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Information about the Secondary Market for INNMUG
Members by Jim Leslie, Lead Telecom Analyst, St. John Medical Center, Tulsa, Oklahoma Newer INNMUG members may wonder just what is the independent secondary market (ISM)? How can I buy from the ISM? I will give a brief overview of the secondary market and list a few issues that should be considered by end users purchasing from secondary market vendors. The "secondary market" is comprised of vendors that can described as "Independent Secondary Market Vendors" or ISMVs. These are companies that purchase used and surplus equipment from end users, leasing companies and Nortel Authorized Distributors (AD). Some ISVMs are brokers that have little or no inventory and offer no installation, repair or maintenance services. Other ISVMs offer the same services as Nortel ADs except that ISVMs cannot provide Nortel Software Licensing or Key Code services. Several ISMVs have the capability to perform component level repair of circuit cards and telephone sets. How does an end user go about purchasing from the secondary market? Where does the user find ISVMs? What are the important issues related to the use of used equipment in systems? Can users buy complete used systems? If you are under a service contract with a Nortel AD, you should check the contract for language that controls and/or limits your right purchase Nortel equipment from sources other than the contract vendor. You could ask your vendor to amend the contract before the end of the contract period if you want to start purchasing from the secondary market before the end of your current contract. Be sure to look for such restrictions in any future service contracts and negotiate changes before signing. The biggest "real" issue for both parties is agreeing on who is responsible for warranty coverage of equipment obtained from sources other than the service contract vendor. More on this subject later. If your current vendor will not agree to continue your contract if you purchase from another vendor, ask your vendor to quote remanufactured and/or used equipment. Nortel has a remanufactured equipment program called Second To None that can provide some cost savings from new equipment prices. If you are a Customer Owned And Maintained System (COAMS) user or don't have a service contract (a time and materials customer of a Nortel AD), you should not have any problems from a support standpoint. COAMS users, by definition, have in-house technical staff to perform service and maintenance so there would not be any contractual issues with use of secondary market equipment. If you want to purchase secondary market equipment, you need to know that the Revision Level of the card, assembly and/or set may need to be at a certain minimum Rev. Level in order to function properly with your existing system. A good ISVM should be able to determine any minimum Revision Level requirements for you based on the current software release of your system. You may also find this information at the Nortel Information Center site on the Product Bulletin page. The Nortel Practices that come with your system and with Software Upgrades has a section called "Product Compatibility" (553-3001-156). This document is also on the Meridian Electronic Reference Library (MERL) CD-ROM. This issue is not as daunting as it may seem but it is an important process for purchasing from the secondary market. If you don't have the time and/or inclination to keep track of the Revision Level issue should look for ISMV's that can provide this support for you. Also, make Rev. Level compatibility part of all purchase agreements/contracts (even with your AD). Most ISVM's offer parts warranties between 12 and 24 months. Be sure to ask if the warranty includes advanced replacement and/or repair and return. You should ask a prospective ISMV for at least three references. One of your most important questions for the references is how do they perform when you have a warranty claim? If none of the references has had any warranty experience with the ISMV, ask for additional references that have made warranty claims. Where do you find Independent Secondary Market Vendors? The INNMUG In-Touch is a good place to start. The Jan./Feb. issue had ads for seven ISMVs. The INNMUG Annual Conference Trade Show is a good place to check out many ISVMs face-to-face. The third source is a free secondary market publication named "Telecom Reseller". Their web address is www.telecomreseller.com. You may also call Telecom Reseller at 1888-833-3317 to request a subscription. Telecom Reseller serves a broad market that includes other manufacturers. The content ranges from "infomercials" written by third party vendors and consultants to regular technical columns for Nortel, AT&T/Lucent and Siemens/Rolm for those of you with multi-vendor networks. Telecom Reseller also has articles covering legislative/regulatory issues and management issues such as toll fraud. Back to the issue of warranty repair responsibility. The effort required to deal with warranty issues depends on the type of maintenance service you have on your system(s): No service contract and/or COAMS - You are paying for repair service on a time and materials basis or your company supports your systems in-house now so there should be no issue with buying equipment from the secondary market. Labor only service contract - You pay in advance for the labor but are paying for parts as they are replaced so there should be no issue with using secondary market parts. You will be responsible for dealing with the third party vendor on warranty replacement issues. Parts and labor service contract on a call out basis - You are paying for the labor in advance so you should expect the vendor to replace any failed component covered under the contract regardless of source. Make sure that your contract doesn't exclude replacement of components obtained from third party sources. In any case, you will be responsible for obtaining warranty replacement from the third party vendor from whom you purchased the failed component and to pay the service provider for the replacement part if you did not have a spare. (Remember that spares are insurance!) Parts and labor service contract with full or part time on-site tech - Again you are already paying for a tech to be on site so you should expect the tech to replace a third party component with your spare under the contract. You can avoid problems with your distributor by clearly identifying equipment purchased from third party sources and not asking your distributor to honor another vendor's warranty. Many ISMVs label equipment that they sell with their own serial numbers and warranty expiration dates. You can purchase complete phone systems from an ISMV but a Nortel AD has to transfer the System Serial Number and Software Right to Use License from the previous end user company to your company. If you plan purchase a service contract on the used system, the Nortel AD will perform and installation audit on the system to insure that it is installed to Nortel's standards. Several ISMVs partner with Nortel ADs for installation and support services. Remember that you must always have a Nortel AD as your Software Distributor otherwise you can't purchase software upgrades nor obtain Nortel CTS (ETAS) services. The variety of equipment that you can obtain from the ISM is diminishing as Nortel continues the shift to the use of key coding and to shift equipment costs from the hardware to the software "Right to Use" (RTU) fees. Meridian Mail is a prime example. The cost of an 8 port MM card accounts for only about 30% of the total cost to add 8 ports to your MM system. So you save 30% on the card from an ISMV. You still have to find a Nortel AD willing to sell you the Key Code (RTU) to make the system recognize the card. In the end, you may save 9% over buying the complete upgrade from the AD plus the extra effort. The new MIRAN card requires a key code. Key codes are implemented on all Meridian 1 switches for software option and incremental software level control beginning with RLS 23. Watch for further developments. General Information About the Nortel Security Audit Program by Judy Limone Under a new pricing structure that became effective on April 29, 1998, audits will be billed on a per hour basis at a rate of $150.00 per hour. Nortel estimates that it takes approximately 12 hours to complete an audit of a 700 line system so the cost of the audit under the new pricing structure will be approximately $1,800. This example assumes that the end user will provide a download of the necessary PBX database programming. For end users who want to audit their own systems, Nortel will continue to update and publish Sales and Marketing Bulletin 868G which includes Nortel's Security Audit Guidelines. This Sales and Marketing bulletin is available to distributors and INNMUG members via the NIC on Nortel's web page. |
