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1/10/2013
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U.K. CIOs Stretch Budgets With Used Equipment

Some UK IT execs embrace pre-owned network equipment in a bid to find more IT budget for new innovation.

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2013 could see a surge in alternative IT spending as CIOs look to make their budgets go further in the light of continued economic difficulties. International network specialist Network Hardware Resale (NHR) claims it has seen a growing interest in extended support for expiring equipment, as well as rising demand for second-hand equipment, as enterprises try to earmark funds for innovation.

"I speak to CIOs daily and, alongside the need to mitigate risk and deliver a consistent and reliable platform, is the need to contain costs and free up budget for strategic initiatives," said Glenn Fassett, international general manager at NHR. "Yet, according to the likes of Gartner and IDC, 70-75% of spending for most companies goes on the operation and maintenance of the existing core network, leaving only 25% for innovation and new-build."

NHR is an independent reseller of Cisco, Juniper and Foundry Networks equipment, supplying both new and pre-owned equipment. It also provides comprehensive maintenance and support services for products that have been discontinued and are no longer formally supported by the manufacturers.

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In the U.K. over the last decade NHR reports that its revenues from pre-owned network equipment have grown at a compounded rate of 13% a year, buying customers an average discount of 75.6% compared with products' list prices. The firm also purchases unwanted equipment from organizations, releasing capital back into the companies that can be reinvested in more strategic initiatives. Over the last four years NHR has bought up redundant equipment worth a total of $29 million from U.K. companies, according to its own calculations.

"CIOs need to get more for their money at the moment and, by buying the same systems for less, or putting off a forced upgrade program, they can start to balance organizations' dual goals of staying lean and preparing for new growth," Fassett said. "Being more discerning in how they allocate their funds means they can put any savings towards the 25% of budget more usually allocated to innovation."

Market analyst firm Gartner produced a paper last year on the subject of premature network replacement. In it, it noted, "Although the lack of a support contract is an issue for network operations, it does not result in a mandatory requirement to replace the equipment. In some circumstances, it is perfectly fine to get support from a third-party vendor."

When Cisco discontinued support for its popular Catalyst 6509 chassis in November, NHR responded with a maintenance and support package to extend its life for enterprise customers. "This has been one of our most successful propositions among large organizations," Fassett said.

With the Western economic situation showing little sign of imminent improvement in 2013, extending the useful life of stable, core infrastructure, or buying second-hand where the resulting equipment is ultimately the same, is an obvious way of doing more with less -- assuming everything else, such as support and reliability pledges, is equal. In a cost-efficiency context, CIOs must realize that there is more than one way of assessing risk when reviewing their network estates.

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FritzNelson
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FritzNelson,
User Rank: Apprentice
1/11/2013 | 9:33:41 PM
re: U.K. CIOs Stretch Budgets With Used Equipment
Interesting approach. I have also heard that software licenses are being re-sold, at least in Europe (I haven't heard of this in the U.S.). In fact there have been court cases involving Oracle, SAP and Microsoft on this. See this link from Constellation Research: http://www.constellationrg.com...
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