White Paper: the OEM's business case for power conditioning

06 May 2011

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White Paper: the OEM's business case for power conditioningPowervar has published a new industry White Paper, The business case analysis for power conditioning: An ROI study of unburdening service costs from the bottom line, which outlines how power quality technology can deliver demonstrable cost savings and measurable returns on investment (ROI) for businesses.

This White Paper highlights how the highly competitive market for power quality and UPS (uninterruptible power supply), which has been largely driven by price, has done little to demonstrate to customers how much power disturbances are costing their businesses and how power quality technology can deliver cost savings directly to the bottom line.

Powercar's Director of Marketing, Chris Walsh, states: "Power quality is a topic that most people pay lip service to, but very few have been able to accurately nail down what the benefits are when implementing different power quality technologies, especially when it comes to delivering real cost savings. We have looked into this topic in depth, and worked with many prominent companies around the world to help customers better understand the issues and make more informed choices.

Putting a price on unreliability

The key focus is the 'service burden rate', which is the proportion of the price of a product allocated to cover ongoing maintenance and equipment repairs during the warranty period. Based on Powervar's research of thousands of pieces of equipment installed by customers, the range of the service burden rate by manufacturers was around 4-8 per cent of the sale price of the equipment or system. The statistics showed a reduction of between 43 and 88 per cent in warranty service costs when a Powervar system was part of the installation, and an ROI of between 154 and 1148 per cent can be achieved.

According to the new white paper, the benefits are not just financial: there is a 'softer ROI' as well, such as a reduction in warranty costs and the number of service calls, enhanced reputation, improved customer satisfaction, greater customer loyalty, competitive industry advantage and repeat business for the manufacturer.

Walsh adds: "For most organisations, power quality problems are 'out of sight, out of mind.' The reality is that in today's business environment, driven by high-tech equipment incorporating sensitive electronic components, the impact of poor power quality can have a profound effect on a company's systems. It may not be today, or tomorrow, or even in a year's time, but cumulative damage over time can cause sudden system failure or lock-ups without warning.

"For a bank or a retailer, loss of critical equipment is devastating in terms of financial losses and customer dissatisfaction; but for a hospital or a clinic, where you have expensive clinical and diagnostic equipment and patient monitoring systems, it can be literally a matter of life and death."

Misplaced blame

Importantly, end users are highly unlikely to suspect that the problem lies in the power being supplied to the equipment; rather they will blame the equipment itself for any unreliability it exhibits. For this reason, end users will probably not consider retrofitting power conditioning equipment, so it is important that OEMs include power conditioning as part of their scope of supply - to protect their reputation and profitability.

In the white paper, Powervar includes a number of examples of customers that have seen a measurable ROI, including James Hall & Co, a Spar group wholesaler, which saw a reduction of 80 per cent in hard disk failures and data corruption in its EPOS and back office systems on its petrol retail forecourts, compared with its retail outlets that had no power quality equipment in place. This led to an investment in power conditioning equipment being rolled out across its entire retail base of 500 stores.

Follow the links for a copy of the White Paper (#213), to view a demonstration of power quality and potential solutions, and to see Powervar's ABCs of Power Conditioning, which helps to explain power protection.

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