We seem to be living in a world of uncertainty. Locking-in to fixed-term contracts can offer a stable solution which works for both parties. Mortgages are a great example where guaranteed fixed-rates, avoid the uncertainty of tomorrow.
Locking-in to contracts has advantages. Data centres have the flexibility to offer services on a short-term basis, but long-term agreements mean they can offer commercial rewards as rates can be fixed from day one. Clients and the data centre can also plan and manage costs more effectively. Surely this creates a win-win situation for all?
Interestingly, although locking-in appears to be the new normal when it comes to mortgages and data centre contracts, it is generally not the case when purchasing and maintaining a UPS system. However, perhaps it could or should be? With ever-rising costs, now is the perfect time to discuss the benefits of fixed-rate agreements that ensure the integrity of UPS systems from start to finish to avoid unexpected costs.
An objection to locking-in to a UPS maintenance contract might be that, “We can’t commit our OpEX budget for 10 years, we only plan a few years ahead.” I’d counter that argument with: “A UPS is not a disposable item. The initial purchase already enters the data centre into a 10-15 year relationship with the equipment and manufacturer. This means data centres must be prepared to invest in the maintenance and remedials during that time anyway. As soon as the CapEx is committed, so is the OpEX.” Therefore, a formal long-term maintenance contract would actually be beneficial as it will reduce costs and ensure the system is always kept in optimal condition
No hidden costs
The ideal scenario would be for a data centre to enter into an agreement with a UPS manufacturer to purchase a solution and maintain it over the next, say, 10 years. This long-term contract would include everything – remedials, caps replacements, preventative maintenance, all parts and labour etc., and the cost would be spread over the time period. This means a flat rate would be due regularly. The manufacturer would simply arrange any necessary replacements at the agreed time and there would be no unexpected costs for the data centre to worry about.
With the recent strain on the global supply chain, guaranteeing the price of parts and labour for several years to come could be a very wise move for data centres. Although the thought of a long-term commitment can put off some organisations, the assurance that all remedials are prepaid and completed when necessary should outweigh any concerns.
And regular remedial works are essential to guarantee the full working life of a UPS system. For example, a capacitor failure can be catastrophic, resulting in loss of load and damage to expensive equipment. It’s easy to see how costs would escalate following the replacement of a damaged UPS due to poor maintenance. A long-term contract would ensure caps are replaced at the appropriate time with no additional cost, for full peace of mind.
Although it may be in the best interest for a data centre to lock-in to a long-term UPS maintenance contract, it won’t necessarily be suitable for a facilities management contractor, as they may only be responsible for the installation and short-term management of equipment. It is rare to see FMs still involved five or 10 years later.
On the one hand, conducting regular tenders for FM contracts can ensure charges remain competitive, but on the other, it can result in a change of FM every couple of years. Although costs are reduced in the short-term, this approach can have adverse effects on the effectiveness and overall cost of maintenance agreements, meaning data centres actually lose out on Total Cost of Ownership (TCO) savings. So, how can FMs and UPS providers work together to ensure that they are doing the right thing for the data centre?
A conversation upfront with the data centre who owns the equipment is important, to see how they’d prefer to work. One viable solution could be that the long-term UPS maintenance contracts are handed over and accepted by the new FM at the same price. This could become a Standard, much like the approach to transferring the FM workforce when they TUPE (Transfer of Undertakings Protection of Employment) across, and they agree to honour the terms of the contract.
To achieve this result requires some joined-up thinking. Why not invite manufacturers into the discussion earlier to pool knowledge resources, ideas and come up with workable options which will save client costs over the long term?
Working with manufacturers
I also believe the scenario of locked-in UPS maintenance contracts will only be beneficial for all parties if clients work directly with trusted manufacturers. Manufacturers can guarantee to support and maintain a product at least 10 years after the last one rolls off the production line. Manufacturer trained and approved engineers will also have the relevant expertise, access to technical support and firmware updates, or spare parts, to prevent putting the load at risk. Resellers may not be able to guarantee these terms.
A refreshing approach
What if there was a world where clients no longer had to rip out their systems and replace infrastructure when going through a product lifecycle refresh? What if manufacturers could guarantee a complete system refresh after, say, every seven years, when the first capacitor replacement is due?
I believe modern modular UPS now offer this opportunity. Data centres are able to select flexible, scalable systems, with a reduced footprint that can be adapted to most, if not all, applications.
A further benefit of true modular UPS systems is that they have the facility for components to be removed and replaced seamlessly (zero downtime), which could form part of a service exchange programme. The ageing UPS modules would then be reconditioned ready for another service exchange opportunity. Clients would then be ‘good to go’ for a further seven years.
It leads me to ask the question: with UPS solutions reaching the maximum efficiency levels with really <3% left to improve on, why shouldn’t we try to extend the life of the current UPS system? Could manufacturers agree to a refresh programme, with all purchase, installation, replacement, and maintenance costs amortised over time to ensure there are no hidden surprises, no big bills and with everyone knowing the costs in advance?
The life of the UPS system could essentially be doubled with reconditioned modules being replaced at the appropriate times. There would be no need for a big system replacement in the future as newer modules replace old, all certified with the latest software and firmware.
This whole topic is certainly one for further discussion. I believe this industry is moving towards locked-in contracts for the benefit of clients and to think everything will remain ‘how it’s always been’ is a mistake. The question is, as an industry, are we ready for change?