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I recently had lunch with Bill D., a senior vice president of a major regional savings bank. I've known Bill for almost five years. During this time, my firm has submitted annual service and maintenance proposals for his bank's item processingbranch and IT eQUipment with estimates we believe were lower than what he was paying. Six months before our lunch, he called to tell me the bank decided to accept our latest proposal.

"Would you believe that we were hit with increases ranging from thirty to fifty percent every year from the various manufacturers of our equipment, and the service got worse each year," he said. "And before you ask why we stayed with them for so long, bear in mind that my bank's management has a policy of going with the 'safe choice' whenever possible."

THE FINAL STRAW

He explained that each year, the three manufacturers whose equipment the bank operates sent less experienced field personnel to service his equipment. Service had slipped and downtime increased alarmingly. The final straw was hearing from one of the manufacturers that it was time to upgrade to a new platform. This meant a major investment in equipment or skyrocketing maintenance bills.

"If I knew then that by switching to a third-party provider I would get better and faster service at a significantly lower price tag, I would have made a stronger argument against selecting the `safe choice,"' he told me.

This is a fairly accurate recounting of a real event. Is this always the case? Do "third parties" always wear a white hat? Absolutely not. Just ask anyone responsible for a financial institution's equipment who has had a third-party provider suddenly close his doors and disappear from the face of the earth, leaving the bank scampering to find a replacement. In fact, many third-party service providers-increasingly referred to as alternative service providers, or ASPs-have caused untold bank executives to conjure up images of ghastly medieval tortures as a result of bad or slow service.

PERCEPTION VERSUS REALITY

Why are manufacturers considered "safe" when it comes to service? First, there is the obvious corporate rationale: "No one ever got fired for buying from the largest, best-known company." Than there is the perception (in some cases misconception) that the manufacturer knows more about the equipment than anyone else. Technically, this should be the case; unfortunately, the young service technician barely out of his teens who is learning his craft on your time is a long way from the industrial designer and mechanical engineer who built the machine.

Another reason many financial institution administrators retain the manufacturer's service arm is what I call the "home owner syndrome": like new-home buyers, they feel secure knowing that the "builder" is there to take care of any unforeseen bugs or problems that may crop up after a new system is installed.

Some bank executives are no different than many of us: they want the newest, "hottest" equipment on the market, and staying close to manufacturers on the service level helps ensure their receiving the latest news flashes regarding cutting edge technology.

INSTITUTIONS ARE UNDER PRESSURE

I don't dispute the fact that some of these rationales are sound, while others cater to personal preferences. However, at a time when financial institutions are under pressure to improve ROI, security, risk management, customer profitability and shareholder value, management must be sure that every decision-ineluding those relating to equipment purchase, maintenance and service-is the right one.

One could argue that having been on the ASP side my entire career, I have a slanted or biased view of this issue. Perhaps, but years of exposure to virtually every possible service scenario in the industry have given me a rare insight into the problems and solutions that exist out there. That experience has also shown me the tremendous strides ASPs have made professionally and technologically in that time.

Consequently I can offer five good reasons for selecting a qualified ASP the next time the question of equipment service and maintenance arises. You'll note I used the term "qualified ASP" Selecting the wrong company for the job is worse than selecting no one. The downside of retaining an incompetent, inexperienced or unreliable vendor is well understood and does not require any explanation.

FIVE REASONS TO CHOOSE AN ASP

1. Price: The fact is that ASPs traditionally charge between ten and fifty percent less than manufacturers for the same service and maintenance programs.

2. Experience: While manufacturers often assign "young talent" to highprofile customers, ASPs often retain older, more seasoned technicians on their service staffs. The irony is that, in many cases, these experienced pros are either retired manufacturers' techs or experienced service people who were laid off in lean times because of their higher salaries.

3. Flexibility: Manufacturers too often are rigid in their pricing structures compared to more smaller, more flexible ASPs. In addition, ASPs often will accommodate customers who want service at odd hours convenient to their operations, while many manufacturers balk at these requests.

4. Staff Size: In these tight financial times, many manufacturers have reduced the size of their service staffs, spreading the remaining technicians over a wider geographical area. Result? Costly service delays. Conversely, ASPs tend to retain full staffs longer, resulting in "more feet on the street" to service customers.

5. Convenience: I've saved for last what is perhaps the strongest reason for selecting an ASP as your next service provider. Summed up in one phrase, it is "One vendor, one call." Wb,en a qualified ASP walks into a financial institution, he usually can claim that he can service virtually every PC, reader/sorter, ATM and most of the other equipment on the floor. The result is that you, the customer, can call only one company for any required repair or service, rather than relying on three, four, five or more separate manufacturers.

FINDING THE RIGHT ASP

Okay, I've made the case for considering using an alternative service provider. How do you find the most qualified one and ensure you are getting the greatest value from the relationship?

1. Analyze your company's specific needs. Every customer has unique service requirements in terms of response time, favorite (or worst) days or times, etc. Discussing these issues up front with your prospective ASP will help ensure more efficient service coverage down the road. Establish specific levels of service, and request appropriate pricing. With many bank branches now open on Saturday and Sunday, the old service agreements simply won't work.

2. Determine if the prospective ASP can handle more than your immediate requirements. Today, many ASPs go beyond simply providing service: they also sell new and pre-owned equipment, as well as supplies. Plus they are familiar with a wide range of equipment and manufacturers. Essentially, you can have your various departments calling only one vendor, one source of service. A positive effect of this new relationship is that you will now enjoy a greater degree of leverage with your single service provider than you had with multiple national and international manufacturers.

3. Be sure the ASP you are considering has a sufficient number of service people on staff, and that all have a diversity of knowledge and experience with a wide range of equipment.

4. It's smart to consider retaining an authorized service provider who can buy parts directly from the equipment manufacturer. In some cases, service providers even buy the same parts the manufacturer uses directly from the maker of the parts, saving the customer money without sacrificing quality.

5. Ask the ASP what his company will do in the event of an emergency. Can he provide additional technicians if required? Will he become a partner in your institution's disaster recovery planning?

AN INVALUABLE ASSET

In short, the right service provider is an excellent source of high-end service, maintenance and knowledge. His staff is better trained, more experienced and more widely certified than ever before. The bottom line is that he can be an invaluable asset to any financial institution whose strategy is to reduce costs, gain operational efficiencies and realize a solid return on investment.

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