There are many things to be checked before entering into a contract with an office equipment vendor. Always remember that it is not easy to get out of a contractual agreement, especially since it will typically involve the participation of a financial institution as well.
This means that a company will be pretty much locked into a deal - for better or worse - that could run for anything from three to five years.
Obviously, the primary concern is the purchase price. But, there are other aspects that could rapidly erase whatever perceived saving was achieved in that area. A good rule of thumb is this: if it looks too good to be true, it probably is!
With machines costing anything between R10 000 and R150 000, office equipment is a major capital expense and few can afford to pay for it with cash upfront. A contract, although slightly more expensive in the long run, allows the customer to spread the impact on their cash flow and, hopefully, achieve a favourable commitment to service - basically, a service level agreement (SLA) that is part of the deal.
Be prepared
Firstly, the contract period needs to be planned carefully. It might look like a good idea to get a five-year contract, but technology changes rapidly and this might tie the customer to obsolete equipment for at least some of the contract period. I recommend a three-year contract.
Beyond that, the customer needs to do their homework. This can save a lot of future pain and expenses. Once again, the real money is not the cost of the equipment - it's the costs, including hidden ones, of the contract itself.
The key question is whether the contract terms are really sustainable. It's easy to make promises, but there are always excuses when promises aren't kept.
Vital stats
A customer needs to check first that they are getting the right machines. Will they cope with the workload without breaking down and costing in maintenance and downtime? Will they still be the right solution in a couple of years' time? Are they based on current technology or end-of-life models? Does the vendor commit to services and spares backup realistically?
Getting the answers to these questions is a lot of work, but it is essential.
A customer has to have a clear picture of what they need. They need to know volumes and technical aspects like size of print, colour and what resolution is really necessary. Then it is possible to compare equipment that is offered against some sort of benchmark.
A good rule of thumb is this: if it looks too good to be true, it probably is!
Michael Powell is product marketing manager of Kyocera Mita South Africa.
The customer needs to know the costs of downtime. If the equipment is out of action for anything from minutes to days, what is that costing the business? The answer to that will allow for real commitments in the contract to minimise the negative impacts. This can include penalties for failure to keep machines running within prescribed timeframes.
For the larger customers, premier SLAs can include 24-hour service support. All customers should look carefully at what the contract covers, no matter what their budgets are. This can save a lot of money being wasted at a later stage.
Few customers will have the luxury of getting consultants in to do the research. Most will be advised by their IT departments regarding needs, but then they have to check on vendors' claims themselves. It's always a good idea to get references - about the equipment and also about the supplier.
This cuts both ways. A vendor who has good word-of-mouth is helping themselves as well as the end-user.
Familiarity breeds control
Perhaps the key point, overall, is that knowledge is power.
A customer needs to know as much as possible about their own needs, the equipment that is available on the market and the reputation and abilities of the prospective suppliers. These aspects need to be covered in as much detail as is necessary, allowing for the total cost of the contract over the years, and the risks involved if promises are not kept.
This is far removed from the usual focus, which is on the equipment cost and the basic cost-per-click specified in the contract.
The fact is that the hidden costs of equipment failure, deployment of the wrong equipment or any deviation from the stated SLA can far outweigh the apparent savings that customers look at when a contract is signed.
Always remember that getting out of a contract is, at best, a difficult process.
Making the effort to check all the fine detail before getting that pen out is the best way to ensure the deal is cost-effective and will lead to a mutually beneficial relationship for all parties involved.
* Michael Powell is product marketing manager of Kyocera Mita South Africa.
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