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Service Contracts

Complete guide to choosing office equipment vendors purchasing service contracts.

Whether you need a service contract or not depends on which equipment is critical, and what your vendor has to offer.

Your employees are finally comfortable using your company's new computer system, and you can tell they are being more productive. And even though they're still making copies of their faces on the new copy machine, they're spending much less time standing around, because it's so much faster than that old clunker. You sit back, relaxed, and pick up the phone to call your old buddy, so you can brag about how great your new office equipment is.

But wait -- your assistant runs in and announces that the computers have just crashed! And all you hear on the phone is an awful clicking!

Uh, oh. What now?

That won't happen the first day you install your new office equipment, but no matter how much you spend on it, it's bound to break down sooner or later. Choosing the right service contract is as important as your choice of machines, and you should go about shopping for service with just as much care.

Service contracts are basically insurance policies. The key is to decide what you need and buy only that. This analysis is rather simple. Go through your equipment a piece at a time, and decide how critical each is to the operation of your business. Can you live without it for four hours? A day? A week? If you run a telemarketing firm, for example, you cannot tolerate your phones being out for even two hours because you will lose orders. If you provide computer design services or publish a newsletter, you will lose valuable time if your computers crash and are not restored quickly.

If you decide to go without service contracts, you will save some money, but also take some risk. To help speed repair when you do have a problem, make a list of service people in your area, call them for references, and check them out. Then when the inevitable happens, you will know who to call and have some idea of what repairs will cost.

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If you cannot risk downtime, you can ensure fast repair by purchasing service contracts. But don't feel bound by the terms of these deals. A service contract can and should be negotiated like any other business agreement. Owners should clearly specify the service they want; the best contracts cover parts and labor, guarantee that a service person will respond to a call within a stated time, and provide for loaned equipment if a major repair is needed.

Response time is a big issue. Be sure to indicate whether the serviceman is to show up at your doorstep in two, four, or eight hours, these being the usual standards. (Remember, eight hours may often mean the following day.) Your contract should include financial penalties if the serviceman doesn't make it on time. Penalties range widely but should be stiff. They are usually included only at the insistence of the equipment buyer, and you should insist. If a service vendor won't agree to a penalty clause, then don't use him -- his technicians probably won't show up on time.

Service contracts can be purchased from manufacturers, certified dealers, or independent service firms. Who to use varies with the equipment you buy. For phone systems and copiers, stick with your vendor, since one manufacturer's vendor will not work on another's equipment. Most computer dealers, on the other hand, offer service for all the brands they sell. It's important to ask if the dealer is certified by the manufacturer to perform service, however; if not, you may have to wait for parts and may not get the best repairs.

Third parties may offer cheaper or faster computer service than dealers and manufacturers, and are worth considering. There are many independent firms, such as TRW and Intelogic Trace. Many of them specialize in one technology, though, so make sure you're playing to their strength.

Be sure to shop around. You wouldn't buy equipment from the first store you walked into, and the same goes for service. Compare at least three companies. Ask each how long it's been in business and how many trained technicians are on staff. Make sure the technicians have years of experience working on the brand of equipment you buy. Ask for several long-standing references, and call them.

Beyond these general considerations, there are other factors specific to the equipment you plan to cover. Which machine parts break frequently? What prices are typical? Should routine maintenance be included? Advice on these and other concerns follows.

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Computers

If computers are critical, a service contract is a good idea. The parts most vulnerable to breakdown are the hard drives and floppy disk drives, which store information in the computer. Also vulnerable are the keyboard, power supply, and monitor, in that order, according to Dan Hansvick, president of Logic Plus Inc., in Chicago, which specializes in systems integration and service. Therefore, your service contract should expressly cover these parts.

Before buying a contract, consider whether you need service for every piece of computer equipment. If you have four standalone workstations and all are vital to daily transactions, you cannot afford to have one down.

If you have 10 personal computers linked to a central processor, you will definitely want a contract for the processor. But you may not need to cover the 10 PCs. If you can get along with nine for a few days while one is being repaired, you may want to rely on an equipment warranty instead of paying a few hundred dollars for service.

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