Illinois-based Company Turns a Profit by Turning CFOs' Attention to Telecom and Office Equipment Maintenance
Launched in early 1997 by Patrick Martucci, a former vice president of GE Capital-ResCom, UAC has a sales presence in 41 cities across America, from Los Angeles to New York. According to Martucci, UAC competes against the country's leading equipment manufacturers that have been using maintenance agreements as profit centers, despite a trend that has seen fewer repairs due to enhanced equipment reliability. As evidence of this, UAC's executives cited a telecom industry trend indicating that, since 1988, the reliability of telephone systems has increased by more than 400 percent, while telecommunications maintenance costs have risen as much as 50 percent. With increasing equipment reliability, maintenance costs would be expected to drop, but they haven't.
"From 1988 to 1993, the price of PBXs dropped considerably," said Warren Williams, a leading telecom industry analyst from Bedminster, N.J.-based Eastern Management Group. "And in the last five years, maintenance costs have risen as much as 50 percent.
These changes have happened against a backdrop of 10 years worth of data showing that reliability, or mean time between equipment failure, has improved dramatically."
In response to the trend, Martucci has built UAC's business to exploit three areas that telecom and office equipment manufacturers have ignored to date: savings, choice and control. UAC's executives stated that the company offers corporate executives what America's telecommunications and office equipment manufacturers will not or cannot do: reduce the costs CFOs pay for maintenance contracts, and offer them choice and control of which vendors service their telecom and office equipment.
"We always believed when you buy telecom equipment that you either take the maintenance agreement, or not," said Leo DelaRosa, Chief Financial Officer of HealthSouth Houston Rehabilitation Institute, a UAC client. "We didn't know there were alternatives out there that would save us more than 20 percent on our annual telecom maintenance costs."
A UAC client for more than 14 months, Houston, Tex.-based HealthSouth met with UAC's sales team and agreed to contract with UAC to protect its 200-station phone system, fax machines and copiers. After numerous internal discussions with his administrative and telecommunications staff, DelaRosa moved his company's maintenance agreement from the manufacturer that had sold HealthSouth its telecom equipment to UAC.
Telecommunications industry experts agree that approximately 85 percent of all companies hold a maintenance agreement on their equipment, or have looked to an insurance company to assume the risks related to equipment failures. The other 15 percent of companies assume the risk by self-insuring.
DelaRosa was willing to sign a maintenance agreement with UAC because Martucci's team promised that HealthSouth could continue its existing relationship with its current service provider or change its service provider and still save money. UAC changes the mechanism that its clients use to contract for maintenance, but does not force them to use any one service provider.
"That right there was a selling point," said DelaRosa. "I felt like I had received less-than-fair pricing all along."
Because UAC does not need to support the same infrastructure that telecommunications manufacturers do, company officials say they can undercut the cost of a typical manufacturer's maintenance agreement. For a company such as HealthSouth or any one of UAC's other clients, ranging from Reuters to Peerless Paper to Wang Global, the change appears to be seamless.
"Potential financial savings while maintaining our level of service was the main reason for switching to UAC," said Patrick Whitten, program manager for Wang Global. "Once we confirmed our level of service would not be affected, we agreed to the change."
Wang Global entered into a service agreement for its telecom equipment with UAC in November 1998. Along with the savings that UAC was able to provide Wang Global, UAC also consolidated all of Wang Global's maintenance bills into one quarterly invoice.
UAC executives note that the company's contracts have streamlined its clients' business services and operations. The company's clients go from processing multiple invoices, sometimes as many as 20 or 30 bills per month, for maintenance on contracted equipment to just one per quarter. This means less work for a client's financial staff.
By streamlining the administration for all telecom and office equipment service, regardless of manufacturer or location, companies are managing their costs, reducing the risks of expensive repairs, and controlling their service budgets and administrative processes more effectively.
UAC is working to turn the attention of CFOs to the fact that they can save money with their maintenance agreements. This is not an area that CFOs have typically thought of when considering cost savings. But to date, UAC has had considerable success in showing senior-level executives the way.
"I have no regrets," said DelaRosa. "We receive the same service. Everything is the same, except for our costs."
United Asset Coverage, Inc., was founded by Patrick Martucci in 1997 to provide corporations with a better way to access maintenance coverage for their technology investments. UAC is headquartered in Naperville, Illinois, and has offices in 41 cities across the nation. Additional UAC clients include American Foundation for the Blind, York Hotel San Francisco, Hunt Corporation and Hinshaw & Culbertson.