Agencies Offer Steady Diet Of Maintenance Services

By Ed McKenna

Third-party service providers are competing with product manufacturers for a slice of the growing federal market to maintain healthy computer systems.

The State Department, for example, is strengthening its help-desk staff with personnel from third-party service providers Wang Government Services Inc., McLean, Va.; STG Inc., Fairfax, Va.; and Alphatech Corp., Arlington, Va.

The agency has been using these service providers to help it respond to 2,000 calls per month it receives for computer-related problems, says Frank Sass, chief of support service at the State Department.

Government downsizing and outsourcing is helping drive the market for maintenance services, valued at $3.3 million last year and projected to hit almost $5 million by 2003, according to Input, a market research firm in Vienna, Va.

Leading providers include a wide range of manufacturers and service companies headed by industry heavyweights Unisys Corp. of Blue Bell, Pa., and IBM Corp. of Armonk, N.Y., according to Input.

Others vying for market share include Wang Government Services, Vanstar Government Systems Inc. of Fairfax and DecisionOne Corp. of Frazer, Pa., as well as smaller niche providers like Stream International, Canton, Mass.

Fueling the competition are outsourcing contracts, such as the General Services Administration's Seat Management effort, which has opened the door to a host of product vendors and maintenance specialists. "Now it is sort of a free-for-all [competition] among companies that can support all those technologies," says Eric Rocco, senior industry analyst with Dataquest in Lowell, Mass.

With all the new choices, customers may opt to "look away from the proprietary manufacturer to a one-stop shop [maintenance] provider," he adds.

Despite these growing opportunities, "it is not the easiest business to be in," says Tricia Reneau, director of marketing for Vanstar Government Systems Inc., a subsidiary of Vanstar Corp. in Atlanta.

Formerly Sysorex Information Systems, the systems integrator purchased by Vanstar in July 1997 generated $150 million in revenue last year from maintenance services, network integration and the resale of products from manufacturers including IBM, Hewlett-Packard and Compaq.

"There are lots of barriers to entry ? you need a huge field service force, dispatch tools and technology and parts inventory," says Rocco.

With their large installed worldwide base, Unisys and IBM gain easy entry. Both companies are playing key roles in the GSA Seat Management effort, with IBM serving as a prime contractor and Unisys as a subcontractor on a team led by Federal Data Corp., Bethesda, Md.

For its maintenance services, Unisys can draw on the resources of its Global Customer Services division and worldwide work force of 9,000 field service agents and 6,000 facilities that store parts, says Terry Weipert, director of network and desktop practice at Unisys Federal Systems of McLean.

"Infrastructure is certainly one of our strengths," says John Booze, IBM area sales manger for product supply services, government industries in Bethesda. "We have the ability to dispatch people anywhere in the 50 states [and] have worldwide logistics systems both in the U.S. and overseas."

Wang Government Services also was selected as a prime for GSA Seat Management, as well as the NASA Outsourcing Desktop Initiative.

"As prime contractor, we would provide the maintenance for whatever product we happen to be offering as a part of that contract," says John Flynn, senior vice president, Wang Government Services.

The company can maintain hundreds of different manufacturers' products, from desktop computers to network equipment, says Flynn. A subsidiary of Wang Global, Wang Government Services has more than 2,300 workers in the United States and Europe.

Aside from its 6,000 employees in the United States, Vanstar has forged alliances with global computer service companies Groupe Bull of France and Ingram Micro Inc. of Santa Ana, Calif., Reneau says. "Vanstar Government Systems only deals with the U.S. government, but our customers include the Army in Korea and Germany, and we have this [new blanket purchase agreement] with [the U.S. Agency for International Development], which is worldwide."

The company is teaming with IBM on that contract, which features 7x24 help-desk support and manufacturer's warranty repair.

DecisionOne has alliances with European service provider ICL Sorbus and FBA (Fujitsu Bell Australia) Computer Technology Services in Australia to gain worldwide reach to go along with its 150 offices and 5,000 technicians in the United States and Canada. The company last year tallied about $786 million in revenue, and about 10 percent of that total came from public sector work, says Ralph Bell, director of federal sales and operations for DecisionOne.

