Release yourself from the burden of IT purchasing and disposal
"Effective strategies not only reduce purchase costs and TCO, but also free up resources that can be applied to more critical areas of the business. The processes involved also help identify business pain points that can then be addressed."
In business, change is the only constant – and technology is constantly changing. There may come a day when IT reaches a zenith of perfection and computers are built to last for 100 years, but until then Moore’s law will ensure that every three to five years the boxes sitting on your desks, in your server room (and, increasingly, in your pockets) will need to be replaced by sleeker, more powerful models capable of running the latest operating systems and applications. Fail to keep up and your staff will become frustrated and your business uncompetitive. Whatever sector you’re in and whatever size your organisation, you cannot escape the endless lifecycle of computer procurement and disposal.
The cost of changing technology is one that every business has to bear but it is not one that need be a bane. Managed well, the processes of procuring and disposing of technology can give you many real advantages over your competitors. As well as reduced costs, you can gain the benefits of sharper system performance, improved process efficiencies, better compatibility, reduced support requirements, more return on investment and lower levels of risk to your business. You can even help charities and the environment into the bargain, which can be as good for corporate PR as it is for the soul. Not bad for something that many businesses consider among the most frustrating elements of modern business.
Fit for purpose
When it comes to procurement, the two words that are often first on people’s lips are ‘cutting costs’ – which may be why too many organisations still equate the best deal with the lowest purchase price. Pete Groushko, commercial specialist in Computacenter’s corporate hardware business unit, says: “Organisations face a continual challenge to reduce their capital expenditure, but at the same time they need to make sure they pick products that are fit for purpose.”
While keeping costs to a minimum, it is also crucial to eliminate risks and maximise the opportunities presented to increase productivity. Addressing the Total Cost of Ownership (TCO), rather than just the immediate capital expenditure, means taking account of failure rates, downtime, continuity of supply and the effects on business continuity. For example, banks are keenly aware of the damage that downtime can do to trading time, and organisations in this sector reduce that risk by paying a premium for technology and services that keep their business online.
One common pitfall is to strike a superficially good deal on price with a direct manufacturer, only to find hidden costs appear further down the line. “Certain manufacturers will offer customers a fantastic price at the beginning, but there will be caveats around the quantity they order which will have a huge impact on their warranty schedules,” explains Groushko.
For example, a FTSE company secured what it thought was a great deal when it bought a large quantity of systems direct from a manufacturer. However, it didn’t ensure that it had control over any changes made to the product before it was shipped, and the warranty started ticking as soon as the computers left the manufacturer’s premises. Unfortunately, the manufacturer made changes to the PCs and this left the customer unable to deploy the bulk of the technology it had purchased, since its standard software image would no longer work on the revised machines. “By the time the customer would have been ready to go live, the products had already lost three months of their warranty, which equated to approximately 10 per cent of the purchase price,” says Groushko. “The manufacturer offered to reset the warranty, but only at an additional cost.”
This company was unable to claw back the time and effort it had wasted and called in Computacenter to address the problem. The machines were sold as second-hand equipment via Computacenter’s disposals arm, RDC, to minimise its financial loss.
Going via third-party specialists may mean you pay a little more upfront, but it’s usually well worth it – not only for the expertise they can often offer regarding selection, benchmarking, configuration and sway over the big manufacturers, but because of their continuity of supply and the warranty terms they can set up to better serve the requirements of their business customers. “If you go via a partner like Computacenter, the warranty doesn’t start until the product is commissioned, not when it’s invoiced or the day it leaves the factory,” says Groushko. “Also, if a product is sold via the channel there will be discounts over the course of its lifecycle, and the price will fall as the product ages.”
Lifecycle management
Of course, smart buyers understand that only a minimal proportion of the cost of equipment is represented by the upfront purchase price and that TCO is a better measure of the success of purchasing strategies. Effective strategies not only reduce purchase costs and TCO, but also free up resources that can be applied to more critical areas of the business. The processes involved also help identify business pain points that can then be addressed.
This involves a long-term outlook, explains Groushko: “IT decision-makers need to look at lifecycle management and the basic point to understand is that only about 20 per cent of technology cost equates to capital expenditure – 80 per cent of the real cost is on support.”
This approach enables you to develop a successful IT strategy and model, which not only complements and enhances the company’s business performance but is financially savvy. If a high percentage of the cost of a machine goes on support, this is where you can make the biggest saving. For example, through standardisation you can eliminate the need for multiple configurations and myriads of software images, making the support process easier and more cost-efficient. Companies should define a minimum number of configurations according to the needs of different users. For example, you might need differing configurations for your desktop power users, your mobile sales force and your administrative staff. You can then standardise on particular configurations and put together just a handful of associated software images, thus achieving all the advantages of standardised support and purchasing. As Adrian Foxall, operations director of Computacenter’s hardware business unit, points out: “When you’ve implemented a standard set of configurations, you don’t need as many engineers because they don’t have to be cross-trained in so many different products. That represents a considerable reduction in manpower and cost, as you’re leveraging your buying power.”
