-approved parts.
Which brings us to TPM.
Third-party maintenance offers several key benefits:
The through-line for all of these benefits is problem-solving. The market for third-party maintenance developed as a direct result of frustrations clients were having with OEMs. TPM providers have addressed those concerns with solution-oriented customer service.
When does it make sense to use TPM? And when should you stick with OEM service?
Companies often have some uncertainty about TPMs, especially about how the level of service they provide will differ from what they’re accustomed to with an OEM. Though many of the concerns we hear are overblown or rooted in misperceptions, there are certainly some scenarios where OEM service is going to provide a better fit—and other scenarios where a hybrid maintenance model (a mix of OEM and TPM contracts) will be your best option.
Here are some common objections we hear along with a few other relevant variables that should guide your decision-making:
Some OEMs will suggest that working with a TPM puts your assets and business at risk, but that’s obviously not true. You should also ask questions, though, about the specific level of service you’re going to need. As noted above, one benefit of TPM is that providers can often create contracts tailored to your specific needs and budget.
Have more questions? Please don’t hesitate to get in touch.