Pulling the plug on hardware: Life-cycle management explained

Planning ahead for the end of equipment life can help keep the IT department's bottom line looking good.

It's a fine line, determining when to junk old IT equipment.

On the one hand, as a thrifty IT manager, you want to squeeze all the bang from your hardware buck, especially in this economy. On the other, the lowered productivity, increased downtime and elevated levels of user misery caused by elderly equipment can be a drain on your department, and on your company's bottom line.

How to know when to pull the plug? You could invest in a crystal ball, or you could get serious about hardware life-cycle management.

Plan from the beginning

There are many different approaches to managing the hardware life cycle, based on factors such as a company's size, the number and locations of offices, and financial priorities, but experts say the most important thing about a life-cycle plan is to have one. Fortunately, resources abound to help IT professionals manage their hardware life cycles.

Organizations such as the International Association of Information Technology Asset Managers offer advice and guidelines for acquiring, tracking, assessing and disposing of hardware as part of the larger discipline of asset management.

And a whole industry of outsourcers that has emerged to help organizations make decisions about acquiring, managing and disposing of hardware is encouraging customers to make life-cycle decisions a priority, not an afterthought.

"Companies that are proactive in making [hardware life-cycle] considerations will derive a lot more value from their decisions than those that are reactively planning," says Robert Houghton, president of Redemtech Inc., a Columbus, Ohio, outsourcer that provides asset management and life-cycle planning services.

If a company decides, for example, that the desktop PCs it's in the process of purchasing will last for four years, it can budget for acquiring new systems after that period has ended. And by specifying a point in time when the systems should run out of useful life, the company can also plan to evaluate those systems prior to that cut-off date, analyze what condition the PCs are in and opt to extend the useful life for financial reasons if need be, Houghton says.

Planning "should happen when you're buying the equipment," Houghton says. "Make decisions based on the value of the hardware at the end of the equipment's life, warranty provisions, user needs and capital resources of the company."

Shelf lives will vary

Though there are many off-the-shelf applications that walk companies through the stages of asset management, there is no set approach that suits every company, say IT pros responsible for managing the process in their firms.

The bigger a company is, and the more geographically dispersed its offices are, the more effort will be required to track systems and evaluate when they should be replaced. And despite basic guidelines about how long equipment should last, more often than not the answer is "It depends."

The average life cycle of common hardware

Cell phones

2 years

Laptop PC

3 years

Desktop PC

4 years

Server

5 years

Networking gear

5 years

Monitor

8 years

Source: Redemtech Inc.

First and foremost, it depends on what type of equipment you're talking about. Smartphones and laptops tend to need to be turned over more quickly because of the abuse they take on the road; desktop PCs don't last as long as servers and other data center equipment, because hardware upgrades and changes happen so quickly for PCs that systems can become out of date in a matter of months.

Until a few years ago, consultancy PricewaterhouseCoopers (PwC) leased the 30,000 laptops it needs for its highly mobile workforce. Since laptop prices have dropped considerably, the company has begun buying the systems outright. But that means that, instead of simply following the terms of the lease, PwC's IT department is now responsible for determining when to refresh those laptops and how to dispose of the old ones.

The company expects to get between 30 and 40 months of usable life from the laptops, in accordance with PwC's depreciation schedule, says Michael Lechner, managing director of project services, who is based in Tampa, Fla.

The first round of laptops the company purchased rather than leased is due for refresh within the next six months; at that point, the company will be able to determine whether its life-cycle approximations match the actual condition of the laptops. "If they've started having problems, we'll give out new ones," says Lechner.

As for data center equipment, those bigger purchases require more consideration.

"We'll look at how the equipment has depreciated. I don't want to replace it before then, and we won't replace them just because they're depreciated," Lechner says. "We wait for a reason, [such as] if the equipment starts to fail or is no longer supported by the vendor, or we can't get [replacement] parts."

Determining the life cycle of mobile phones is easier to deal with, according to Lechner, because PwC considers employees' requests for new phones only when they sync up with service contract renewals, which happen every two years. Employees who don't want a new phone don't have to get one, but they become eligible for an update every 24 months, he explains.

Bigger companies have more to manage

Very large companies often maintain an entire department dedicated to tracking the life cycles of IT assets.

Financial services institution Citigroup, for example, has a 16-person team in the U.S. responsible for assessing the IT equipment used by more than 300,000 employees around the globe, according to Jim Brown, Citi's senior vice president responsible for desktop asset management, who is based in St. Louis.

With the assistance of an asset management software package, which Brown declined to name, the department has come up with life-cycle guidelines for its IT equipment. The guidelines are typically 36 months for desktop PCs and laptops and 60 months for servers, but not all of the machines in the company fall under those parameters.

"We get a list from our engineering group on a monthly basis that says, 'Here's what we have [that's still viable]; here's what's going off the list,' and make a determination," Brown says. "The base lifetime is determined at the point of acquisition, when we know what the vendor says it will be, but typically it ends up longer."

The department has weekly discussions to review the list and make decisions about what hardware stays in use and what will be retired, he notes.

Brown's team spends 100% of its time managing IT assets -- including phones, printers and monitors, in addition to computer systems. "In past lives, this has been a part-time job, where [the employer] says, 'I want you to take care of this asset management thing,' " Brown says. Not so at Citi: Brown works with financial departments to collect input, but his focus is solely on asset management, and the final say comes from him.

That dedication allows the team to explore ways that technology can improve the process of tracking an asset and determining where it is in its life cycle. (For example, they're exploring passive RFID and discussing ways to enable certain hardware to report its location over the Internet.)

Finding the sweet spot

Whatever the size of the company, firms should strive to reach a "sweet spot" in asset management, where equipment has reached or exceeded its break-even point but isn't yet unreliable enough to inconvenience users, explains Anthony Abbattista.

As vice president of technology solutions at Allstate Insurance in Northbrook, Ill., Abbattista is responsible for the hardware used by roughly 100,000 employees and agents in the U.S., and his department spends about 10% of its time on life-cycle issues, he estimates.

For data center equipment, once hardware has passed its depreciation point, Abbattista's team evaluates the performance and throughput that the hardware can achieve, determines how much power it consumes, and examines the cost to renew maintenance agreements with vendors before deciding whether the total cost of ownership makes the system worth keeping.

Allstate swaps out its 50,000 to 60,000 desktop PCs for new systems on a rolling schedule simply because there are so many of them, says Abbattista. He will consider running systems past their expected life span as long as they can still support users and they're not being regularly sent back to the IT department for repair.

While he works closely with Allstate's finance department, Abbattista believes that ultimately the decisions a company makes regarding its IT asset life cycles must be driven by the IT department.

"We always want to save money, and we've learned to keep assets around until they're broken," he says. "When and how to do a capital swap-out becomes part of running a good IT shop."

Check back for Part II, coming soon, on retiring and recycling old hardware responsibly.

Garretson is a freelance writer in the Washington, D.C., area. She can be reached at caragarretson@gmail.com.

This story, "Pulling the plug on hardware: Life-cycle management explained" was originally published by Computerworld.

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