The economy remains concern #1 to most businesses even though the signals are reasonably certain that the recession has turned the corner. I have recently presented in several venues discussing lifecycle management. There still remains a number of companies that remain unconvinced that extending the useful life of a desktop is not the best set of economics. The desktop economics differ from the discussion of the laptop useful life so this blog entry is to discuss desktops specifically.
This blog, like all my others, represents my perspective and opinions only, not that of my employer.
Many businesses believe that the best set of economics is derived from extending a desktop useful life from 3 years to 4 years, or 4 years to 5 years, or in the case of some- "ride them till they die". My opinion remains that 3 years is the optimal lifecycle and the best set of economics. I clearly understand that in some scenarios a company may not have the capital to acquire new desktops. In that case, however, there is a bigger set of problems in play that is more than desktop lifecycle.
There remains some belief that it is a thrifty, or frugal, or otherwise admirable quality not to spend capital on desktops. In some cases, this is based upon social, political, or cultural aspects not the economics. Part of the rationalization is that the technology is so reliable it does not need to be replaced. It is true that reliability and quality is much, much better particularly with desktops where the help desk call volumes are typcially not even a "top ten" incident. To assume, however, that because one is not spending capital on desktops, IT is optimized , simply does not necessarily connect.
I would be interested in your opinions and experience regarding this topic.
In terms of quantifying the potential impact, it may be easier than one might think. Let's assume, for example, that a desktop acquisition price is $450. In comparing various cost categories one can discuss a business case that may shed some light on the extension of the useful life.
First, energy consumption. Governmental energy standards such as 80 Plus and EnergyStar have improved consumption metrics statistics severalfold over a four year period. All OEM's have improved power consumption when one compares older technology to newer technology. If we peg a range of $35 to $50 annually for a single desktop, that is a reasonable range. If the figure is $40 to make a final assumption and the desktop is retained for 3 years, that is $120 of the $450 acquisition price or 27% of the price. This in an of itself may be compelling.
To dispose of a 4 year old or greater desktop there are two aspects to consider. A four year old desktop robustly configured, may have up to $36 of remaining residual value. More likely is that the costs to dispose, including shipping (older desktops weigh considerably more than newer desktops), packing, and kitting approaches $35 itself. These are likely one time only charges which to be complete should include about $20 to $30 to actually dispose of the asset and secure a certificate of destruction or other validating documentation. Penalties for not complying to the EPA and state regulations could be costly. If we assume that these figures are reasonable, then the end of life for older desktops approaches $90 or 20% of the acquisition. Another interesting statistic, provided by third parties, is that 90% of the PC's deployed do not implement power management settings.
Energy savings and end of life costs are real, they are direct to a budget (energy perhaps not to the IT budget which is a part of the issue). Most companies post on their websites a commitment to sustainability, but the lifecycle strategies employed may not reflect that commitment in this case as it relates to desktop lifecycle.
Productivity, which is frequently considered an indirect cost is the statisitic that should push the desktop retention strategy over the edge. The statisitic that the W7 teams promote is 68% improvement. "Giveback" which is a new metric I have identified in my research, clearly offsets downtime (another indirect cost) whcih which can be estimated at 2 to 4 hours annually per most of the independent consultants (you could Bing or Google for the reference materials). If labor is assumed as fully loaded at $50 per hour, there is another $100 to add to the quantification now summarized as $120 energy, $90 end of life and $100 productivity or $310 which is 68% of the acquisition pricing.
In addressing the remaining $140 is the potential fourth year of useful life in which case the energy competes the justification. The features of W7, new chipsets, OEMs platform features and the potential impact of implementing these features in lieu of other incremental counter measures is the offset remainder.
To state that the best set of economics is to extend the useful life is a conscious or unconscious decision not to acknowledge all of the reasonably well known information and trends in the market place. We in IT really understand this, we live and breath this every day.
Optimization of the desktop today is not "rocket science" I am told, however, the "rocket science" is the integration of all of these disparate data points into a cohesive message and strategy.
If the business can really retain desktops beyond the 5th year, a virtualization discussion may be in order as a next step.