More than 5 years ago the first independent third-party hardware maintenance companies came to Austria. One of the goals was to stand up to the big hardware manufacturers like HP, Dell, Netapp, EMC, Oracle or IBM and to free the Austrian market from its restrictive pricing policy. Today we want to draw a conclusion and see what they have achieved what they still want to achieve.

Yusuf Sar is the founder of and knows the suffering of third-party maintenance companies especially in Austria. “Austria is very special with the maintenance of Server, Storage or Networks, because the companies are so used to their shackles that they consider our offers unrealistic. How can a maintenance company, like my company, offer a maintenance contract with better or at least the same quality at a price that is up to 40% cheaper? I feel like a charlatan just because the Austrian companies only know the overpriced manufacturer prices with the most necessary service.. But I’m the good guy in this game! “

Fortunately the perception has changed a bit in the last years. At least the big companies have already jumped on the third maintenance bandwagon. They have understood that the interests of manufacturers are different from hardware maintenance. A manufacturer like EMC, for example, thrives on hardware production and sales. They only run the maintenance business until a new model comes out that replaces the old model. The life cycle is often 3-5 years and during this time they can use their overproduction as a spare parts store for the maintenance business. Of course, the goal here is the optimal use of production. The End of Life data is calculated on the basis of stock levels..

In contrast, a pure maintenance company is more interested in maintaining the existing infrastructure, because this is where its revenues lie. A manufacturer-independent maintenance company buys the necessary spare parts based on the existing market and manages them with a sophisticated logistics system so that they always have the most important replacement equipment in the right place. Here it also becomes clear that the larger the maintenance company, the lower the prices they can offer. You can spread the risk not only by the quantity of manufacturers, but also by the high number of serviced devices. All they need now is the right pool of experts and technicians to offer a high-quality and cost-effective maintenance service that hardly any manufacturer is interested in keeping up with.

So why aren’t third-party suppliers already dominating the market? There are many reasons for this and some are of a psychological nature.

  1. The manufacturers have built up very good partner models that allow IT service providers of all kinds to simply sell their maintenance services without having to build up their own know-how or take any risks.
  2. When purchasing hardware often a 1-3 year maintenance contract is purchased, which costs the manufacturer as good as nothing. The first failures usually occur only from the 3rd year on.
  3. Once the customers have signed a maintenance contract with the manufacturer, they usually do not change their decision even if the prices increase when the contract is extended, because the effort to find new maintenance partners is too high. In most cases, only the IT service providers who are already active in the company are included in the tender anyway, all of whom fall back on the same partner model from the manufacturer. This means that the partner who has the highest status with the manufacturer (e.g. GoldPartner HP) receives the order because the prices are linked to the partner status. Maintenance third party provider are rarely included in the tender because they do not have partner status.
  4. Well-known maintenance companies established on the market have long been using third-party maintenance companies in the background to increase their contribution margins with end customers. They clearly do not pass on prices to customers because they want to make more profits and do not want to jeopardize their partner status with the manufacturer and thus their hardware trade.
  5. Customers still believe that more expensive is better and in reverse cheaper is worse. No IT manager would switch to a new unknown maintenance partner for a few percent discount. Hardly any IT manager believes that a radical reduction in prices does not also affect quality..

As you can see, there’s still some persuasion to be done. Companies, like, fight relentlessly for the customer by working not only with one, but with all major third party maintenance companies in Europe to find the best quality at the best price for the customer. “We have powerful opponents, but if we can win the trust of customers, we can show them what is possible. Many large companies have already understood and changed. Of course, these customers are often preferred because they can generate high sales. But I would like to focus on small and medium-sized enterprises, because this is where the greatest mismanagement is to be found. Although 70% of the market is SMEs, nobody cares about them. It seems to be too difficult to build a profitable business with many small companies. With my business model it makes no difference whether I serve big or small customers, the main thing is that I can win their trust and make them realize that I really want to help them. That is probably the biggest challenge: to make people understand that we can be trustworthy, serious, reliable and affordable at the same time”, concludes the managing director of his monologue and sums it up for the whole industry.