Resellers cash in on in-house fixes

The modern computer is a highly complex system, and like any other electrical device, it is liable to go wrong at some point in its life. No matter how well designed or put together, there is no guarantee that any computer system will run for ever.

And in the same way that your car will break down when you are on the way to an interview, or the television will die just as the World Cup final is about to start, computers often fail at the most inconvenient of times.

Today, any business that does not have some form of hardware maintenance for its computer equipment risks suffering serious consequences, should a key item of hardware become unusable.

When a piece of hardware fails, customers want it repaired or replaced as soon as possible. Most importantly, they do not want to be inconvenienced by having to return faulty equipment to their suppliers. Peace of mind in this area usually means having some form of on-site hardware maintenance contract with suppliers so that equipment faults are dealt with in situ by engineers visiting a customer's premises.

For resellers, there are a host of opportunities in this area if they can identify the best way to provide on-site maintenance for their customers. There are two ways that resellers can approach the problem. They can employ their own engineers with suitable equipment and vehicles for providing on-site maintenance, or sub-contract the work to a specialised hardware maintenance company. There is a third potential solution that we will look at later.

Is the investment worth it?
The main advantage of providing an in-house maintenance service is that you have full control over the service and the costs. In addition, it enables resellers to maintain a fairly close relationship with their customers.

The downside is that implementation can be rather expensive, with a high capital outlay required for items such as tools and transport. As a result, you may find that the set-up costs for such a service are prohibitive.

Reseller 1-2-1 Euro Technology has successfully taken the in-house maintenance service route. Jane Dennis, the company's sales and marketing director, said: "We offer on-site maintenance contracts to a number of our clients, particularly where we have supplied the hardware. Our contract involves the maintenance of the network and the management of warranty repairs through manufacturers.

"1-2-1 does not usually support any third-party kit, but if there are any very specialist products that we supply, then 1-2-1 will work with the manufacturer to provide appropriate support. The service we offer is provided by our own team of well-trained engineers who possess a variety of skills including mobile computing, wireless local area networks, networks and server and PC configuration. We offer specialised engineers to match the specialised markets in which we operate."

The decision on whether or not to offer your own on-site maintenance depends on several factors. For example, the size of your customer base and the geographical spread of systems in the field can dramatically affect the economics of such an operation.

Generally, a fairly small, local group of customers with similar systems is far easier to cater for than a large, diverse set of systems. But if the customer base is too small, then resellers face the prospect of not having enough clients to keep in-house engineers busy.

Managing the service
According to Dennis, the key to success is in the proper management of the service. "The challenge of using in-house support is to ensure that our engineers are familiar [with], and trained to meet, the changing needs of today's IT requirements. We meet this challenge by ensuring our technical team attends regular product briefings and training sessions."

She claims that as long as the contract is properly managed, with good communication between the customer and her company and a good understanding of the site by the technical team, on-site hardware maintenance can work profitably.

"You have to have a well-managed technical team and a company that is focused on specific areas. There is no point in trying to specialise in all areas," she said.

One of the other main benefits of providing your own service is the strengthening of customer relations. "On-site maintenance places us in a better position to offer proactive advice and recommendations. It enhances our overall service to the customer and potentially increases turnover. Clients will buy products from a supplier that can demonstrate its ability to support the products," said Dennis.

Providing your own on-site maintenance is fine if you can afford the time to manage it properly, but many resellers find that it is far easier to subcontract such a service to a third-party maintenance company. The key point is to ensure that the subcontractor is well established and fully qualified to support the systems that you sell.

Martin Prescott, managing director at BigRed Computers, has tried several third-party companies, but not always with the best results. "It is important to remember that engineers from a third-party are representing the reseller at the customer site," he explained.

"In the past, there have been one or two occasions when an engineer has basically slagged us off to the customer, claiming that we use inferior system components or that build quality is not up to scratch. Naturally, this is not true, and often it is a case of the engineer trying to cover up his own incompetence by shifting the blame onto the reseller," he said.

Prescott insists that any third-party that allows its engineers to criticise a supplier in such a way should not be in business. "We ditched one engineering company for precisely that reason," he said.

Reclaiming the benefits
However, provided you use the services of a decent hardware maintenance company, there are some obvious benefits. "We subcontract all of the on-site warranty repairs on our bog-standard workstations and SoHo [small office/home office] systems, but for servers and high-end systems we tend to service them ourselves. The main benefit is that we can offer on-site hardware support on a national basis."

Prescott claims that the other major benefit is that BigRed knows exactly how much it will cost to provide on-site warranties. Typically, it costs between £20 and £25 per system depending on actual specification.

Like BigRed, other resellers find that it is best to mix and match in-house resources with those of a subcontractor, as and when necessary. Chris Swann, director at Swanntech Europe, feels that this gives them the best of both worlds.

