It has been five years since the anticipation of Y2K led hundreds of rental companies to upgrade or replace their computer systems. Now, many of these companies are entering the next computer purchase cycle. Others in the industry believe that the right time to buy a technological advantage is now, as the rental industry picks up steam. If your business is faced with either of these situations — or if you recently purchased a system — here are some considerations that should help you manage your computer's life cycle for return on investment.
First, put your computer investment in perspective: Business computers are primarily productivity tools. There is actually a negative value to your business in keeping a system limping along beyond its productive life span. For this reason, the life cycle of a computer system is usually defined in terms of its usefulness to the business, from the initial acquisition of that system through its ultimate disposal.
The most tangible aspect of the computer life cycle is the hardware, which is typically comprised of the server and the workstations. The life cycle of a business server is currently between three and five years, on average. The server is the heartbeat of the system, and its performance is critical. For this reason, many companies prefer to replace their server every three years as a preventive measure.
Workstations, on the other hand, have far fewer demands put on them and often last longer than five years without causing problems. Furthermore, if a workstation stops functioning it can be disruptive, but rarely impacts the system as a whole. Nevertheless, many companies replace their workstations every four to five years as a precaution. Preventive replacement can be an effective and fairly inexpensive strategy, since the price of computer hardware has dropped dramatically in recent years and new units offer the benefit of a full warranty.
At the other end of the spectrum are rental companies that still run their businesses on systems at two or three times the average life cycle. We have more than a few customers running their rental operations on 10-year-old servers that still do the job for them according to their expectations. It is possible, although not advisable, to keep a system functioning for years by treating it gently and feeding it a consistent power source. Power spikes are the most destructive normal enemy of electronics. A business computer should always run on a protected circuit with a battery backup system in place.
When economic times get tight, some companies may opt to push the limits of the hardware life cycle, software upgrade cycle or system replacement to avoid cash outlays. At other times, companies may delay making a computer investment simply because it is human nature to avoid spending money. Again, productivity should be the determining factor. It can be actively harmful for your business to deal with slow system performance, intermittent lockups and downtime on a daily or weekly basis. This can be particularly devastating when it comes to the negative impact on customer service.
Managing for needs
Other things besides age can influence a computer's life cycle — for example, changes in user needs, changes in available technology (applications and operating systems) and the cost to support the technology (internally, and with the vendor). Of these three considerations, needs are the most important.
To get the most out of your system's life cycle, manage it based on the current and projected needs of your rental business. An extreme example of needs-based cycle management was Y2K. Many system life cycles were truncated because of the real or perceived danger posed by the date format of the new millennium. Systems that were otherwise operating satisfactorily suddenly became obsolete. Rental operators deliberately shortened the cycle in order to provide for the needs of their business: seamless transaction processing, accounting and reporting through the change of millennium.
Any analysis of business needs is likely to impact the life cycle of your information technology. For example, if you plan to open or close a rental location, market more aggressively to customers, carry new types of inventory, or expand repair services, software capabilities come into play. Part of life cycle management involves gauging whether or not your rental system is meeting your current needs, and whether it will support your business objectives moving forward.
An inability to support business growth is the number one reason for the end of system life cycles. Software is not like hardware in this regard; it never really becomes obsolete. Software will always do exactly what it did when you first bought it — it is made unproductive or obsolete by evolving business needs that demand more than the software can deliver, and by the introduction of new, more effective software on the market.
If your system falls short of your needs, replacement is not automatically the right answer. Speed issues might be solved by something as simple as buying more memory. Software functionality could be added through upgrades, options and enhancements offered by system vendors. Third-party integrations are a current trend that ultimately serves your interest by expanding your system's value with optional capabilities for GPS tracking, Internet interactivity, wireless communications and more.
If you choose to upgrade your software, it may also be necessary to upgrade your hardware in order to run the new, up-to-date versions of your rental applications. Even so, this can be a better solution than implementing a completely new system and training your staff on unfamiliar software. In some cases, however, there may be strong arguments against upgrading with your existing vendor. Foremost among these are the stability and long-term viability of the vendor itself. The natural end of your computer's life cycle is an opportunity to evaluate not only the technology, but your technology provider as well.
Finally, bear in mind that an investment in mission-critical rental technology is actually an investment in the goals of your business. Computer investments, by nature, run in cycles, but there are no hard rules you must follow. The criterion to use when ending or extending your system's life is not cost; it's cost/benefit.
Jack Shea is president of Springfield, Mass.-based Solutions by Computer Inc.
