Friday, January 13, 2012

SOP Friday: Hardware Replacement and Upgrade Policy

When do you replace hardware? Well, that's more complicated than it appears at first. There's the "ideal" policy, the reality of dealing with clients. And then we have the reality of dealing with clients in the worst recession in sixty years.

General Rule for Success: "We Like To See . . ."

Let me just take a sidebar here and explain a powerful rule of success if you are a computer consultant (or any kind of consultant). You need to have a philosophy about how things are done. In some way, this is a core belief that leads us to create all these other policies.

It boils down to this: The combined total of all the advice you give will move your clients in the right direction. It will give them better performance from their computers, more efficiency from their employees, and save them money in the long run.

We are this month celebrating clients with 5th anniversary, 7th anniversary, 8th anniversary, and 10th anniversary, as our clients. When I look back on all the advice that's been given and taken, I can honestly say that we saved them money "in the long run" because of our advice.

Newbies to our company don't understand how we can have so few service requests. We have weeks where basically nothing happens. That's because we are very firm in pushing our philosophy about hardware, software, licensing, maintenance, and spending money wisely (which might mean spending more in the short term).

The key phrase to memorize here is We like to see . . . because it gives clients confidence that you have a big-picture philosophy about how things are done. We like to see hardware replaced every three years. We like to see Exchange on a hosted platform. We like to see point-in-time backups. We like to see a documentation folder for each machine.

When you go into a client with strong philosophies about how things are done, they feel more comfortable relying on you to give them good advice!

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Anyway . . .

There are two major policies here. First, there's a policy regarding upgrades. That is, upgrading existing hardware. Second, there's the philosophy regarding replacement of hardware.

Upgrading Existing Hardware

This used to be more of an issue in the "old days" when 1) Technology kept improving at a fast pace, 2) Things broke, and 3) Components were installed separately.

Today, most of the core components are built into the motherboard. LAN card, Video, sound, printer, RS-232, USB: It's all onboard. So if something goes wrong you normally just call the manufacturer because it's covered by the warranty. (See next topic.)

But, aside from that, things don't break. Well, rarely. I don't remember the last time an onboard LAN went bad, or a sound card or video. I think I recall one bad LAN port in the last ten years. And all I really recall is that someone had taped over it with a label that said to use the add-on LAN card. So maybe it wasn't bad at all.

We used to get faster and faster modems. But now 56K is the top. You either get one or you don't. LAN ports have been 100 MB or 1 GB for so long that no one every upgrades. Sound is onboard. Very few people want an upgrade in the business environment, unless they're doing something special. Every machine has five or more USB ports.

The point is: We almost never have to address upgrading existing hardware. But when we do, here's our policy:

It is this company’s core belief that a business class machine’s useful life is 3 years.

Upgrading Hardware
We do not upgrade hardware in machines that are more than 3 years old. If we're looking for a manufacturer part, we end up spending a lot of time trying to find the right thing and get it ordered. We almost always lost money once we consider the labor involved in getting such parts.

In addition, we are much more likely to experience additional problems once we start replacing stuff. For example, we've had a motherboard go bad after upgrading memory. Yes, we've done it a million times. But suddenly something goes bad and it's an issue that has to be addressed.

The only two possible exceptions are:
1) A retrofit (not upgrade) of a business critical machine in an attempt to keep it alive long enough for its replacement to come on line.
2) We have explained our policy to a client and they are willing to pay for both our time to find the correct parts and all time for all installation and troubleshooting of issues arising from that installation.

So far, we haven't had too many clients that are so endeared to a machine that they select option 2.

Replacement Hardware

Note, please, that this discussion involves all hardware except printers. That means that we're talking about servers, desktops, laptops, routers, firewalls, switches, . . . everything.

Printers are an exception because we tend to sell business class HP printers, and they never die. One time we had a client who built their annual conference registration system around HP Laserjet 4 printers (a wise choice). I had bought a used HP4 from a client. So it was 5+ years old when I bought it. When I decided to move to a faster printer, I sold it to this client for their conference registration system. Five years later, they retired that system and there was my old printer in the pile, in perfect working order. Finally donated to charity along with the rest.

As for everything else . . . Our general rule is that a business class machine’s useful life is 3 years. There are several reasons for this.

First, we sell business class machines. So they're built to last that long. They're built with better parts and better processes. They're inspected more carefully. And they really should last three years trouble-free. This is true of HP. It's true of Lenovo. It's even true of Dell. IF you buy business class machines.

You can take a "home" grade PC (or low-grade server) and boost the memory, boost the cache, boost the hard drive, etc. You can spend just as much as a business class machine, but you'll have an upgrade home machine. It won't be designed to last three years. You need to start with good equipment and figure out how to reach your price point. Never start with cheap equipment and spend your way up, because it will never become business class.

