IBM Revamps Break/Fix Warranty Program

"About half of our [PC break/fix warranty service is performed by the channel, and that's growing," said Joe Ciulla, manager of channel service support for IBM's Personal Computer Division (PCD).

IBM's revamped service reimbursement program, launched in September, doubles the payments solution providers receive for performing warranty service on IBM desktops and servers.

IBM has increased desktop warranty payments to $120 per incident from $60 and server warranty payments to $200 per incident from $100, he said. In addition, IBM pays $50 per incident for travel.

To get the higher reimbursement rates, solution providers must hit prescribed customer satisfaction ratings and meet parts efficiency bars.

"Every part we replace is a cost to us so we've designed this into the program," said Frank Vitagliano, vice president of distribution channel management for IBM's PCD. He noted that instead of using a shotgun approach and simply replacing parts to attack a problem, solution providers are rewarded for using diagnostic tools to pinpoint the problem and replace parts only as needed.

"IBM has decided to reward companies that do well [in warranty service," said Brendan Turner, president of Turner Techtronics, a solution provider in Burbank, Calif. About 30 percent of his business is break/fix warranty, he said. "I'll take [break/fix warranty work all day long," he added.

Turner attributed the surge in warranty business to customers holding onto their systems longer because of tough economic times and to increased purchases of relatively inexpensive extended warranties.

"Getting in the back door with break/fix also opens up the opportunity for other projects for the client," he said.

Vitagliano said there is a big opportunity for solution providers to perform break/fix in SMB accounts. "The SMB solution provider is the outsourced IT department for SMB customers," he said.

But Turner noted that most of his warranty services work is at Fortune 500 accounts. He said that break/fix often falls below the radar of IBM Global Services because IGS consultants focus on higher-end opportunities and IGS has a higher cost structure, making warranty work less attractive.