"When new systems are supplied, the option is given to the customer for us to provide on-site maintenance cover. The cost is usually in the order of 18 per cent of the invoiced cost when new. The sites we cover with our own staff are normally within two hours' drive of our office. Outside these areas we may use third parties to provide cover on our behalf," he said.

"However, you need to be very confident that the maintenance company understands your customer's requirements, otherwise you can end up with very unhappy users, which does nothing for your credibility in the market," he added.

Both Swann and Prescott agree that it is vital that systems are built using high-quality components and that proper care is taken over the build process. "We always use the very best components that we can source and make sure everything is soak-tested and inspected prior to delivery," said Swann.

"Ideally, we will deliver hardware using our own transport to ensure no damage is done by an outside delivery firm. Most carriers do not understand the words 'fragile' or 'handle with care', so we try to avoid using [carriers]," he added.

Prescott said: "It's certainly a false economy using cheap components to build systems. You need to be sure that systems will work when they are unboxed by the customer. The less dead-on-arrival systems you have, the better, even if this means that you may be slightly more expensive than your rivals."

The third option holds much potential. As an alternative to on-site maintenance through subcontractors, some resellers have opted for an insurance scheme which covers the cost of sending their in-house engineers to a customer's site.

BigRed is actively exploring this option. "For a relatively small premium of about £20, we can insure a system so that in the event of an on-site visit, we can send out an engineer and the expenses associated with the call are subsequently claimed back from the insurance company," said Prescott.

"If a customer in the north of Scotland has a problem, we can dispatch one of our head office-based engineers, knowing that it will not cost us anything apart from the engineer's time," he added.

Prescott is taking this concept a step further by paying key freelance engineers in different parts of the country a small monthly retainer to provide engineering cover in their local area.

"If a customer has a problem that requires a replacement part, we send out a new component to the engineer on an overnight carrier for delivery before 9am. This approach is very efficient, so we are aiming to expand this method, hopefully to cover the entire country," he said.

Establishing an on-site hardware maintenance service is no easy task, whether you try to do it with in-house resources or subcontract to a specialist engineering company. But as businesses become more reliant on their computer systems for their day-to-day operations, the need to provide on-site maintenance is becoming an essential element of supplying systems.

Dealers must be able to offer proper maintenance, especially when it comes to providing businesses with mission-critical systems. If you want to build a loyal customer base or enhance your reputation, then maintenance really is something you need to address.

Conclusions:

• On-site hardware support has become a pre-requisite for businesses buying systems. Therefore dealers are often obliged to offer it.
• Using in-house resources can be a short-term solution but is also very expensive.
• Very few dealers can offer a nationwide service using their own resources. Freelance engineers on a retainer is one option.
• Sub-contracting work to third-party hardware maintenance companies can often be the ideal solution if the customer is outside your region.
• Insurance schemes can be a viable alternative in certain circumstances.

Case study: Response Computer Maintenance

As far as Cliff Wimpory, service manager at Response Computer Maintenance, is concerned, most resellers are better off subcontracting their on-site service to a third party.

"Response started out by providing on-site maintenance for leading vendors such as Elonex and Compaq," said Wimpory. "Over the years we have expanded our operations to include many dealers and distributors, which now account for about 60 per cent of our business. With more than 65 engineers spread all over the country, we are in a position to offer eight-hour or even four-hour response times to customer problems, no matter where they are located."

Most dealers totally underestimate the cost of using their own engineers to provide on-site support. While many start off with good intentions, they frequently fall by the wayside.

"A good PC engineer will be on a salary of at least £20,000, and when you add associated costs such as a car, petrol, essential equipment and training, it could easily cost more than £40,000 a year to keep someone on the road. As a result, you need to be selling an awful lot of systems that cost about £1000 or even £2000 each to pay for just one field engineer," explained Wimpory.

Specialist hardware maintenance companies also have an advantage in that they are geared specifically towards providing on-site support.

Wimpory said: "We have all the necessary stock control, invoicing and contract management systems already in place to efficiently manage our operations so that the dealer does not have to worry about such things."

However, some dealers are a little wary about allowing a third-party company access to their customers, and Wimpory recognises such concerns.

"Response is contracted to do a very specific job: to maintain hardware and no more," he said. "Response does not sell any hardware or software or provide consultancy. Therefore we pose no threat to the dealer's relationship with the customer."

More importantly, because its contract is with dealers, they can choose to what level they want to get involved in providing on-site support. Some resellers like to be the first port of call when a customer has a problem and then contact Response when a field engineer is required.

"Other resellers simply let their customers ring us direct and then Response handles all aspects of the call," said Wimpory. "Basically, the dealer can be included in various aspects of the loop and Response is happy to accommodate their requirements."