Channel Pro - January 2008

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their own companies with such drastic peaks and valleys in business activity, and the latter wind up piecing together outdated technology in an effort, understandably, to avoid shelling out for a company-wide upgrade.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.

quent, and that has a direct impact on 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

The

Hardware

Lifecycle Paradox

“Saving money” by hanging onto hardware long past its optimum life span costs SMBs more than if they phase equipment in and out on a regular schedule. By Carolyn Heinze

“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, 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, downtime becomes a critical issue. “Failures will be more likely,” says Stahl. “Downtime will be more fre-

partners, and customize a solution that is aligned with the customer’s business goals.”

THE LIFEC YCLE SELLING APPROACH

Jerald Murphy, director of research operations at Robert Frances Group Inc., underlines that the infrastructure architecture should reflect the organization’s processes so that hardware is purchased according to a carefully constructed plan. “If all I’m doing is buying incremental storage to add to storage limitations, or an incremental network box to add to capacity, what happens is that I end up overbuying infrastructure,” he says. “Companies [pay] more than they need to for the infrastructure they have in place.”

This is why lifecycle selling is the best approach, says Michael Klein, president of Computer

Directions Inc., an IT consulting firm in Searing-town, N. Y. With lifecycle selling, channel partners can draw parallels between hardware and other assets in a business owner’s life, such as a car. “They know that if they buy a car, in a couple of years they will have used the car up and it’s time to replace it,” says Klein. “We talk about that in terms of hardware and software.”

With this established, the discussion over what should be retired, and when, begins to take shape. If, for example, a business has 12 workstations, Klein suggests that each year, four should be replaced. These new systems should be allotted to the company’s power users, and their old workstations should be granted to the four most powerful users under them. The following year, when four more workstations are purchased, they should once again be assigned to the power users, with their computers being assigned to the group under them, and so on.

“You can still give the new computers to the fastest four people, and their old computers should be forwarded to someone else,” Klein explains. “By buying four computers a year, everybody gets a brand-new, faster workstation every year.” This also evens out cash flow, enabling companies to properly plan and budget for system upgrades.

Older equipment may no longer be suitable for high-power, daily use, but channel partners can advise their customers to push it out to the perimeter. One of the most popular applications for semiretired equipment is backup. Servers that are several years old may be assigned to other functions, such as gateway and log-in tasks, when they are no longer powerful enough for hard labor. Organizations with multiple locations may have outgrown a server at the head office, and that unit can be transferred to a branch location where processing demands are lower. In some cases, companies give older workstations to telecommuters.

As is the case with anything in business, all parties involved stand to benefit from good planning. With hardware retirement, the solution provider’s role is to counsel the client on the process that works best for the client’s specific company.

“Business changes—what was important five years ago is superseded by new processes and developments, and the asset management needs to take into account that fluidity,” says Stahl.