Second, we sell only servers and workstations that come with a 3-year warranty. For everything else (firewalls, switches, etc.) we require at least a one-year warranty and we really push the three years. We always quote equipment with three years worth of warranty, whether it's standard or an upgrade.

Our managed service agreements require that all covered equipment has to be under warranty. If not, all labor is billable. There are two very simple reasons for this:

1) Equipment designed to have a three year warranty almost never has any issues within the first three years. In fact, it also never has issues within the first five years! It's "business class" and just works.

2) In the fourth or fifth year, under extended warranty, we can still just call the manufacturer and say, "Come fix your stuff."

Third, technology marches on! Whether a client wants to admit it or not, you have to upgrade sometime. Old machines get slow. They get bogged down with lots of programs. They get asked to do more than they were intended to do. Hard drives begin to slow down because of re-reads and re-writes. Older machines have fan issues, even if they're not obvious, so they're hotter and slower.

AND all the equipment in your office has to work together. When you replace a desktop here and a desktop there, pretty soon the server is the slowest machine in the office. It's working overtime just to keep up with all those fast desktops.

Network equipment also gets old. Ports go bad. But more importantly, older chipsets are slower than newer chipsets. New kinds of protocols come into existence and the routers and switches don't know what to do with them. VOIP is a GREAT example of this. Very often, manufacturers will put a 100 MB port on a firewall that can't possible pump out data faster then 30 or 40 MB. Yeah, you get a link light. But you don't get the data flow you're paying for.

That approach worked great when you were moving from a 1.5MB T-1 to a 6 MB DSL line. But with a 70 MB cable connection or 1GB Fiber, you are totally wasting your bandwidth potential and slowing down everything in the office.

Older, slower equipment is just going to get older and slower. Period.

A philosophy of regular three-year upgrades will always keep your client working efficiently with quality equipment.

There's a very weird mentality with equipment. Sometimes we find ourselves saying, "It still works." Well, yeah. So what. The first Compaq Proliant I ever installed with Windows NT 3.5 is still working today. Pentium, baby! With a blazing 96 MB of RAM. 16 GB SCSI drives. It takes ten minutes just to POST. But it works!

The fact that you can turn on a stereo amplifier built in 1974 and it works is NOT impressive. It's solid state. It should just work. But does it give you the performance you want?

A switch (or even a hub) that's five, ten, or fifteen years old will "work." It will turn on. The lights will blink. Data will flow. But that doesn't mean it's a good idea to use that equipment in the backbone of a client's network.

A five year old server will turn on. It will load the O.S. Lights will blink. Data will flow. But that doesn't mean it's a good idea to use that equipment in the backbone of a client's network.

The Sales Pitch

Many clients accept the three year rule. This is due, in large part, to the fact that we harp on it all the time. We remind them of the age of their machines. Sometimes we even label machines with the year they were new. We quote replacements for three year old equipment. We encourage the clients to officially adopt a three year replacement policy. And when machine are absolutely brand new, we remind them that it will be old in three years.

I would say that "most" clients accept this policy. Most of them allow us to replace servers in three years. So, while they might extend the warranty for a year, they begin getting quotes to replace it at the same time. Most clients try to adopt similar policies with desktops, but they tend to be closer to the four year mark.

And a four year old desktop is not horrible these days.

But, as you know, the new desktop machine that replaced it is blazingly faster! I love projects that require a decision make to sit down at three or more of their employee machines and work on a project. They see how painfully slow they are making their employees work. It really helps them see that we're not just pushing hardware to make money.

It's funny how little attention is given to desktop machines, given that they are the most important productivity tool for 90% of all employees in our clients' offices.

So we're not just pushing hardware sales. We really are working to make them more efficient and profitable. This policy is not meant to serve US. It is meant to serve the client. After all, when we're working on an old, slow piece of crap, we're getting paid by the hour. With that policy in place, we'd make a lot more money working on old equipment!

I know you know how it is.

We are so "into" technology that we can't stand being on old, slow machines. But some people somehow convince themselves that they're saving money.

You need to believe this philosophy deep in your heart: Old machines cost money! You need to speak this philosophy when talking to employees and clients. You need to work it into your web site, your newsletters, and all of your client conversations.

"We like to see these machines replaced every three years."

Your Comments Welcome.

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About this Series

SOP Friday - or Standard Operating System Friday - is a series dedicated to helping small computer consulting firms develop the right processes and procedures to create a successful and profitable consulting business.

Find out more about the series, and view the complete "table of contents" for SOP Friday at

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Next week's topic: Keeping Your Standards and Procedures Organized


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