Learn to Reduce Computer Hardware Maintenance Costs Through Lifecycle Management
written by: Bruce Tyson•edited by: Rebecca Scudder•updated: 5/24/2011
Cost-cutting measures focusing on IT such as virtualization and cloud computing have offered new ways to make organizations more efficient while reducing IT staffing. Companies can realize even more gains by learning how to reduce computer hardware maintenance costs through lifecycle management.
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What is Lifecycle Management?
How to reduce computer hardware maintenance costs is the subject of much inquiry as companies struggle for profitability in a slow economy. Many organizations find a solution to those costs in the form of Lifecycle management. This strategy increases the organization's flexibility to upgrade or extend hardware life through practical measures while ensuring that a portion of its hardware assets are replaced every year. Through an orderly process, hardware costs can be controlled while elevating the overall performance of the company.
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Without actively planning for computer hardware lifecycles, companies are pushed into situations where their efforts to compete are subverted by a continued reliance on obsolete computer hardware as the organization relies on “seat of the pants" methods for addressing hardware needs. This can result in the acquisition of inadequate or unnecessary equipment that puts unnecessary strains on the budget. It can also result in the continued maintenance of computer hardware that has long outlived its usefulness. In short, the question of how to reduce computer hardware maintenance costs is often asked by companies that have not planned properly.
Key to computer hardware planning is the assessment of useful life for each asset. Companies can estimate useful life based on manufacturer data, industry data, and real experience, to decide when computer hardware should replaced. Typically, laptops are assigned a three year life, desktops four years, and servers five years or more. Mobile devices are typically considered to have a useful life of two years. These values need to be defined in every organization.
When the end of the life of an item arrives, IT personnel can assess the accuracy of the original useful life estimates. In doing so, they can elect to dispose of the hardware or to retain it for a definite length of time. In either case, the company is not strained by the decision because it has already planned for its replacement.
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Leasing or purchasing decisions should be driven by the present and future needs of the company and what role the hardware is expected to fill. Specific purchases should be guided by the value of the product, its suitability for the role, its potential salvage value at end of life, and warranty coverage. Budgetary constraints should also be considered, although price oriented purchases can often result in the purchase of substandard equipment that does not adequately fill its intended role.
A rule of thumb is that the cost to support computer hardware is about four times its purchase price. Although this rule is not very scientific, it does illustrate that minimizing new hardware expenses does little to reduce the overall cost of the item over time. This means that when key hardware features are compromised to save up front cost, such compromises will rarely realize any long term savings, although they can easily impede the mission the hardware is to accomplish from the get go.
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By prioritizing how they plan to use hardware, companies can extend the useful life of their resources while defending against the high cost of computer hardware maintenance in mission critical applications. Sections of a business that must be running at all times in order to accomplish its mission require the newest and most reliable computer hardware. This is important to realize since downtime for maintenance and repair can be very costly in terms of revenue. When hardware begins to show signs of instability, it can be redeployed to non-mission critical areas of the business where hardware failure will not be as cost intensive. The more significant areas of the business can then be reinforced with the acquisition of new hardware that has more capability and is less likely to fail.
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Maintenance and Repair
The maintenance of computer hardware should be considered when it first goes into service. Manufacturers often issue estimates on mean time before failure (MTBF) and total cost of ownership (TCO) for their products to help companies with budgetary planning. If estimates are not available from the manufacturer at the time of purchase, real time data can be collected within the organization so that – over time - it can adequately budget for the costs of hardware maintenance. Indirect costs such as lost opportunity from equipment downtime should also to be included when planning for maintenance and repair costs.
Evaluation at the end of life is really how to reduce computer hardware maintenance costs. When computer hardware is nearing the end of its estimated lifecycle, it should be reevaluated for cost of ownership to see if its useful life can be extended. When considering such life extension, IT staffers should compare the costs of repairing the existing equipment with the productivity that could be gained by deploying new equipment (including speed gains and the ability to run the latest productivity applications). Also, as new green computing requirements come into play, the improved power handling characteristics of new equipment may of itself guide the extension versus disposal decision.
External maintenance agreements can also impact the decision to upgrade or repair computer hardware beyond its usable lifecycle. Service contracts may eventually stop supporting certain hardware or dramatically increase the cost of service for older equipment. Finding alternate modes of service and support can be a factor when deciding whether or not to extend the life of computer hardware.
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Because they do not know how to reduce computer hardware maintenance costs, businesses will often keep old hardware around until it completely fails. For some, this approach appears to be budget savvy, but in reality the company may be paying more in maintenance, repair, and down time expenses than it would pay to acquire new equipment. This is why the involvement of a company’s IT department should drive the usable life estimates in the planning stage and be responsible for evaluating total cost of ownership of each hardware device as it reaches its end of life. The single most important factor in reducing hardware maintenance costs is to dispose of hardware when it reaches its end of life and start over with new equipment.