Refreshing News

Study: The winning business case for long term TCO is made with a three-year PC refresh strategy.

In a tough economy, everyone is looking for creative ways to conserve capital.

At first glance, expanding the life of PCs and laptops may seem a prudent measure for enterprises. And, according to recent research conducted by Wipro Consulting Services sponsored by Intel, some 32 percent of companies are of that mindset today.

But when the total cost of maintaining systems over years comes into play, that short-term temptation may prove unprofitable.

In fact, the Wipro research demonstrates that a three-year refresh cycle is the best long-term strategy for cost-cutting, citing plenty of good reasons to retire those dated systems.

The Magic of Three

To determine the best time to shelve older PCs, the Wipro study—Using Total Cost of Ownership to Determine Optimal PC Refresh Lifecycles, May 2009—reviews data from over 100 companies with more than 2,500 PCs.

After all, there is inevitably a point in most product life cycles—from cell phones to cars to homes—for which purchasing new becomes more cost advantageous than maintaining the old.

The firm’s analysis uses an equivalent annual cost (EAC) model to assess the total cash flow associated with a sizable stable of PCs and laptops, quantifying “the cost per year of owning and operating a PC” over a period of one to five years.

To get an accurate picture of what’s involved, Wipro explored factors such as:

• cost drivers,
• management practices,
• failure rates,
• and user downtime.

The bottom line: After year three, it becomes less expensive to buy a new desktop PC or laptop than to continue supporting aged equipment.

The report cites plenty of rationale behind that assertion. Here are its top three reasons to refresh on a regular basis:

1. Refreshing is Smart Spending

In today’s economy, enterprises need to spend strategically, particularly by scrutinizing PC support expenditures. Such costs prove substantially higher for older systems.

In fact, the Wipro research points to an average increase in support costs of almost 60 percent between the first and fourth years of a PC’s life cycle.

That’s no surprise considering that, with every passing year, applications accumulate, parts wear, and compatibility and performance issues surface.

The single greatest cost comes from updating PCs—including new application deployment, software patches, security updates, and more. There are also the added costs for diagnosis and repair, for example, which encompass helpdesk support and parts replacement.

Wipro puts this into perspective, indicating that first-year support costs are relatively low—around USD 400 for PCs and USD 700 for laptops. But by year six and beyond, those costs exceed USD 900 and USD 1,600, respectively.

If the average purchase price is USD 600 for a desktop PC and USD 1,100 for a laptop, those support costs now far outweigh acquisition costs. Year three appears to be the tipping point.

What does this mean in terms of hard savings? Wipro’s “model” company—with 11,500 mobile PCs and 19,300 desktop systems—saves USD 3 million by refreshing their PC fleet on a three-year cycle.

2. Buying New is Productive

Replacing old equipment can impact more than a budget line item. Enterprises must be more productive than ever to stay on top in competitive business climates and can ill afford the user downtime that comes with increased failures in aged PCs. Those productivity lags can be financially devastating, taking on epic proportions in today’s economy.

Just consider the typical knowledge worker in Wipro’s model company.

If PC failures prevent individuals from doing their work, 48 percent end up clocking the same hours but producing less. Some 23 percent book overtime, while 29 percent simply put in more time.

The economic toll is huge, so productivity must be a core consideration when developing refresh strategies.

3. Shedding the Old is Safer

What’s more, a tough economy can lead to increased security events—from host infections to accidental misconfigurations—and older systems tend to be more vulnerable.

In the fourth year of its life cycle, a PC can experience a 53 percent increase in the number of security incidents per year compared to year one, according to Wipro. By the time the system hits six years, that figure could reach 120 percent.

Of course, the process of detecting and then recovering from security mishaps is costly, so frequent equipment overhauls help enterprises protect their assets and avoid the high expense of resolving security incidents.

In the case of Wipro’s model company, that’s a savings in the neighborhood of USD 59,000 over the three-year refresh cycle—another compelling incentive to keep current on refresh cycles.

Timing Your Refresh

Is it time for a refresh? Check out this web-based ROI estimator for a custom assessment. After all, the right PC refresh strategy can be just the ticket for weathering these turbulent economic times.