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The Hidden Costs of Buying IT
- October 21, 2021
Buying IT assets might seem like a sensible idea, but there are many hidden costs associated with outright ownership that can eat into your budget. That’s why it’s important to think in terms of total cost of ownership (TCO) – in other words, the amount that asset will cost you throughout its entire lifetime, over and above the initial cost of the new device alone. In fact, only 20% of the TCO for PCs and laptops lies in the purchase price – so, what makes up the other 80%?
Equipment over three-years old is more expensive to run
It’s easy to cling onto legacy equipment – after all: if it‘s not broken, don’t fix it. But while ‘sweating’ your purchased IT assets may seem more cost effective than acquiring newer tech more regularly, the opposite is actually true. As maintenance costs scale with a device’s age, you’ll spend an increasing amount on fixing them, undermining your projected ROI. In fact, maintaining an old PC costs 2x more than acquiring a new one, suggesting organisations are falling prey to the sunk cost fallacy, and clinging on to devices that are no longer fit for purpose.
In contrast, research carried out by 3stepIT found that replacing PCs every three years reduces their total cost of ownership (TCO) by 24% compared to keeping that device in circulation for twice as long. This is because after three years, maintenance and support costs rise by 12.9% year on year2 – a waste of funds that could be better allocated elsewhere. And when 30% of businesses surveyed are keeping their IT assets in use for over 5 years, there are ample savings to be made.
IT lifecycle management can reduce your TCO
If you are refreshing your IT assets every three years, congratulations, you can skip this section! However, if you’re in the 82% of people who aren’t, a usage-based IT lifecycle model could help you to discover a wide range of benefits for your business.
Administration such as invoice processing, asset registration and IT asset disposal could be a thing of the past, saving you time and money (upwards of £75 per device). But on top of this, replacing tech at the right time eliminates the hidden costs of older gear that’s past its prime, preventing it from becoming a burden on your workforce. For example, dragging out the life of your equipment can be a drain on productivity - a typical worker loses 1 day a month to issues like slow running systems and outdated kit3. Combine this with time spent by the IT team dealing with the additional trouble tickets generated, and it’s clear that those who move to a three-year usage model will enjoy significant cost savings.
A three-year cycle means increased ROI
Many businesses plan their budgets year on year but thinking of your IT budget in a three-year cycle can enable you to achieve more with the same amount of money. For one real life example, our TCO calculator showed that a laptop using our Technology Lifecycle Management service cost £495.15 for 36 months of use. This included invoice processing, asset registration and return of the device at end-of-contract with secure data wipe. Meanwhile buying the same device outright and paying for those services separately would cost an average of £637.18 – that’s 18% more. Imagine that scaled over your entire workforce – that’s a huge opportunity cost, not to mention the low value activity taking place in the IT team.
A better way to acquire IT
Fortunately, all these hidden costs can be mitigated by moving from a CAPEX to an OPEX model of IT procurement, like our Technology Lifecycle Management service. This offers everything you need to see out the life of your device, from acquisition to safe and secure disposal. With your tech equipment being refreshed and recycled every three years, you not only save money and time, but lower your carbon footprint and avoid contributing to the record 53.6m metric tons of e-waste that was generated in 2020 alone.
Buying IT is costing money and costing the earth. It’s time for a better way.