Streamlined procurement
Once your equipment is standardised, you will be in a much better position to centralise purchasing and streamline your procurement. This in turn gives a clearer return on investment and enables you to better justify purchasing decisions to senior management. You will also find it far easier to ensure that your suppliers meet stringent requirements not only in terms of price, but also in assuring continuity of supply, delivering technology that is correctly configured to your specifications, and guaranteeing agreed levels of performance and support. Benchmarking suppliers’ prices and selecting best-in-class products becomes straightforward, since you will only need to do so for your standard configurations. A third party like Computacenter can also help in many of these areas.
When it comes to streamlining the actual process of procurement, one of the most effective methods is to take advantage of e-tendering, which reduces the time and cost involved in selecting suppliers by automating the procedure. While it is probably not an appropriate method for selecting higher-end equipment such as mission-critical Unix systems, where you would need to perform a more in-depth appraisal, it is certainly an effective method for sourcing commodity hardware.
“Generally, from the Wintel server down to PDAs, e-tendering works well,” says Foxall. E-tendering can help you ensure the best price without compromising quality. With the e-tendering processes themselves already streamlined, taking this route can significantly reduce time-to-purchase and make the selection process easier and more efficient. It means the companies tendering respond with specific information in a standardised format.
In any e-tendering process, you first need to define your requirements, which should be relatively easy once you have decided upon the standard packages and configurations you need. These should not be limited to hardware specifications, but also the other factors such as delivery and warranty terms, support requirements, whether you want guarantees over failure rates and so on. It may be best to start with what is effectively an online request for information (RFI), and then subsequently follow this up with an e-auction where you firm up precisely what you want and ask only the best-suited suppliers to bid.
Unless your organisation already has in-house e-tendering expertise and a good understanding of manufacturers’ technology roadmaps, you will probably want to engage the help of a third party specialist with the systems and expertise already in place. Select a partner that is able to offer a fully-audited process, can weight different suppliers in the e-tendering process according to your needs, and which can also help recommend which organisations to invite to respond to the online RFI. Employing a specialist in this way also helps ensure vendor-independent validation.
End of life
If you’re buying new technology, it will inevitably mean disposing of your old equipment. How do you get maximum return from equipment that just a few years ago required a significant investment? And, whatever its final destination, how do you address the array of security, regulatory, environmental and logistical challenges disposal involves?
Gerry Hackett, MD of Computacenter’s disposals business RDC, says: “The first question you’ve got to confront is security. Are you confident all the data on your systems has been wiped properly before you get rid of them?”
Last year, for example, a customer database and the intranet access codes of one of Europe’s largest financial services groups were left on a hard disk sold on eBay. And in 2000, details of Sir Paul McCartney’s financial transactions were discovered on a second-hand PC discarded by a large company.
In addition, there are a host of regulatory and environmental concerns to contend with – from the Data Protection Act, through electrical safety regulations, to the Environmental Protection Act and recent Waste Electrical and Electronic Equipment (WEEE) Directive. This directive obliges users to ensure they’re putting equipment at the end of its life in the hands of somebody who is competent to handle it and meet Government targets for recovery and reuse.
Even if you’re donating old equipment to third-world charities, you have to ensure it is through a recognised scheme where its final disposal can be properly audited and managed, otherwise you could unwittingly be contributing to environmental disaster. “Disposed equipment from the EU is ending up in Africa, India and China where it is being processed in a totally unregulated manner, polluting rivers, making noxious fumes and shortening people’s lives,” says Hackett.
There are the logistical issues of physically getting equipment out of offices to make room for the new hardware. “Clearly, if you’re a bank with 3,500 branches around the UK, you’ve got a major challenge in getting equipment back to a location where it can be processed. And leaving it around to be cannibalised will drastically reduce its resale value,” says Hackett.
But while many companies view disposal as a problem and a cost, getting it right (see the Solutions feature, page 16) can actually generate both revenue and good publicity. Hackett says: “If you start to reuse some of these materials, either internally or by remarketing to generate cash, you can create a benign circle of events where the money being generated actually pays for the costs of the waste disposal.”
Partnering a third party with the capacity for environmentally-friendly equipment disposal by ensuring as much of it as possible is recycled and none of it ends up in landfill – or by benefiting charitable causes, such as the Microsoft-inspired Digital Pipeline scheme (see page 17) ensures disposal can contribute to other, less tangible business benefits.
“It’s worth thinking about some of the positive PR you might generate from charitable donations and correct environmental behaviour,” says Hackett.
