Since the start of the recession, many data centers have extended the time between hardware upgrades. Enterprises have moved to a five- to eight-year hardware replacement schedule. This may seem reasonable considering standard equipment depreciation rates, but a recent Gartner study1 found that the energy and space drain of older equipment can end up costing an organization far more that what they save by putting off the purchase of new equipment.
In the study, Gartner highlighted a client that evaluated the potential impact of refreshing its own servers after only 18 months. This company found that it could save an estimated $380,000 annually on power costs and gain over 3,000 sq ft of space by upgrading “early.” This client opted for staged server replacement, to optimize hardware and facility usage, by treating IT equipment as a strategic tool rather than a simple expense. Empirically, this study shows that we are in a period of time where the traditional wisdom of clinging to older hardware doesn’t apply.
Gartner isn’t alone in this insight. I’ve been in the IT asset disposition (ITAD) industry for nearly two decades and I’ve found that there is a distinct drop-off in value around the 5 year mark when it comes to IT equipment. We call it the cliff. Companies that keep their equipment past the optimal three to four year refresh window fall off the cliff into decreased server value and increased energy spend.
So what’s preventing more data centers from moving toward a faster refresh cycle? Many data center directors are overwhelmed by the complexities of the IT refresh process. Even if they do understand the value of a faster refresh cycle, they often don't know how to properly dispose of the old equipment safely and securely and in a way that maximizes their value recovery.
How to Simplify the Refresh of Equipment
In order to take advantage of the financial benefits of a shorter refresh cycle without the headaches, there are a few key steps companies need to take. First, work with an ITAD firm to help you understand the best path forward in the reuse/recycling of your older assets. A good ITAD firm can help you sort, audit, and test assets to decide when is the right time to replace. The firm should help you put a market value on your assets, and more importantly, determine what it’s costing you to keep those assets in service.
- When it is time for the next upgrade, ask four questions of your ITAD partner:
- Will you help me determine if the best financial option is to resell or recycle an asset? How?
- If an asset is to be resold, do you have the right wipe technology, and detailed, documented processes, to ensure all sensitive data is verifiably destroyed? Walk me through it.
- Will you ensure a documented and an environmentally-sensitive recycle to protect my organization from liability? How?
- How can I know that you have enough market knowledge and reach to ensure that I am recovering the highest possible value from my old equipment?
Getting the most value for your old equipment will obviously help take the sting out of that new equipment purchase. You need to work with someone who has a comprehensive understanding of every IT asset category, and they must have broad expertise across an array of channels to maximize your resale.
We once had a client that was performing their own value recovery for their assets internally, he continued. In other words, they were remarketing their old equipment by simply sending out lists of assets and requesting bids. The problem was that they were grouping large batches of equipment together with an ‘as-is’ price. By separating out each component, determining the true worth of each asset, and then marketing these assets through the proper channels, this client experienced an 80% increase in value recovery revenue.
Defining a Smarter Hardware Cycle
There are basically three buckets to consider in determining if you’ve financially optimized your IT equipment lifecycle. First, you need balance obsolescence and depreciation with energy costs and physical space expenses to find the “just right” timeframe to replace assets. Second, you need to recapture the most value for the assets cycling out. Third, you must resell/recycle assets in a way that protects your business from the potentially serious liability of data loss or environmental consequences of improper disposal — this third bucket can easily obliterate any savings from the first two if not taken seriously.
Fortunately, this process does not have to be intimidating. A reputable, experienced ITAD vendor will help you define the “Goldilocks” moment for your technology lifecycle. And when that moment comes, they can support you in streamlining the process to eliminate hassle and get you the most financial reward for your efforts.
“New and shiny” can reduce your data center costs… if you choose the right path forward.
1. David J. Cappuccio, “Reduce Costs and Extend the Life of Data Centers Using Server Refresh,” Gartner, (March 18, 2014), www.gartner.com.
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