The Hardware Lifecycle Paradox

It’s been close to a decade since Y2K, but channel partners continue to feel its effects. Most notably is its impact on the flow of business: After replacing all of their hardware at the turn of the century, small and midsize businesses (SMBs) have approached the phasing in and out of systems on a feast or famine basis.

This poses challenges for both channel partners and their customers: The former have concerns about sustaining their own companies with such drastic peaks and valleys in business activity, and the latter wind up piecing together outdated technology in an effort, understandably, to avoid shelling out for a company-wide upgrade.

“One of the classic mistakes is [being] penny-wise and pound-foolish,” observes Laura DiDio, research fellow at Yankee Group Research Inc. “Some companies are not prescient enough to say, ‘I’d better keep good records and do regular inventories and asset management to see which servers in my organization, or which groups of power users, might need to be upgraded or refreshed sooner than others.’” In the long run, these older systems wind up costing more in lost efficiencies, compatibility issues, service and maintenance, and downtime.

“When you look at costs—particularly around a four- to six-year lifecycle—it may seem like you are saving money, but really it’s costing you, because you are going to increase your support costs,” says Darin Stahl, lead analyst at Info-Tech Research Group. Replacement parts grow scarce and, as a result, more expensive. Most important, however, is that downtime becomes a critical issue. “If you are using four- or five-year-old pieces of technology, that means failures will be more likely,” says Stahl. “Downtime will be more frequent, and that downtime has a direct impact on the business.”
With this in mind, solution providers need to ask their clients such pointed questions as: How much money are you spending to support your old hardware? Where is the tipping point when the cost of replacement is cheaper than continuing to support your existing equipment?

“This tipping point has changed significantly in the recent past; the cost of hardware per processing unit has declined so much, the cost of labor continues to grow, and the cost of imaging and deployment has declined significantly,” notes Matt Scherocman, vice president at PCMS IT Advisor Group, a network infrastructure and security provider in Cincinnati. “The solution provider’s role is to offer best-practice information that they learn from their customer base and from their hardware partners, and combine it all together to customize a solution that is aligned with the customer’s business goals.”