Friday, December 16, 2016

Top Tip: Replace 1/3 of Your Machines Every Year

We have always had a double-whammy policy that we push on our clients: Replace One Third of Your Computers Every Year.

Why is that a double whammy? Because we only sell equipment with a three year warranty. As a result, machine are always under the original equipment manufacturer warranty.

There's actually lots going on here. First, equipment built for a three year warranty is going to be better equipment. Parts are cheap and labor is expensive, so if one small thing fails, the profit is probably gone for the manufacturer.

With clients we refer to this as "business class" equipment. Business class means it is built to last. We all know those machines are good for four or five years. And if they're alive after five, they could be alive after ten. But who wants to run old, slow machines?

Second, No matter what you do, old machines are slow by "today's" standards. Networks go faster. Peripherals go faster. Huge hard drives mean more work for processors. SSDs actually give the fastest processors a run for their money. New software has higher requirements. It's a never-ending leap frog of updates. Old machines just don't perform as well as new machines.

Third, we basically never upgrade machines once they're installed. Because we know we'll replace the machine in three years, we buy a little extra RAM on day one. Then we know it will work well for three years. We also use the latest operating system available when the machine is new. That's even true with Windows 10. The latest O.S. combined with the latest hardware and software has a multiplying effect on productivity!

Fourth, when machines are under warranty, our cost to support them goes down. Things basically never break. If a hard drive goes bad or a power supply goes out, we call the manufacturer and tell them to come fix it. The client has less downtime overall, and when something goes wrong our cost to get it back in service is close to zero.

The challenge for some IT consultants is that YOU don't believe the client will go along with this plan so YOU don't push the policy. As a result, you end up supporting old, slow, upgraded Franken-machines that take a lot more work and have a lot more problems. The client suffers because you didn't push them to invest in their own business.

Yes there are super-cheap clients who won't go along with this. I would encourage you to develop strategies to deal with those clients. You could charge a higher rate for machines that are not under manufacturer warranty. You could sell extended warranties. You could exclude older machines from managed service. You could offer Hardware as a Service and include the computers in you managed service contract.

But most importantly, you need to create a never-ending patter about business class machines and three year warranties. You need to talk about this all the time. You need to mention it whenever possible. You need to use the royal We: We like to see clients buy business class equipment. We like to have all machines under warranty. We like to have you on the latest operating system. etc.

After years of hearing you talk about this as if every business on earth just replaces their machines every three years, clients begin to parrot it back to you. And then you set them up on a schedule to replace 1/3 of their machines each year. It may start out as 1/4 of the machines each year and work up to 1/3. But you have to start somewhere!



  1. If I were the CIO of a major company and the CEO would back me, I'd say that this is a great policy, even if we had to extend the warranties to four or five years and do 1/4 or 1/5 replacements every year. It's actually a great policy anyway, except that software comes first. The software that is being used dictates what operating system and hardware are being used-- unless one is starting from scratch or a client has already decided to scrap existing software, the software is usually there first.

    While one can easily just say, "they have to upgrade the software too," that isn't always a realistic option, and even if it is realistic from an IT standpoint, clients often just don't want to spend the money or go through the hassle of upgrading. You can lead the horses to water, but you can't make them drink. That's why we still have clients using an old DOS program in XP Mode. The DOS program vendor does not have a Windows product, and the alternatives cost a small fortune, and end users would need to be retrained. That's why I virtualized an NT server two years ago-- the client did not want to spend $3000 for a new version of a program that as far as he was concerned did what he needed it to do just the way it was.

    It's easy to say "fire those clients," but you learn to compromise after you've been in business a while. Clients are a mixed bag, like people. They come with the good and the bad, and sometimes you have to swallow both together. If a guy pays his bills and doesn't make too many unreasonable demands, you try to accommodate him. Do I enjoy supporting DOS? Of course not. Do I enjoy supporting old Windows software? Not really. But that's why it's called work.

    We generally get 7-10 years out of workstations. That's what the 5-25 user range wants. I would cut it down to 4-7 years if I could, but it's really hard to justify to small business owners. We try to buy better workstations to start so that they will be useful longer. Often, they get passed down the line and eventually wind up being spares that see light use until the capacitors finally blow or the hard drive crashes, and then the owner or the comptroller will get a new one and the process starts over again.

    Then there are the software vendors that tell you to disable Windows Firewall, disable SMB3, disable UAC, require SQL 2005, and so on. If you have to reconfigure the workstation to run like an old workstation, why not just leave an old workstation in there as long as it will run? As for Microsoft Office, most small business owners don't use a quarter of the features of the Office that they have. Selling them an upgrade is tough. They see it as a Microsoft tax, not a productivity investment.

    Finally, why not just move everything to the cloud? No more incompatibilities and you can always run the latest whatever, right? Don't bet on it. Cloud-based computing will be really fun when vendor A requires one version of a browser and vendor B requires another. Or Vendor X refuses to upgrade his software and it requires a browser that is more than three years old and won't install on a new workstation, and changing from vendor X to vendor Y will cost $100,000 or more. (We once had a client that spent $500,000 in licensing fees, training costs, and hardware upgrades to switch from the aforementioned DOS program to a Windows-based program.)

    If I had a new client with no line-of-business software to dictate the shots, I would definitely try to get that client in the habit of keeping all workstations and servers under warranty and replacing those that aren't. All other things being equal, it's a great idea. It's just that all too often, the real world intervenes and messes up what is otherwise a great philosophy. Nevertheless, I will suggest that our company start getting those 4- and 5-year warranty extensions whenever possible for workstations. (We almost always do extend server warranties to five or six years.)

  2. Andrew - Thank you for a very thorough and well thought-out comment. My experience is different. I have rarely seen small clients keep PCs for this long. But to tell the truth, I have always worked hard to hire clients who view technology as an investment. When people are frustrated that a two year old machine is too slow, they will never let the machine get to five or seven years.

    I know such customers are out there, I think most people can build a practice among clients who are willing to invest in their own success.

    I also acknowledge that there are regional differences as well as Line of Business differences that affect many clients.

  3. We only sell business-class computers with 3 yr warranty, and shoot for 5 years life. I don't have any clients that replace all computers every 3 years. Its very rare that I crack a case on any of those boxes in the first 5 years though. If I do, and the client is on one of our low-end MSP contracts, then its a billable charge to repair. My higher-end MSP contracts cover the repair labor, but then again, they pay more per device. Its a win-win for me and it keeps my clients paying extra $ for the business-quality computers. I also believe its a regional difference. We are in the south.

  4. I get frustrated with the speed of two-year-old computers. I don't understand how anyone can work on a five-year-old machine. Maybe it's just email and word.

  5. Most of our clients are email and word. I will admit, both my home and work desktops are 5 years old. However, both have quad-core processors, 2GB video cards, nice SSD's and 8GB memory (or more) and they both hum along quite nicely (I'm very impatient!). Solid-state has been a real game-changer. The solid-state prices are coming down so we've started quoting it in more client computers and servers.


Feedback Welcome

Please note, however, that spam will be deleted, as will abusive posts.

Disagreements welcome!