The company, which serves as a subcontractor to several government contractors that provide maintenance services for many agencies, is on course to up its federal revenue by 20 percent in 1998. One of his goals is a GSA schedule for maintenance services by the end of the year.

A major difficulty for these companies is staying current with rapidly changing technology, industry officials say.

"One of the biggest challenges I have is supporting these new [indefinite delivery, indefinite quantity] contracts," says Bell. The contract may initially specify a 300 megahertz system, for example, but by the time the contract is awarded, newer technology may be required, he notes. "Now I've got to scramble around to understand how I am going to support it."

For the third-party providers, maintaining strong relationships with original equipment manufacturers (OEM) is also critical.

"If you don't have those OEM [agreements], it becomes even more costly for you to buy your parts from a different market ? if you can get them [at all]," Bell says.

Like all of the other large maintenance providers, DecisionOne has network service and support relationships with the ilk of Compaq, Sun Microsystems and Netscape Communications Corp.

Along with its other OEM agreements, Wang inked a pact with Dell Computer Corp., Round Rock, Texas, this year to become the computer maker's preferred provider of service and support for federal customers. Similarly, Vanstar added Gateway Inc. of North Sioux City, S.D., to its list of vendors for its Portable-2 contract with the Army.

Armed with these relationships, these companies are providing a variety of maintenance services, with one exception: Preventive service, once a staple in the old mainframe environment, is now rarely part of their duties.

Today's systems do not typically need a regular cycle of what you might think of as preventive maintenance, says Flynn.

What's more, preventive care is, to some extent, being replaced by technology that allows technicians to remotely monitor systems, says IBM's Booze. However, some defense and intelligence agency customers are resisting this kind of service for security reasons.

"Because today's equipment has a very short life cycle, the majority of maintenance is as much a warranty service as it is anything else," says Flynn. Desktop PCs, printers and servers have anything from a 12-month warranty period to one that spans three to five years.

"We are still pretty standard with a one-year warranty on our large systems," says Booze. Manufacturers are grappling with what to do with desktop warranties, but the government favors longer warranties.

Vanstar's Army Portable-2 and PC-2 contracts both have five-year, on-site, worldwide warranties, says Reneau. That warranty was a key selling point in Gateway's decision to enter the Portable-2 contract, she says. Slated to end next May, both IDIQ contracts are being re-bid, and Vanstar likely will seek to retain them.

Aside from their length, warranties have different service levels that can range from two hours to restore service to repair by the next business day, says Weipert of Unisys. "Critical servers need at least four-hour service," she says.

For the desktop system, however, next business day seems to be the developing standard, she says, noting that time frame allows vendors to take advantage of centralized parts inventories.

In some cases, the standard warranties do not meet the end users' requirements, says Bell. Some three-year warranties stipulate "48 hours or best effort response, which really means they will be out there in three or four days."

In those cases, maintenance companies offer warranty upgrades. Under a subcontract to Boeing Co. of Seattle on the Army Reserve Component Automation System Program, "we are providing warranty upgrades on 50,000 desktops that offer anywhere from a four-hour to eight-hour response time," Bell says.

"Maintenance is not always just an in-person event," Flynn says. "A lot of maintenance involves getting the customer up and going again [remotely] via help desk."

For the past three years, help-desk specialist Stream International has been taking some of the pressure off the information system staff at the National Institutes of Health in Bethesda.

"They were looking to offload on us a lot of the more routine support calls, so their own folks could focus on more strategic initiatives," says Ralph Palsson, director of sales at Stream International.

"We've contracted with them to take up to 100 calls a month for PC shrink-wrapped software," says Dale Spangenberg, chief of customer services branch. "It is not a big part of our business, but it was a big frustration because we had to keep experts in all the different versions of the software."

For its services, Stream receives about $25,000 a year from the NIH, Spangenberg says. With revenues of $186 million last year, Stream employs more than 5,000 technical support specialists. He says the NIH's 12-person help desk handles about 300 calls a day, addressing a customer base of about 20,000 people.