What are the benefits of extended service contracts?

The goal for any service contract is to ensure that the equipment is working properly at all times during its lifespan and, if it fails, that it is repaired in a contractually-specified period of time. We have found that extended service contracts only provide great value when combined with proactive system health monitoring. Digital video recorders are generally not monitored daily by the end user, and problems are too often found after an incident has occurred and investigations are taking place. Often, as a result of the system failure, the evidence that the equipment was designed to collect and store is unavailable. When health monitoring services are supplied as part of an extended service contract, the system integrator can proactively monitor the system and take steps to resolve problems before the end user even knows there is an issue.

Extended service contracts are very much a win-win for all parties concerned. Naturally for end users they provide real peace of mind, ensuring they have assistance from experienced experts for the life cycle of the product. Equally, for integrators/installers they offer an ongoing revenue stream that helps with long-term business planning. For suppliers, the benefits are clear too. With extended service contracts, solutions are properly maintained, so end users reap the full benefits and will appreciate the quality of the products – which is a key driver for repeat business. There will also be opportunities to provide training to installers and at the same time fewer direct demands on the supplier for technical support. This saves time and money that can be invested in new market opportunities.

We consider preventative maintenance agreements to be an important vehicle for the end user to know their security system is operating properly. With a preventative maintenance agreement, we are doing periodic inspections and continued maintenance thereby prolonging the life of the system, which is a benefit to the end user. Preventative maintenance agreements can also raise the performance of the system. In the case of IP videos cameras, camera domes are kept clean for optimal viewing by the security officer or operator because the systems integrator is inspecting those cameras on a regular basis. Also, preventative maintenance agreements reduce downtown by decreasing costly service calls. From a liability standpoint, the end user can demonstrate to senior management they are taking every measure possible to ensure the safety of employees and the company’s assets. Finally, preventative maintenance ensures that customers have the latest software revisions.

Bringing some certainty to future income and outgoings is usually popular with both suppliers and buyers, especially their bean-counters. Agreements stretching years into the future enable more reliable long-term planning for budgets, resources and staff. Buyers savvy enough to calculate Total Cost of Ownership (TCO) could make better cases to resist the lure of the cheap installation with nasty surprises around the corner. They could make sure they can afford their maintenance for years to come. Integrators could strike better deals with suppliers, and hire the staff needed to service the extended contracts. Suppliers might see a reason to extend manufacture and support of each product if there is foreseeable demand. However, there’s always been the risk that being locked-in can remove the flexibility that buyers enjoy, especially in a volatile world. Suppliers can slack off over time, too, so rigorous quality checks and get-out clauses are vital.

While having an extended warranty can sometimes save you repair costs downstream, it is important to understand what type of warranty the manufacturer is offering. It's rare to find warranties that provide full repair or replacement of all components. Most will have limited clauses. Find out what the warranty does cover and whether it includes labour and shipping. If the cost of an extended warranty is high and you're not sure if it's worth it, you might want to reconsider other factors such as the reliability of the product brand and how durable the product will be. Has it stood up to the amount of use you project at similar customers? What have been their maintenance issues and costs?

We see that, as in the IT industry, the role of software in security solutions is getting more and more important. We also see that integrations between IT systems and physical security systems are required more often. In this respect, it is important that the physical security system is upgraded along with the IT systems, because if it isn’t, it can easily cause miscommunication between systems, meaning security is compromised. To obtain exchange of data between a physical security system and other systems such as SQL Server and interfaces, updating a security system is mandatory. That’s why upgrade assurance in physical security is just as relevant as in the world of IT. Regular upgrading not only ensures all systems communicate correctly, it means that customers always have the latest new features, so their security is always up-to-date.

One of the main benefits is that it gives the end user peace of mind, as they have trust in the relationship established through extended service contracts. From the point of view of the systems integrator and distributor there’s also a potential financial security benefit, as this kind of contract means that any issues will automatically be addressed by them, rather than competitors.