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The hardware gamble: If it isn’t broken, should you fix it?

The hardware gamble: If it isn’t broken, should you fix it?

NZ businesses are determined to get value from their IT hardware, often working it well beyond the call of duty - unless software or users dictate more rapid replacement.

Maximising value

New Zealand businesses are determined to get value from their IT hardware, often working it well beyond the call of duty – unless software or users dictate more rapid replacement. Smarter middleware and document conversion have stretched legacy mainframe, minicomputer and green screen lifecycles up to 15 years – way past their expected retirement date.

Internet technology, XML and third party gateways opened the way for data to be ported to modern databases or to enable access via web browsers, delaying ‘forklift’ upgrades.

The move to enterprise resource planning (ERP), customer relationship management (CRM), upgraded financials or more flexible back end systems is often part of a slow migration, ultimately placing more pressure on servers and networked PCs.

MIS asked the following IT directors for their experiences and pointers on extending the life of the enterprise hardware and whether it makes good business sense:

Martyn A C Smith, manager information and technology services, Fuji Xerox;

Dr Phillip Lindsay, general manager information technology, AgResearch;

Laurence Bevan, information services manager, Manawatu District Council;

Scott Campbell, IT manager, Independent Fisheries;

Chris Holmes, MIS group architecture and infrastructure manager, Farmers Trading.

1. Manage the lifecycle

User monitoring and management policies lead to better long-term planning.

In replacing an ‘old school’ IT environment, IT and board level management want assurances new hardware – servers, network switches, cabling, desktops and mobile devices – meets business needs for the next five years, while also remaining flexible.

Consequently, the pressure is on to track the expected lifecycle of hardware against user needs, so maintenance and replacement can be achieved within a set budget and time frame.

Informed strategies geared to extending the life of equipment beyond the tax write-down keep overeager vendors away in the interim and empower businesses to know exactly when hardware assets are likely to become a liability. For larger organisations, the outsourcing option saves a lot of headaches, leaving a third party responsible for ownership, upgrades and maintenance.

Servers, mainframes and other equipment at Farmers Trading Company are under a full maintenance contract with IBM. “We get regular reports from IBM about help desk calls, so we have a pretty good idea of what’s going on. They’d typically get about 150 calls a month, and that’s not bad when you consider there are about 4000 pieces of hardware on their maintenance list,” says Chris Holmes, Farmers MIS group architecture and infrastructure manager.

“Years ago, we used to have preventative maintenance with engineers vacuuming out the [cash] registers and servers every 12 months. However, when you do this you can get more problems. These days everything is hopefully designed to operate in reasonably extreme circumstance, which has enabled us to bring the cost of maintenance down.”

Some regular maintenance is still scheduled, particularly ahead of high-use periods including Christmas. Holmes says it is important store managers report equipment failures, such as problems with printers, when they happen. This can help pinpoint bigger issues.

Having a controlled central computer room for the mainframes helps protect that environment and everything at the stores is standardised and locked down, including limiting menu options so users can only access what is necessary for their job.

2. Master the trickle-down effect

Replace where the need is greatest, passing older hardware to low-end users.

Work on upgrading hardware at Farmers was put on hold for a few months in the midst of an early takeover bid and then resumed just ahead of the successful offer by Pascoes and Fisher & Paykel Appliances.

The company believes in getting the most from what it owns; for example it is still running cash registers that are up to 13 years old. “They were written-off over five years and are still ticking away, so we’re getting real value from them,” says Holmes.

These are all linked online into the back end systems, regardless of their age, but newer computer-based registers are introduced where stores require more functionality, while older machines are shuffled out to smaller stores.

Moving off legacy equipment depends on the business environment. Farmers is still largely a mainframe-based business with about 400 old green screens and another 300 thin client terminals running 3270 emulation software. Wyse terminals are gradually replacing green screens.

Terminals are preferred to PCs in the stores, because of the lower cost of ownership and maintenance. “There’s a better business case for browser-based capability. We may go with Citrix or Terminal Server if we want more functionality,” says Holmes.

The company is also upgrading primary and back-up servers. “It’s pretty rare that we have any problems. We tend to get more than four years out of each. We’re upgrading 75 bigger stores to IBM X-series – and have done 30 so far. We’re also shuffling older boxes to the smaller stores and throwing out old PS/2 micro-channel machines.”

