By Jenny Schuchert, IAITAM
ITAK V4 I6
Financial management for IT asset management is a busy job, requiring vigilance and a detective’s eye for the clues to better financial performance. At any time, established sources of savings can stop delivering those savings, necessitating finding an alternative strategy. My favorite example of savings failure happened to a technology organization that developed an extensive online catalogue with a vendor so that employees could select what they needed and the price was already negotiated. The program worked well for some time, but the IT asset management team forgot to pay attention to current prices. They were embarrassed to find out that they were actually paying higher than current pricing and wasting money rather than saving it.
When managing the hardware for the organization’s desktops, awareness of current PC pricing is an important step. But what other strategies might yield a more cost-effective desktop? I have identified 10 questions for you to analyze and consider before purchasing additional PCs.
- What is the Life Expectancy for Desktops and Laptops?
Many organizations have successfully lengthened planned technology refreshes. Some have negotiated longer warranties so that replacements are easy, others have not and use resources to repair if possible and replace when necessary. Machines that fail are individually replaced with redeployed equipment or through individual new purchases. If a department has a software upgrade that requires more computing power, the decision is replace or upgrade the hardware configuration. There are plenty of examples where upgrading the existing hardware was a good, money saving step and just as many showing that it would have been more cost-efficient to replace. Obviously, research is required to figure out the best path.
Keeping hardware in service longer yields savings from avoided purchases and less interruption of productive employees. However, these savings can be lost if the machines fail frequently and demand too many support cycles. Ongoing analysis of the service received by asset type is the only way to avoid this problem. Savings may also vanish if volume discounts are lost either by not meeting contracted buying numbers or simply through a reduced purchase volume.
- Is there an Opportunity to Redeploy?
Best practices for hardware asset management promote redeployment of hardware if there is a sufficient pool of possible recipients. Organizations with standard configurations for employee hardware have been very successful generating savings from redeployment. One organization analyzed redeployment and determined that a used PC only cost $166 to redeploy, despite required clean-up and other logistical expenses.
Issues for redeployment are collecting, cleaning and storing the equipment until it can be reused. IT asset management is absolutely essential so that machines are not lost on shelves and maintenance is paid on machines not in service. Coordination with software asset management is also important so that license counts are still accurate after this process.
- Is the Disposal Program Configured for Savings?
Organizations often dispose of equipment that has an FMV (Fair Market Value) high enough that reselling should be considered. With server consolidation creating the unprecedented surplus of still-valuable servers, now is the time to talk to your disposal vendor about reselling options. Organizations that are required to park used hard drives on the shelf for a few years might consider their machines unsalable, but that is not necessarily the case. There are many excellent disposal companies available these days and their offerings are not all the same, so it might be time to re-negotiate the disposal services with an expectation of being able to pay for itself or perhaps make some money.
- Is Buying Used Equipment a Possibility?
Someone is buying hardware from disposal vendors. If the organization’s infrastructure is stable and no plans are in place for major changes, it might make sense to buy used. In some cases, used equipment might be newer than what is in use within the organization. A past colleague of mine grumbled that every computer in his home is better than the one on his desk!
Reputable sources, with a quantity to sell, are the best choices. RMA, warranty and maintenance are negotiable items. Evaluation of savings will require not only the analysis of failure rates by asset type but also by acquisition source so that used machines can be compared against those in service since they were purchased new.
- Are Policies for Hardware Actively Enforced?
Hardware policies include theft prevention, appropriate use and a clear statement that the organization owns the asset. When policies are not enforced, equipment can and does “walk” away from the organization. The enforcement actions of policies act as a deterrent for some losses and in other cases, allows the organization to recoup financial value
If the policy for loss and theft requires a police report, triggering technology to wipe the machine, or financial repercussions if multiple machines have been lost by the same individual, make sure that those consequences consistently happen. Find out what insurance the organization has and if there is any opportunity to recoup through the insurance.
Recovering assets for terminating employees is problematic and without records and a process of retrieving the equipment before the person is gone, the chances of recovering the equipment shrink. In addition to the hardware concern, don’t forget the software and data issues associated with a computer not being collected at termination. Do not limit your scope to just employees. Contractors are just as likely to walk off with an asset and if the asset is taken to another country, the chances of return are almost non-existent.
- Do They Really Need Two Computers?
You may be walking in dangerous territory with this idea, but are there any justifications required for the privilege of having more than one asset? Is convenience a good enough reason for the organization to pay for a second asset? Is a laptop necessary if they also have a smart phone for receiving email?
If it is possible to make it harder to obtain a second computer through processes such as Request and Approval, then do so and eliminate duplication.
- How Many Employees Need Laptops instead of Desktops?
Desktops cost less, work longer and are much less likely to be lost or stolen. If laptops are already hard to justify in your organization, then this idea isn’t for you. However, if you know that people have laptops and don’t need them, then replacing with a desktop and re-tasking the laptop is another way to reduce new purchases of more expensive equipment.
- Is Leasing a Cost Effective Choice?
Leasing as a business model for the desktop goes in and out of favor. CFOs like the reduced capital investment and the monthly payment approach. Lifecycle advantages such as more frequent technology refreshes and no disposal issues are great incentives from an IT asset management prospective. While the cost of the computer is likely higher than if purchased, it doesn’t depreciate and terms can be negotiated for inexpensive purchase at the end of the lease.
Leasing absolutely requires strong asset management processes that are granular to a specific asset. Leased assets have to be returned in a timely manner to avoid possible penalties. With IT asset management tracking, finding that leased assets have been disposed instead of returned, forces the organization to pay for a computer that is long gone.
- What about Using Virtualization Technology to Reduce Desktop Computing Power Demands?
Virtualizing at the desktop level is a significant task that does not quickly lead to savings. The organization usually has a large investment in desktops that are more powerful than will be needed in the virtual environment. Replacing them with thin client machines doesn’t make economic sense unless they are replaced over time. Financial benefit from the virtualization will happen slowly over time instead of the faster pace savings that organizations have seen from server virtualization.
- Are We Buying Green Machines?
Since 2007, the greening of the data center and IT in general became part of corporate citizenship and a way to save significant energy dollars. Is buying green part of the organization’s culture to stay? From the perspective of a global company, the answer has to be yes due to the savings as well as compliance with numerous legislated requirements.
While tracking savings might seem difficult, the manufacturer and government agencies such as the U.S. EPA will help you evaluate the savings that can be assigned to purchasing more energy efficient IT equipment.