“How long do we use our servers?”
“Until they die.”
That was a real conversation I had with another system admin during my first week at a new job in 1998. Google “how long should you go before refreshing servers” and you will find that the topic is still debated. But, why?
When you buy something that isn’t disposable, you own it for its useful life. Your goal is to get the most out of it before you have to replace it. A car is a great example. You buy it and plan to drive it for as long as possible. It costs a lot upfront and you need to recoup that cost, right? But, how long before an old car becomes too expensive to maintain compared to buying a new one? Repair cost is the key variable for most people to consider. But, if you commute an hour each way to work, you might factor in the increased fuel efficiency of a new car. But if you don’t drive much, a couple of extra miles per gallon is pretty meaningless. On the other hand, to the owner of a taxi company in New York City, a few extra miles per gallon could save millions.
Twenty years ago, most companies thought about technology as a cost to minimize and tried to squeeze every last ounce out of it. Today, organizations of all shapes, sizes, and organizational structures are transforming and rely heavily on technology. For a business to transform, they must embrace doing things differently. An easy place to start is by evaluating your company’s server refresh guidelines. Some companies have learned to maximize their server investment and opt for faster refreshes. But, as the IDC report Accelerate Business Agility with Faster Server Refresh Cycles shows, for many companies, old habits are hard to break. Let’s take a look at the myths leading to an average server refresh cycle of 5.8 years when it’s clearly beneficial to refresh more often.
Myth 1: To Get the Most Value From a Server, Use It as Long as Possible
Not true. It actually costs a company more to keep existing servers instead of refreshing them. A lot more. Companies who refresh servers every 3 years have operating costs 59% lower than companies who refresh their servers every 6 years.
Myth 2: The Cost to Acquire and Deploy a New Server Is More Than Just Keeping the Old One
Wrong. The cost of operating a server in years 4-6 increases to 10 times the initial server acquisition cost. The reason is because the increasing costs are not linear and jump significantly as a server ages past 3 years. In fact, by year 6, a server requires 181% more staff time and exerts a productivity cost of 447% more than in year 1.
Myth 3: Upgrading Servers Is a Cash-Flow Drain
It’s actually the opposite. Even when you factor in the cost of acquisition and the cost of deploying new servers, a company that refreshes twice every 6 years instead of just once will have a 33% lower net cash flow. And if servers are a significant investment for your business (e.g. 300 servers), that could translate to a savings up to $14.6 million. Efficiencies of new servers and the benefits of consolidation (e.g. replacing 300 servers with 247 servers) make this savings possible.
Myth 4: It Takes Too Long to Realize the Benefits of Refreshed Servers
Incorrect. Remember, the cost of a server starts to increase rapidly in year 4. But, if you replaced it instead, you would not incur those costs. The cumulative benefits of user productivity time savings, IT staff time savings, and IT infrastructure cost savings pays for that new server in less than a year. To be more precise, it occurs in about 9 months.
Myth 5: Newer Servers Have No Impact on Increasing Revenue
False. But, this concept can be a little difficult to understand without hearing from the companies who increased their revenue. IDC highlights two different companies in their report: a logistics company and an educational services company. In both cases, the greater agility, capacity, and shorter time to delivery with the new servers helped them win additional business. IDC calculated the additional revenue per server at $123,438.
Myth 6: Buying Servers Is a Capital Expense
Not anymore. There are traditional leasing options as well as new innovative payment options such as Pay As You Grow and Provision and Pay from Dell Financial Services.
Don’t let these myths continue to keep your business from moving forward. The new generation of PowerEdge Servers are more scalable and agile, perform better, are more power efficient, and can help you consolidate more than the previous generation of servers released about 3 years ago. And if you embrace a 3 year server refresh cycle instead of every 6 years, you can take advantage of these innovations and say goodbye to higher costs.
