Hardware replacement cycles face change

Virtualisation, user demand and other factors are altering upgrade timeframes

Ask what seems like a simple question — How often should PCs be replaced? — and you'll find that for IT managers, the answer isn't so simple. And it's certainly not universal.

The correct answer at Grant Thornton is 24 months. And next month, the Chicago-based accounting and management consulting firm plans to replace 5,000 laptop and desktop PCs that have reached the two-year usage limit.

At Southern Co, an electricity generator and utility operator that has about 23,000 PCs, the answer is three years for laptops. But 18 months ago, the utility began replacing desktop systems every four years.

And Virgin Entertainment US has no single answer to the PC replacement question. Instead, the Los Angeles-based branch of the global entertainment company has an "on demand" refresh policy under which it replaces systems as needed, based on the business requirements of individual workers or departments. Some of its 700 PCs, in particular the desktops, may be four or even five years old.

For IT executives in general, financing arrangements, the ways PCs have been used, the need for more processing power to run resource-intensive applications, and "softer" issues — such as keeping younger employees happy by giving them new technology — can all be considerations in deciding when to replace systems.

But while there may not be any real consensus among companies, the broader IT trends point to an expanding period between PC refreshes.

Many companies have settled on a three-year refresh cycle for laptops and a four-year window for desktops, says Gartner analyst Leslie Fiering. He adds that replacement cycles have increased over the past few years. Four years isn't even out of the question for laptops or notebook PCs, Fiering says.

Of all the factors that can influence a PC replacement schedule, accounting may be the most important. And while the slowing economy may prompt some companies that treat their PCs as a capital expense to hold on to the systems longer, many businesses lease their equipment and are sticking with the refresh schedules in their contracts, as is the case at Grant Thornton.

Dave Johnson, the firm's director of infrastructure and technology, says that he gets a higher residual value on systems by taking them under a shorter lease, thus helping to lower his overall costs. And, he says, the lease payments take the residual-value calculations into account, "so it doesn't necessarily pay to go out much beyond 30 to 36 months."

But financing issues aren't all that's involved. For instance, laptops are the point of the technology spear at Grant Thornton. The firm's work involves a lot of travel to client sites, which can be tough on IT equipment. Johnson says the durability of laptops is increasing, but not enough for him to extend his 24-month refresh cycle.

Another reason why the two-year cycle still makes sense for Johnson is that he can be certain the hardware he gives his users will meet their application needs for that amount of time. "The further out you go, the better your crystal ball needs to be as to exactly what you are going to be running three to four years from now," he says.

William Lewkowski, CIO at Metro Health in Michigan, leases most of the healthcare provider's technology, including PCs and datacentre equipment. Lewkowski likes how the leasing approach drives IT upgrades.

"It forces us to keep current every three or three and a half years," he says.

Lewkowski says he doesn't doubt that he could extend the life spans of some of his desktop systems in particular to four or five years, especially as he starts using virtualisation technology to deliver applications to end users.

On the other hand, Virgin Entertainment CIO Robert Fort buys his IT gear and treats the purchases as a capital expense, which gives him more flexibility than he would have if he was leasing. Then it becomes a question of how best to spend the company's IT dollars — on replacements of all PCs at regular intervals, or on what Fort described as "higher-priority activities".

Fort's answer to that question is that replacing PCs on an as-needed basis makes the most sense. Each year, he sets a baseline configuration standard with his PC vendor that any new systems must meet. But deciding when individual PCs should be replaced can depend on factors such as application needs and the amount of on-the-road use that they get, Fort says.

Rebecca Blalock, Southern Co's CIO, says she thinks desktop technology "has stabilised enough" to make a four-year refresh cycle on those systems feasible for users. But there's still a need to stick to three years on laptops, Blalock says, and she doesn't see the life cycle for either laptops or desktops getting much longer.

With new processors still arriving at a Moore's Law pace of every 18 months or so, the cost of computing power continues to decline rapidly, Blalock says. And software vendors continue to develop applications that are more functional and require more processing power, she adds.

There's also the need to meet the expectations of employees, especially young, IT-savvy ones. "This younger workforce, they really want the latest tools," Blalock says. "They're going to push us to be very progressive. It's not like the workforce of the past."

Steve Rubinow, CIO at NYSE Euronext, which operates the New York Stock Exchange, says he sometimes hears complaints about laptops even from workers who do nothing more than run Word.

The NYSE uses a combination of blanket upgrades and replacements based on use. For instance, some developers may still be walking around with four-year-old laptops, while frequent travellers may get new machines much sooner.

"The rule of thumb is still three years," Rubinow says. However, "it's as much driven by accounting mentality as it is by technology changes", he adds.

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