The current financial crisis is forcing more and more companies to continue to tighten their belts, and slash their IT budgets. As a result, they are indefinitely delaying the purchase of new servers, PC, and printers to replace outdated or antiquated equipment. In fact, some analysts estimate poor economic conditions have already pushed back the purchase of more than one million servers, with an additional two million planned server acquisitions to be put on hold this year. And, because IT teams are unsure when funds will be available to acquire these new assets, they are challenged to properly plan for IT asset disposal.IT asset disposal is a complicated process. The existing asset must be discarded, a replacement must be evaluated and purchased, and the new system must be logged into inventory, then installed and configured. Analyst firm IDC estimates that the costs associated with IT asset disposal can range from $150 to $500 per asset when handled by members of the procurement or IT staff. These expenses include administration and accounting, logistics, adjustments to inventory records, hard drive erasure (for PCs, in accordance with the Sarbanes-Oxley Act), and downtime.
But, while delaying hardware replacement may seem like a smart thing to do from a fiscal perspective, there are serious risks associated with it. For example, the older an asset gets, the more likely it is to break down, creating unplanned work stoppages that can negatively affect revenues. Additionally, it can affect budgets. An “emergency” hardware purchase will mean that funds will need to be re-allocated from other, potentially critical IT projects.
“If replacement cycles do not change, almost 10 percent of the server installed base will be beyond scheduled replacement by 2011,” said Peter Sondergaard, senior vice president at Gartner. “This will impact enterprise risk. CFOs need to understand this dynamic, and it’s the responsibility of the CIO to convey this in a way the CFO understands.”
The best way to properly plan for IT asset disposals this year, and in coming years, is through the use of a comprehensive IT asset management system. This will provide complete visibility into all IT assets across the business, enable users to manage asset lifecycle, and allowing IT staff to review all hardware components in inventory (including age, configuration, and repair history), and precisely determine which ones have the highest risk of failure (and need to be replaced immediately), and which ones can remain in service a bit longer. Additionally, automated IT asset management tools simplify the handling of end-of-life activities for hardware and other technology components, dramatically reducing the associated time and costs.