The beginning of a new year is a time for clean slates, fresh starts, and budget resets. While this prospect may be a viewed as an opportunity for many decision-makers in most business areas, for many IT managers, it is a reminder of the many difficult decisions that come with the budget planning process. IT budget planning is a delicate balancing act. In order to keep up with company growth and changing business needs, IT managers must carefully weigh competing priorities. In trying to make cuts, they may find themselves asking questions like, “Is it more essential to replace outdated network hardware or upgrade storage? Should we bolster security or update our infrastructure? Should we be migrating to the cloud? What about software needs?”
The good news is, according to the Spiceworks 2019 State of IT Report, 89% of companies expect their IT budgets to either grow or stay the same this year. However, European businesses were more likely to report that their IT budget increases were due to external factors like changes in regulations (i.e. GDPR) or currency fluctuations (thanks, Brexit!). In a year that’s bound to bring financial uncertainty, IT decision-makers may find that even though their budgets have increased on paper, they are still expected to do more with less.
The Spiceworks report found that the biggest line item on European IT budgets is hardware, which accounts for an average of 36%. And for small companies, nearly half (up to 42%) of IT budgets were allocated to hardware this year. These same companies were less likely to expect budget increases this year, which means they’ll be left with very little room to address other technological concerns like security, software or storage.
But as it turns out, when it comes to hardware, there is a great potential for savings, which can free up space in tight budgets for other business needs. An easy way to start cutting costs is by purchasing pre-owned hardware. According to Gartner, “The secondary market, also called the ‘used-hardware market’, can offer significant savings on server hardware. Secondary market resellers offer both refurbished and ‘new in box’ products. Such hardware is best for use with noncritical and disaster recovery use cases, especially when hardware is particularly expensive, or you are purchasing models or configurations similar to ones you already own. Depending on the age and complexity of the equipment, savings can be 50% to 70% off the discounted price of new hardware.”1
A re-evaluation of the IT lifecycle could also reduce costs significantly. Spiceworks reported that end-of-life is the top motivation for new hardware purchases for 60% of small and medium businesses this year. But depending on the application, end-of-life dates as specified by OEMs may be greatly overstated. The useful life of certain types of equipment, especially the stable, hardworking ones, can last up to twice as long as what some manufacturers recommend. As Gartner states, “Life cycles beyond five years are appropriate when hardware is relatively easy to self-maintain, or when older hardware can be repurposed for use cases with less strict SLAs.”2
Although OEMs will stop supporting equipment after the equipment lifecycles that they define have ended, third-party maintenance (TPM) providers can continue to service the equipment for years to come. Implementing TPM can allow for more freedom in your overall IT strategy, and a great deal more flexibility in your budget. As Gartner reports, “TPM contracts offer customers an average of 60% savings off of OEM support price lists. I&O leaders who restrict themselves to vendor-supplied maintenance may be missing an opportunity for significant warranty and postwarranty support cost savings.”3
When considering the substantial cost savings reaped from the implementation of TPM and the use of secondhand hardware, suddenly the outlook for 2019 looks much brighter. If you’re able to cut your hardware spend in half, that leaves plenty of room to address other IT priorities or even invest in innovation. So here’s to 2019, the year that you don’t have to make any sacrifices or compromises – your budget can do it all!
1-3 Gartner, 10 Ways to Reduce the Cost of Acquiring Servers, Daniel Bowers, 27 October 2017.
