Determining the
Optimal Server
Refresh Cycle

Replacing servers more frequently may reduce the total cost of ownership while potentially improve productivity and performance. But knowing when to upgrade isn’t always clear.

Some companies attempt to extend the lifespan of servers for as long as possible—often as much as six to eight years—due to tight IT budgets and other considerations. In recent years, however, the trend has shifted as industry analysts have recognized the significant benefits of a shorter, three-year refresh cycle§.

Here are six factors to consider in evaluating your server replacement strategy:

1. Expenses

Prolonging the refresh cycle can increase costs over time and diminish the ability to efficiently support core business functions.

An International Data Corporation (IDC) whitepaper found that server operating costs in years four to six of deployed life are 10 times higher than their initial acquisition cost.

By upgrading servers on a three-year cycle, IT departments may reduce expenses while taking advantage of key benefits afforded by new technology.

  • Server consolidation. Newer, more powerful servers provide higher levels of virtualization which make it possible to scale down server costs on a “per-workload” basis. For example, a company with 300 servers could reduce the number of servers to 247, while increasing capacity.
  • Power efficiency. Improvements in hardware and power management make newer servers more efficient, reducing costs associated with power consumption and cooling.
  • Warranty/break-fix fees. Quicker refreshes mean less break-fix events and enables many businesses to stop paying annual extended warranty or maintenance fees to vendors.
  • Smaller footprint. The ability to do more with fewer physical servers allows companies to reduce the physical space required to house their data centers. Not only does this free up space, it also removes the need to lease or build new facilities, which can be a financial benefit to the organization.

2. IT Staff Time

Older infrastructure usually requires IT staff to spend more time maintaining and fixing equipment, instead of focusing on priority projects and activities. Conversely, new generation servers offer more powerful and efficient management features, as well as performance and reliability improvements, which can ease support demands.

By upgrading servers, surveyed companies were able to have their staff time and costs reduced by 59% over three years, which enabled their IT departments to focus on greater strategic initiatives that could improve their business innovation and growth.

3. Productivity

Many organizations suffer lost productivity when faced with unplanned upgrades, installations, or system outages. These outages can affect the entire network and have an impact on business operations.

Newer servers tend to be more reliable, offering increased capacity as well as more effective updates and patching. As a result, surveyed businesses that had server refreshes allowed them to reduce productivity losses associated with unplanned application outages by 78% over three years.

4. Cash Flow

Some enterprises may be reluctant to adopt a shorter refresh cycle, given the significant cost of new hardware. But when you consider the expense of maintaining aging servers, the investment in new servers may be warranted.

Analysis shows that replacing servers after three years, rather than extending their life to six years, resulted in a 33% net cash flow savings over six years for businesses that were surveyed†. That allowed those companies to recover their initial investments in new hardware within about nine months after they were fully deployed.

5. Traffic Demands

Reliance on cloud-based applications and the rapid growth of the Internet of Things is placing enormous pressure on data centers.

According to BisNow, “increasing connectivity and other factors mean that roughly 600 zettabytes of new data is created each year (that is 600 trillion gigabytes), which is about 200% more traffic than current data centers can handle.”ǂ

The enhanced performance, agility, and scalability of newer servers helps to ensure that organizations have, or can quickly acquire, the server capacity needed to meet ever-increasing workload demands. In addition, upgraded servers are better able to accommodate next-generation, cloud-native applications that are so vital to meet current and future objectives.

6. Cyber Security Risks

A top priority of many businesses is to ensure the appropriate security controls are in place to help protect corporate and customer data, and mitigate the chance of becoming the next cyberattack headline. Modernizing servers and other aging infrastructure can help combat the rapidly growing threat of security breaches and other cybercrimes.

Additionally, newer servers provide the latest hardware- and software-based security features, including advanced encryption, authentication, and threat detection tools.

Evaluate Your Needs

The potential benefits of a shorter server refresh cadence are compelling. For many enterprises, accelerating the refresh cycle may reduce costs, enhance performance and productivity, and mitigate cyber security risks.

Before pursuing a server refresh, it’s critical to evaluate your IT infrastructure and overall organizational needs.

At Huntington Technology FinanceSM, we can work with you to assess your situation, provide feedback where needed, and craft a refresh strategy that provides our best possible mix of financial benefits, flexibility, and innovation for your business.


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SOURCES:

† IDC White Paper, sponsored by DellEMC, Accelerate Business Agility with Faster Server Refresh Cycles, Doc #US42505917, May 2017

The U.S. Needs 4,000 More Data Centers In the Next Two Years,” BisNow, June 28, 2018

§Using Total Cost of Ownership to Determine Optimal PC Refresh Lifecycles, Wipro 2009 

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