Extended Warranties

August 12, 2011

Q: We have been asked on a large project to provide an extended warranty for 5 years that covers the manufacturers software, includes upgrades/patches/defects, a product obsolescence guarantee and other items very specific to the manufacturers equipment. Is this becoming a trend? Is this something we should be concerned with?

A: Yes and Yes. What’s happening is the end users (generally IT savvy ones) have started to use extended warranty, IP protection and technology guarantees that have migrated over from the IT department. That language can be very troublesome in that you as an integrator are providing a guarantee (and often a bond) that insures you will fix, upgrade or replace any hardware of software that may become obsolete. The major problem costing our members money is when the facility upgrades their systems often new firewalls, LAN segmentation, data recognition issues, etc. becomes your problem. Or at least you have to show up and defend why your systems has a new compatibility problem with the network upgrades that were made.

I suggest that when you are required to provide a technology performance bond or any binding form of extended warranty, have the primary manufacturer(s) of the products you are using become partners in this agreement. Don’t allow the manufacturer to accept the contract direct, rather use a partnership format whereby you still maintain control of the account and the relationship. A recent blog I did on bonding explains the trends on all forms of bonds. This was included.

Important Note: Make sure the manufacturer agrees that this extended warranty will be binding even if your dealer agreement gets terminated. — CW

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