Keeping the Hardware Lights Lit

Keith Burson has spent a career selling alternatives for HP’s customers. The president of Surety Systems, Burson sold HP 3000s during the 1980s in the reseller marketplace. Burson started in the computer business in an era when graduate Computer Science degrees like his from American University were a rare thing. American’s computer training was so new the university awarded its CS grads a Master’s in Public Administration. He had close to two decades of industry experience saelling systems before he founded Surety in 1988. One year later he led the Houston-based company into the 3000 hardware support business, maintaining systems so customers could extend the useful life of computers, printers and storage devices outside of HP’s range of support. Burson is also chairman of the Greater Houston Regional User Group, one of the few still putting on annual conferences with 3000 speakers.

Surety’s specialty is hardware, from alternatives to the HP-branded line printers, to the Series 9x7 3000s, to latest-generation system support and HP-UX systems. The company provides the “feet on the street” which the third-party support companies will need to replace a worldwide organization like HP Services. Surety partners with another third party firm to provide MPE software support, for companies that want full service to replace all of HP’s support. But Surety also does hardware-only support business, literally going the extra mile in some cases to win business from HP. A school district far down in the Rio Grande Valley is one of Surety’s customers, nearly a day’s drive from the company’s Houston facility. HP is not much closer anymore, dispatching its service techs out of a San Antonio facility. Surety got the business by matching HP on service, and improving on the cost of support.

As HP eases out of the 3000 marketplace, customers who must remain on their systems beyond 2006 are looking at support alternatives. HP won’t support many of the older systems in the field, and third parties are starting to win support deals on price against HP for newer systems, too. We wanted to ask Burson how his third party support arrangements work with 3000 customers, who is signing up this year, and how the end of HP’s 3000 sales is affecting the prospects for this growing sector of the computer’s economic ecosystem. We spoke by phone in the weeks after the Interex West Coast Solutions Symposium.

Customers who want to reduce their support costs start by getting a quote. What do you need to know to give them a price?

We have to know their complete hardware and software configuration, as well as their expertise in HP 3000s. We find wide ranges there, from small shops where there is virtually no expertise — they know how to do a backup, and that’s about it — to very sophisticated shops that have lots of expertise. With more expertise, it makes our job easier, because if there’s a problem, we can do a lot with telephone diagnostics.

You’re asking about a customer’s expertise, which sounds like something HP wouldn’t do at the start of a support contract. Why?

We want to know the customer, and what the customer knows. In terms of how we price, it’s typically not dependent on what the client knows. If they need in-depth support, we provide it. If they need lesser support, we provide that as well.

Knowing how much the customer knows helps us plan how much resource we must have available to them.

You’re starting to service accounts that are remote to your Houston-area offices?

We had an account that went down yesterday in the late afternoon, and we couldn’t get them back up over the phone. Our contract for this customer guarantees next-day response, but if it’s a system-down situation, we’ll get there just as soon as we can. Our engineer caught the last flight out on the night the system went down, and got to McAllen before midnight. A printer problem would have meant we would have gotten there the next day. But we need to give the customer the assurance that if it goes really bad for them, we’ll get there just as quickly as we can.

How has HP’s exit from 3000 sales changed the customers’ acceptance of third party support?

There’s more openness to looking at a third party approach. Certainly with all the 9x7s, whose support life has come and gone. But also with the other 3000 systems, because the customers know the HP support drop dead date. Of course, if they are going to homestead, then they have to be looking at third-party.

The most important factor was that HP killed the machine. I don’t know that the end of sales was a factor in itself. It’s just another straw on the camel’s back.

Are you spending more time with the customers than they’ve gotten from HP’s support?

Yes. It gives the customers a comfort level knowing that we will talk to them, and try to affect a resolution regardless of whether the problem is hardware or software-related. The real advantage of working with the third-party software vendor which we use is that we’re in a non-competitive situation. When a malfunction occurs, it can be difficult to tell if it’s hardware or software. Typically, our customers call us first. If we get onsite, and can’t pinpoint it, we call our software partner. Together we resolve the issue.