Farmers has about 600 full PCs in back office and head office locations, for which it has a four-year recycle plan. Many are now being replaced – for example the lowest-powered 200MHz PCs, which were purchased in 1998. “They’ve been adequate for what we have needed, running Office 2000 on Windows NT. We may dispose of them or turn them into thin clients.”

Holmes says there is a fine line between upgrading too early and leaving it too late. “If we had a more regular upgrade program it may not have cost us so much when we got caught out on a couple of occasions. It’s important not to upgrade too soon, but when you make a call you just have to go with it.”

3. Place importance on quality control

Decide on a supplier who is aware of your needs and pre-tests accordingly.

The rapid drop in price for relatively high-powered PCs has been a blessing for businesses needing to upgrade desktop machines. However, Scott Campbell, IT manager with Independent Fisheries, is concerned about slipping quality in hardware. He suspects some suppliers, under pressure from low margins, are using cheaper components and not testing them as thoroughly as they should.

The company had a bad experience when graphics cards in a number of machines began failing a few years ago. More recently, hard drives in laptops and CD-Rom drives in desktops have failed, largely from heavy use. “The PC is now a commodity object and I’m starting to see a decline in the lifespan of hardware and general components.”

In the past, he saw greater stability. “I’ve got PCs still ticking over after eight years, and a server at Littleton still working merrily after seven years with no failures whatsoever. However, I have two other servers around three years old, which have had power supply and hard drive failures and a couple of other issues. I’ve seen similar problems with desktops which seem to be failing sooner.”

The recent crash of the PC Company and other computer assembly businesses in recent years has made Campbell wary of buying local. He warns custom-built systems tend not to be as stringently tested with different operating systems and applications.

Campbell says hard disks in laptops seem particularly sensitive and recalls five hard drives failing within three years. He suggests a stringent policy, including ensuring they are carried around in padded bags, treated gently and not used for hard disk intensive applications.

4. Strive for a common desktop

Standardised brands, configurations and warranties ease maintenance and management.

Independent Fisheries has 60 PCs supporting its South Island-based fish processing operation, but still expects to get up to five years life from them. It will not settle for anything less than a three-year warranty – that is, on-site for one year and up to two years return to the factory on parts and components.

A move to an Intentia ERP system and heavier software requirements meant it had to upgrade from grossly underpowered 200MHz machines with 32Mb memory to Pentium 4s with 256Mb RAM. The company has also replaced all its Win9x code operating systems and has standardised on Windows 2000 Professional across the organisation.

In the past, with the different mix of operating systems and applications, it could take Campbell up to three hours to rebuild a machine. With a common PC model and operating system, that has been reduced to between 30 to 40 minutes to configure a machine from scratch.

His tips for extending the life of hardware include consolidating to a minimum number of models and brands of PCs. He gives desktops an occasional clean out using a vacuum cleaner or, in the factory and engineering workshop, a gentle blast with compressed air to remove dust off the power supply and to prevent fans and other moving parts seizing up or overheating.

5. Use warranties as insurance.

A three-year warranty can increase your confidence in life beyond the contract.

Desktop replacement at AgResearch is being slowed to four years, unless users have high-end modelling or analysis requirements. After close in-house monitoring, general manager of IT Dr Phillip Lindsay says mainstream PCs are now able to handle most applications smoothly and extended warranties offset any concerns.

He says the additional cost of three-year on-site warranties is well worth it. “Generally, if a machine is going to have a spectacular failure it’ll happen before three years. The extra year we’re hoping to get is a bonus,” says Lindsay.

There are 1200 users across six main campuses and other smaller offices around the country. “We’re now getting more performance for what we spend and, while the balance is consumed by higher weight applications, we’re still better off than we were a couple of years ago.”

The organisation buys at the current corporate model level – a 2.83 GHz Pentium. Older machines are trickled down to those with a lower user requirement; for example, there are about 300 PCs at the 300 to 400 MHz Pentium level being used as dedicated laboratory instruments.

AgResearch has policies regarding replacement of most IT items based on a desire to keep the environment current. “We always have a high demand for our services and the faster we can provide them the better it is for our user base,” he says.

6. Prioritise power and performance

Shorter life cycles suit businesses where profit is related to performance, rather than budget cuts.

