Benefits and Risks Flashcards
Benefits: Direct cost savings
Hardware maintenance is increasingly being considered “nonstrategic IT” spending, resulting in organizations seeking low-cost alternatives to expensive OEM contracts and pricing. TPM contracts can offer customers 50% to 70% savings off net OEM support prices. When this is converted to the percentage off of OEM list, it is even higher.
Benefits: Escaping OEM post warranty maintenance increases
Customers often switch to TPMs when the original warranty runs out rather than renew the OEM support contract, at significantly higher OEM post warranty pricing.
Benefit: Extending the life of IT assets
Almost all of the installed base supported by TPMs post-warranty or after the end of service life (EOSL). This can provide organizations with flexibility to delay upgrade projects, especially when moving workloads to the cloud.
Benefit: Flexibility in contract term
Some enterprises consider flexibility and customized support from TPMs an advantage over OEM contracts. For example, OEMs will typically not entertain a contract of less than a full year. A TPM, on the other hand, is typically willing to provide a customer with a short-term contract of, for example, nine months (or less).
Benefit: Leverage against an OEM quote
Not all OEMs are prepared to lower support costs if you threaten to move to a TPM or have a TPM quote in hand. Some will not budge on price, while others will lower their price.
Benefit: Control refresh
Gives IT leaders more control over equipment refreshes
Risk: Software licensing/updates
Despite being hardware-focused, this market has software implications. The lack of clarity/consistent contract language regarding software access right scan be confusing for end users, and special attention to individual OEM policies must be paid .In addition, “software only” bids for firmware/microcode can be very expensive if needed down the road. Also, OEMs can implement a recertifcation fee/relicensing fee if you decide to go back to OEM maintenance. Sometimes, these recertification/relicensing fees are forgiven, sometimes they are credited in part and sometimes they are enforced. It largely depends on the vendor, total spend, future spend and many other factors. Gartner has seen very few customers look to move equipment back to OEM maintenance once it has been moved to a TPM because overall satisfaction with TPMs is good and the savings are dramatic. There are rare cases where an end user has looked to move back to OEM maintenance. Those seen on Gartner inquiries have been because the overall savings have been diminished because of the high cost for firmware.
Risk: Lack of visibility into financial stability of providers
It can be difficult to analyze TPM financials, including overall business size and growth, as almost all TPM companies are privately held. Many of the larger companies have private equity backing.
Risk: Risk of retaliation by their reseller/VAR
VARs cannot provide TPM services according to the rules of engagement of most OEMs. VARs can be categorized as “TPM friendly,” meaning they will partner with a TPM, or “TPM unfriendly,” meaning they will not. Some OEM-loyal VARs or account executives (AEs) at VARs have reported that a customer is using a TPM or purchasing unauthorized secondary hardware to the OEM. When reported, an audit may be triggered.
Risk: Risk of audit by OEM
Some OEMs have audit processes that target the secondary-hardware and TPM market customers. For example, Cisco has been conducting Cisco IOS audits, through management consulting firms such as Deloitte and KPMG, of select customers to discover what Cisco deems violations of Cisco (IOS) licensing policy. IBM has conducted audits through management consulting firms for what IBM deems violations of its firmware/microcode policies.
Risk: Difficulty knowing what a TPM does itself versus what it leverages a partner for
Many TPMs are regional in stature, so the market can be cumbersome to navigate. It is important to know what providers do versus what they use partners for in terms of Levels 1, 2 and especially3 support. In addition, understanding models for field engineering and parts procurement for different technologies across servers, storage and networks, and across geographies, is critical. Some providers operate without having parts/logistics and engineers, and use subcontractors for many technologies. Due diligence is required to ensure you choose a viable, effective TPM provider. This will also provide insight into how many layers are between you and the TPM actually handling Level 3. Talk to references for a TPM that is supporting the specific vendor’s model equipment you are looking to support.
