OEM Product Partnerships: Importance

 An integrated support strategy for third party systems, software, and components

An original equipment manufacturer (OEM) makes systems or components that are used in another company’s end product. Computer manufacturers, for example, commonly bundle or integrate OEM parts – such as processors and software – into the solutions they sell.

OEMs can save time and money. Third-party components enable an enterprise to focus on its core business instead of having to develop each tertiary part or system.

An end customer, such as an IT department, may handle bundled products and systems involving multiple OEM and third-party vendors. Some form of centralized control is usually required to ensure overall system reliability and availability.

Why OEM is important

By partnering with an OEM, a manufacturer or reseller can reduce costs. Companies don’t need to build manufacturing facilities or handle OEM production in-house. They simply integrate the OEM parts into their system and sell under their own brand name.

OEM products can be cheaper due to economies of scale. “The OEM excels in building one product and one product only, and thrives by building hundreds of thousands, or even millions of those products on a cost-effective, streamlined basis,” says TheStreet.?¹?

What’s more, OEMs may provide a good return on investment. “OEM parts, components and products extend the life of the partnering company's product, thus maintaining top performance and saving money with replacement parts and increasing the company's financial bottom line.” ?²?

The cost savings are usually passed along to the customer who purchases the bundled product or system.

For the end customer, managing multiple products, systems and vendors may become a complicated task. As an enterprise adopts new technologies, the technical support and maintenance model grows exponentially. Dozens of OEMs and third-party providers may be servicing their hardware and software products.

Many organizations reduce their OEM and vendor complexity with a centralized support and service model.

“Trying to support IT solutions that include products from several vendors would be like having to manage the roughly 30,000 parts that make up your car,” says David Subia in his IBM blog. “Would you have multiple vendors managing each part, or go to one trusted mechanic to ensure that it performs efficiently, safely, and at minimal cost to maintain?”