Making the Case for Refresh Cycles in Tight Budgets

Larry Bonfante, Founder, CIO Bench Coach | 4/9/2014 | 10 comments

Larry Bonfante
When every capital expenditure is put under a microscope, it's harder than ever to continue to make the necessary investments in refreshing the technology our companies need to compete in the marketplace.

Many technologies, especially back-end devices such as storage, servers, routers, and switches, are viewed as a black hole of spending on commodity products and utility services. Besides, can't we just put everything in "the cloud" (that's what the airline magazine your CEO just read suggested).

I have established a three-year technology refresh cycle for both back-end infrastructure capabilities as well as front-end client devices such as laptops, tablets, and mobile phones. This was a hard-fought battle that was won over time and required much in the way of education and explanation of ROI. Here are a few ways to think about this that may help support your own case.

When I worked at Pfizer I had many a late night when the only person left in the building I saw while leaving was a maintenance worker who was changing light bulbs. I couldn't resist asking this gentleman why he was replacing not only the burnt-out bulbs but also replacing light bulbs that seemed to be working perfectly fine. His response to me was that the cost of the bulbs themselves was insignificant compared to the cost of the time required to service the fixtures to replace the bulbs. This was (no pun intended) a light-bulb moment for me.

Part of your rationale in replacing older and antiquated technologies is the fact that the cost of having your team fix older devices is higher than the cost of simply replacing them. I try to educate my decision makers that while the cost of a new laptop may be $1,000 (less in many cases) what is the cost of your chief revenue officer not being able to effectively work for a day because his laptop drops dead?

Also, it's imperative that we maintain familiarity with and access to the latest and greatest consumer devices. How bright an idea would it be for your customers to be accessing your websites and services via the latest iOS or Android device while the people trying to support them are working with flip phones? Many of the new capabilities and apps require a new platform or level of OS to run effectively. We can't have our customers having a different (and better) experience than the people trying to support them and develop and deliver mobile solutions to them.

Technology refresh is a cost of doing business. You would never allow your elevators to not be maintained on a regular basis because your most important asset, your people, use them every day to get to work. Technology is no different.

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tekedge   Making the Case for Refresh Cycles in Tight Budgets   4/29/2014 11:16:26 PM
Budgeting for IT
Replacing instead of repairing a good theory but it has to be weighed case to case.
kstaron   Making the Case for Refresh Cycles in Tight Budgets   4/28/2014 3:12:21 PM
Budgeting for efficiency
I think you really hit the nail on the head here. with older technology there are more down times, slower working conditions, and when something goes wrong an entire office can be twiddling their thumbs while it's getting fixed. Changing out old tech for new tech needs to be a built in budget item within a reasonable time frame for every company or their efficiency is going to go down the tubes.
singlemud   Making the Case for Refresh Cycles in Tight Budgets   4/28/2014 3:11:18 PM
Re: interesting analogy
Very true, with a new system in place, it will eventually pass that point,
Henrisha   Making the Case for Refresh Cycles in Tight Budgets   4/11/2014 5:37:29 AM
Re: Squeezing the money out
It is sometimes a useful (&good) trick to creat a 'apocalyptic scenario' -if we do not buy this, that service will fail and would cost us a lot of money. 

Right on! But I consider it more as a technique or tactic rather than a trick, because it actually is true in many cases.
Henrisha   Making the Case for Refresh Cycles in Tight Budgets   4/11/2014 5:36:49 AM
Re: interesting analogy
The case where fixing or repair is cheaper than replacement is true in many situations, but it's not always the case. Sometimes, in the long run, it would be cheaper to get a replacement because eventually, the cost of repairs and upkeep will add up.
Zaius   Making the Case for Refresh Cycles in Tight Budgets   4/11/2014 12:04:35 AM
Squeezing the money out
Alas! Gone are the days, when IT purchases were not under this kind of 'cost saving' umbrella. I also liked the light bulb story. It is sometimes a useful (&good) trick to creat a 'apocalyptic scenario' -if we do not buy this, that service will fail and would cost us a lot of money. This is , however, getting a bit less effective from being used too often.
SaneIT   Making the Case for Refresh Cycles in Tight Budgets   4/10/2014 7:19:14 AM
Re: interesting analogy
I've heard this put less eloquently by other facilities managers.  It went more or less like "If I have to climb a ladder I'm only going to do it once".  While not quite the same when you think about it if you have one bulb fail then chances are the ones next to it are near failure because they share a fixture and have been cycled exactly the same over the years.  Just because budgets are tight it doesn't mean hardware is going to last longer and if you're increasingly visiting that hardware are you really saving money by not replacing it.  PCs or light bulbs the concept is the same.
nasimson   Making the Case for Refresh Cycles in Tight Budgets   4/9/2014 10:24:31 PM
interesting analogy
> His response to me was that the cost of the bulbs themselves was
> insignificant compared to the cost of the time required to service the
> fixtures to replace the bulbs.

Interesting analogy Larry. I had never thought of it this way: The cost of fixing the broken equipment is lesser compared to the cost of replacement. 

But the missing link here is of probability. How probable is that the equipment will break down? The estimates of probability will vary and so does the likely impact of the damage. Any inputs on how to quantify this guess-timate?
zerox203   Making the Case for Refresh Cycles in Tight Budgets   4/9/2014 12:35:51 PM
Re: Making the Case for Refresh Cycles in Tight budgets
The practicality of this post is very much appreciated, Larry. There's lots and lots of theorycrafting to be done when it comes to IT, and all of it has i The practicality of this post is very much appreciated, Larry.There's room for plenty of of theorycrafting when it comes to IT, and most of it can be very useful - even still, there comes a time when you need real, practical advice for day-to-day operations, especially in a tough climate like this one. This post fits the bill quite nicely - I think refresh cycles are something we're all struggling with now, even on a consumer level... can most of us afford to replace our personal smartphones as often as we'd like? Advice on how to reign in control of our budgets is much obliged.

Whenever E2 Radio comes around, and I have the ear of an expert on a certain topic, I find myself asking the same question over and over again; ''that sounds great, but how do I sell this idea to stubborn management who doesn't want to invest or who doesn't understand the benefits?" Many are quick to offer some great advice, but others seem a little taken aback by the question, and offer a more generic response. Now, there's nothing wrong with that, but I find myself craving some more specific advice for the issue at hand - after all, the managers have heard the generic stuff before! I'll be sure to keep your advice in mind next time I'm trying to convince someone else (or myself!) of the benefits of a refresh cycle, Larry.
SaneIT   Making the Case for Refresh Cycles in Tight Budgets   4/9/2014 8:32:53 AM
Another thing to remember
In a down market the hardware you're looking to buy is going to be less expensive as well.  If you negotiate you'll have better leverage and that tight budget can go much further.  The problem is when you have a tight budget and you're trying to buy like you did when money was flowing freely.  Get in the habit of negotiating aggressively now and when the budget opens up again every additional dollar will go that much farther.


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