Isn’t that the way it works with HP handling software support while you support the hardware?

That’s very difficult to do with HP. HP will say things like “Prove to me that it’s software, and then we’ll talk.” And proving that can be difficult. So we enjoy a real advantage working with third party software support. The client gets the benefit of that.

How about a profile of a new client? What kind of company is signing up for third party support?

We just entered into a hardware and software agreement with a school district. They’ve got a 4-way Series 979, loaded with lots of software. The reason the customer made the change was unhappiness with HP’s 3000 strategy to discontinue. That, and the fact that their HP service was coming out of San Antonio. In years past, HP had someone in the Valley. Now they can’t get there much faster than we can. Then there was the financial decision. School districts are in serious financial crunches now.

When you consider your geographic field of service, are you sticking to Texas?

We are. It’s a big state, I have to look at my logistics: my manpower, and how thinly we get spread. I’m just not going to take on anybody who I can’t provide a high level of service. That’s unethical.

If I get a lead for someone who’s in one of the other support provider’s service areas, I will forward the lead.

So people are contacting you from outside the Texas zone?

Yes, and then we contact the customer and say that we can’t really service them, but here’s the name of someone else who can.

Surety has sold its share of 3000 hardware over the last 16 years. What portion of your business is support by now?

I’d say 65 to 70 percent is support. You’d want your support provider to be doing a majority of its business in support.

Houston’s one of the biggest US cities. How exclusive and territorial does the hardware support business for 3000s get down there?

As far as I know, we’re the only people with feet on the street down here. There are companies with virtual offices, but I don’t know how they can support customers unless the customer is willing to take next-day response. There are other companies down here that are capable, but they choose not to offer 3000 support.

A significant part of hardware service is keeping up a staff. How’s the 3000-capable manpower market holding up for you in Houston?

It takes a lot of energy and effort to find people, but in today’s market, it would be a lot easier. I don’t happen to be in the market for anyone right now. Certainly the manpower is out there, in light of what HP’s done. They’ve let these old-time experts go.

Any desire to get into the software support end of the 3000 market?

I don’t even have any thoughts about that. I like where we are now. As time goes by, that could change. We might get into a need for single-source solutions, where the customer wants one company to do both. As well as we work with Beechglen Development, I have no incentive to get into the software support business

How’s the parts availability by now? HP tried to warn that parts would be scarce for the 9x7s.

Parts are not an issue at all. Of course, we’re collecting parts, but they are not a problem.

Are you still in the part of the 3000’s lifespan where parts are getting more affordable?

That’s correct. I don’t know if they’ll get more costly. We thought that would happen with the old “Classic” 3000 models, but it never did. There’s still a lot of those out there. The real key to parts is to get them before people throw out their systems. There is no market for the small 9x7s anymore. A lot of the used equipment guys have them, and if we need them, we can get the parts.

Do you believe you’ve got a role to play for companies who plan to leave the platform?

The key is to buy them time. We know we can support these 3000 systems well beyond HP’s end of support life. Several thousand dollars in savings to support a Series 927 is a lot of money to a small shop. Even if their application on a Unix machine were in the same price range as their 3000 application, they’re looking at a $30,000 investment just for that. The small shops don’t want to do it, and some of the mid-sized companies will hang in there, too — because of their investment in their software.

Do you get a sense that people who have 3000s installed will want to replace them with newer 3000s? Is the support base going to show a bigger share of newer 3000 machines?

The small and medium-sized customers are going to stay with their 3000 as long as they can. They just don’t have the budget for new application software and the migration costs. If the customer is able to find a good third party hardware support company, and a good MPE/iX support company, they will stay with these machines indefinitely.

It’s not really a question of whether the older machines are fully depreciated. It’s a question of whether you have money to buy the newer system. The Exxons throw a few million at it. But not so for the small and medium-sized companies. They don’t have that kind of budget. Even the companies that everyone knows sooner or later they’ll have to make a move, will make it later if they can.