IT is one of the highest areas of expense in most businesses. Vendors have traditionally dictated short life-cycles for their products by withdrawing support and maintenance to impose upgrades and generate new sales revenues. On average, vendors tend to push upgrades on to customers every three years when the true useful life of IT equipment is closer to five years.
Until now, this built-in obsolescence has been largely overlooked as organisations have had little alternative. But now, businesses are paying increasing attention to IT lifecycles. Market maturity, commoditisation and the aftermath of IT ‘bloat’ from the dotcom boom is forcing a rethink. This new market liquidity is turning businesses towards quality refurbished IT equipment.
Refurbished IT is not just a fad – the numbers are extremely compelling. A new server depreciates within its first hour of use. As soon as the seal is broken on a box, IT equipment depreciates by 25% – even if it’s never taken out of the box.
Companies can sell their end-of-life hardware to refurbished equipment providers, getting the best market value for excess server, storage and networking hardware, and directly contributing to the bottom line. In other words, they can benefit from both the buy and sell side. There are obviously some applications where new equipment is more appropriate – a trading room floor, for example. But many of the everyday applications that organisations use to run the backbone of their business can and should be benefiting from the savings that quality refurbished IT equipment can deliver.
Seven factors of IT obsolescence
To help IT managers recognise when major upgrades are appropriate, lifecycle control specialist World Data Products has outlined seven key factors of IT obsolescence.
1 Functionality Combinations of hardware, software and infrastructure perform certain tasks with a certain level of productivity. When functionality requirements increase or performance decreases, and the shortfall between expectations and results is critical enough to justify an upgrade, then the existing equipment is obsolete.
2 Compatibility Changes or upgrades in one part of the network often create incompatibilities in other areas, rendering these components obsolete.
3 Reliability Security and reliability are important core attributes of corporate networks. When age or other factors result in unacceptable levels of reliability, the equipment becomes obsolete.
4 Competitive advantage When the opportunity for achieving competitive advantage requires a technology upgrade and the upgrade promises a sufficient ROI, then the existing technology is obsolete.
5 Availability New or refurbished product needs to be available to accommodate growth or the replacement of failed components. When lack of availability becomes a big enough concern to justify an upgrade, the equipment is obsolete.