For power users at AgResearch, the replacement cycle remains three years or even sooner. In the science area there is huge demand for informatics processing related to gene discovery, molecular biology, mathematics and database modelling. “That sort of activity consumes most of what we throw at it,” says Lindsay.

Server-based computing is particularly important where people in laboratories need high-performance access to back end services, largely using server farms. “We strongly encourage storage on central servers. Our basic servers are upgraded every three years but high performance Unix systems, depending on budget, are replaced every two-and-a-half years. We would prefer to do that even more frequently.”

AgResearch also uses Citrix to provide remote users and some internal people access to specialist applications from low-level desktop platforms. However, much of its in-house development is done using .Net for web delivery of business and science applications.

The internal network is already capable of 100Mbit/sec to 1Gbit/sec, but there is pressure to increase the capacity of the wide area network. “We spend a lot of money on wide area networking and, while it is reasonably quick, there are applications that could be used 100 times faster than they are now,” says Lindsay.

“We’re hoping this can be resolved through our participation in the Next Generation Internet (NGI) consortium, which should provide us with gigabit capacity.”

AgResearch’s philosophy isn’t predicated on getting the maximum life. It’s about achieving maximum possible performance. “If I were running the lowest possible cost operation and trying to get the maximum life, I would probably go with thin client or open system,” says Lindsay.

7. Centralise software

Providing networked software and stripping back the desktop reduces overheads and risks.

Fuji Xerox IT services manager Martyn Smith suggests IT managers look at centralising everything including management, and have as little as possible on the desktop.

This year, Fuji Xerox upgraded its servers – increasing disk and memory to take more pressure off the desktop machines – and is reviewing its operating systems. It has stabilised on Windows 2000.

After some unpleasant experiences as a “very early adopter” deploying Citrix thin-client technology in a mixed environment that required considerable server power, it opted to embark on its own web-based strategy. The company is also looking at extending its web applications to salespeople through laptops, iPac and other mobility tools.

“We don’t need the support or the desktop grunt because the applications are on the server. We have some decentralised storage for each branch, so they don’t have to keep coming to Auckland. We’re in the process of doing some mobile work for our engineers, so we can roll out applications to any WAP phone with a browser on it.”

A review of application requirements a couple of years ago pushed lowest common denominator desktop needs up to 450MHZ, with the company selling off older 133MHz machines at book value.

And, while the company hasn’t had to upgrade any desktops this year, software continues to push the boundaries. “As applications get bigger, even though people might not need all the functionality, the cycle starts all over again. I guess that’s why Bill Gates has shares in some of the hardware companies and vice versa,” says Smith.

A number of decisions are up in the air with regional headquarters considering options to centralise. “In the past, we’ve been very much our own entity, but there’s a move afoot to have a common system across the business, in which case we could all become Unix or Linux terminal users and it may be taken out of our hands.”

Meanwhile Fuji Xerox is trying to integrate legacy systems to extend their usefulness, although Smith says the sensible idea would be to replace them all.

8. Compare leasing with ownership

Leasing has its benefits, but lower cost of purchasing and maintenance makes this a difficult decision.

Conscious of higher interest rates and confident PCs are becoming more reliable, the Manawatu District Council in Fielding recently reverted to full hardware ownership after seven years of leasing its PCs and servers.

“As a small authority, there was no benefit for us keeping gear longer than three years. Although the industry is still moving quickly in terms of processing speed, there’s less redundancy,” says information services manager Laurence Bevan.

In July, the council froze upgrades of its 90 machines at Pentium 4 level and cancelled its technology lease.

“Some of the equipment is still performing well, even though it’s already three years old – the test will be over the next 12 months, to see if we can extend further.”

The council has five “reasonably high-end” servers and makes good use of Microsoft’s Terminal Server for some in-house and remote users enabling low-end computers to access server applications. About 75 per cent of council staff only use word processing, spreadsheets, email, internet browsing and PowerPoint presentations.

In-house applications for rating and financial systems require more computing power, although an intranet takes some of the pressure off.

Data entry staff have access to the Oracle Forms database. Power users in computer aided design and working on the geographical information systems have high-end workstations. “We can never give them enough power, so they’re the lucky ones who get faster machines every year.”

Ownership of the technology means the council has had to increase its maintenance budget. “Previously, the lease company would send out a technician if something broke down. If, in the next year, we end up spending $100,000 replacing hard drives and screens, then the exercise will have been a waste of time,” says Bevan.

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