Jan 01 2005

Out With The Old

Is It Time to Upgrade?
Jim Nolan, director of Information Systems, Inogen

Through the years, Jim Nolan has followed a simple but reliable pattern for upgrading desktop computers and systems.


On average, Nolan expects to get three years of solid service from a desktop. By replacing one-third of his office computers every three years, he can ensure that the technology stays current, there's no disruption in service and he doesn't break the bank by trying to upgrade all the desktops at once.


But Nolan, director of Information Systems for Inogen, a Santa Barbara, Calif., provider of portable oxygen concentrators, isn't sure that practice still works. The flaw in the formula: There's nothing wrong with most of the three-year-old computers in use today.


"Computers have become so much more reliable that we're not seeing a lot of the problems we used to experience after three years," Nolan explains. "Also, Microsoft hasn't significantly changed the operating system recently, so it's possible we now could get four years of service out of a desktop."


In the past, computers tended to experience higher failure rates as they approached three years of service. Hard drives crashed, processors and operating systems could no longer support the latest software and the costs of maintaining older systems often outweighed any savings to be gained from keeping computers around another year.


In addition, new releases of Microsoft Corp.'s operating system often forced companies to undertake wholesale changes. But Microsoft hasn't released a new operating system since Windows XP in 2001, and its next major release, code-named Longhorn, isn't expected to go on sale until 2006. And as Nolan points out, today's durable desktops for the most part don't need a major upgrade to run standard office applications.


So is Nolan thinking about extending his desktop replacement cycle to four years instead of three? Not exactly. Other factors, such as price and new monitor and network options, have persuaded him to keep to the standard replacement plan—at least for now. The last time Nolan completed a major desktop upgrade, he paid an average of $1,600 per computer. This time around, Inogen purchased new brand-name desktops with more processing speed and twice the hard drive space and memory for about $600 each.


Some of the savings went to outfitting the desktops with LCD (liquid crystal display) monitors, which also have dropped significantly in price. "They're better on the eyes, they take up less space and I was able to get them for about what I paid for a CRT [cathode-ray tube] monitor the last time around," he says.


More Bang for the Buck


Nolan isn't the only one weighing the actual need to upgrade computers against the bigger bang he can gain from his technology budget.


Market research firm IDC predicts that the U.S. personal computer market will experience a 9.1 percent growth rate in 2005. That's healthy, but it's down from the 10.8 percent and 10.1 percent gains in 2003 and 2004 respectively, at a time when the economy appears to be gaining steam.


IDC analyst Alan Promisel believes many companies are simply getting more life out of their older desktops, servers and software. "When the economy slowed, companies started delaying their purchases and found they could get along fine with their older PCs," he says. "The question is, with the economy improving, will companies go back to their traditional three-year cycles? It's too early to tell, but we do know a lot of companies say their computers that are three to four years old are fine for running [Microsoft] Office-type applications."


When it is time to upgrade, buyers find that the price-to-performance ratio that characterizes today's computers makes them an unprecedented bargain, says Rick Broadhead, a technology expert and consultant. To get the best combination of value and performance, Broadhead recommends moving one or two steps down from the top-level PCs offered by manufacturers. Top-of-the-line PCs are packed with features that most businesses don't need, like high-end graphics cards designed for game-playing, built-in televisions and earsplitting sound systems.


"What you need depends on the nature of your business and the types of users," adds Broadhead. Employees running Microsoft Office-type applications probably can get along with a $500 to $700 computer, whereas graphic designers or engineers running sophisticated drawing applications may require a $2,000 to $3,000 desktop.


That's why finding a vendor that knows a business's requirements can pay off big-time, agrees Inogen's Nolan. "Working with a company or representative who is knowledgeable about my business and my needs is worth its weight in gold."


Nolan says a good service representative will know ahead of time what applications need to be pre-installed on desktops and the required system configurations. "If I forget something, like the fact that I always add extra memory, my representative will catch that. It's like having an additional employee," he says.




CEO Takeaway

Is it upgrade time? In evaluating a company's specific needs, managers should consider several key factors:

Does the current technology do the job? If office desktops and servers can efficiently run the applications needed to operate the business, an upgrade may not be necessary.
Are maintenance costs rising? If a company's computer systems are beginning to experience hard drive or system crashes, the cost of maintaining those systems could outweigh the cost of replacement. Research firm Meta Group estimates 70 to 80 percent of the total cost of owning business PCs is tied to maintenance, administration and help-desk support.
Could the business run more efficiently with new technology? Time is money for most small companies, so if employees are slowed down by the speed of desktops or servers, it's time to upgrade. And with today's reasonably priced computers, the cost won't blow the budget.
Are there plans to grow the business or expand in different directions? An upgrade could be key to success. The sales force might need to be on the road more often, making an upgrade to notebooks worthwhile. Rather than continuously rewiring the office to accommodate new employees, it could be time to upgrade desktops to support wireless networking.
Is the system vulnerable? Protection from viruses and hacker attacks is a particular concern for companies running computers with older operating systems. If patches and security updates are no longer being provided for the operating system or applications, the company may be at risk.