Most every IT Department has a replacement cycle for equipment.  Most companies tend to replace PCs every 3 years.  Sometimes laptops are sooner due to the wear and tear of being portable but generally this 3 year cycle is across the board.  Other equipment is kept longer; servers may be 5 years and even as much as 7-8 years for other networking equipment.  But why replace if it is still working?

Let’s look at history for some answers.  Moore’s Law has basically true for decades.  Gordon E. Moore, co-founder of Intel stated in paper written in 1965 that the number of transistors in computers would double every 2 years.  We have seen basically this exponential trend in all areas of computing (processor speed, memory capacity, etc.)  But how much faster can our computers get? I click on an icon and the program pops up, I hit a key on my keyboard and it shows on the screen instantly.  We are at a point now that computing speed may not need to increase for basic computing so it seems like we shouldn’t need to replace our computers as often.

From another historic perspective, software has generally used faster processing power every time the latest upgrade came out.  So like good minions of Microsoft, we upgraded our computers for the latest Windows or Office.  I really like Windows 7; it works great, doesn’t crash, and does what I need.  The last couple Office upgrades haven’t given the average user any new features that we just had to have, so why not stick where we are?

The problem is that computers are machines and machines wear.  The inside of a computer gets hot and that degrades the electronic components.  Hard drives spin very fast almost the whole time you are using your computer.  Keyboards, mice, DVD drives, and cooling fans all have moving parts so they will wear out.  All these affect performance of the computer.

Another factor that impacts computer performance is software itself.  Have you ever noticed that your computer is blazing fast when you first get it but as you add programs and files it starts to slow down over time.  There are lots of reasons for this (fragmented drives, increasing size of the registry, security patches, etc.) all of which could be fixed by wiping the hard drive clean and reinstalling fresh but that takes time and you still have the physical issues.

Let’s do a short case study.  Let’s say your computer with all of the software costs $1,000.  Ignoring actual depreciation rules and tax codes for this illustration, if you use the computer for 3 years it is going to cost you $333 per year plus support expenses.  As the computer ages there will be more issues with the computer so support costs go up.  Not only is there a cost for the IT person to fix the problem there is the cost of replacement parts (if not under warranty) and most significantly is lost productivity.  If you charge $150 an hour you only need to lose a little over 2 hours a year and you have the annual cost of the computer.  If the computer that goes down is a server then you can multiply the loss by the number of people in your office and you can see how costly it can be.

As they say: “an ounce of prevention is worth more than a pound of cure” and if Murphy’s Law is right, the systems will die right before a due date, while preparing a big proposal, or in the middle of a presentation.

Rule of Thumb:

End-user computers are generally rotated every 3 years.  Servers are replaced less frequently because they use enterprise-grade equipment and are maintained in a more controlled environment.  Other equipment varies and depends on the environment, and the needs of the organization.  One problem that occurs between the IT department and the Accounting department is that IT wants to replace a computer in 3 years and Accounting wants to depreciate over 5 years due to tax rules.  If you replace one-thirds of your PCs each year and then keep the old computers for at least a year as loaners and other less demanding needs (conference rooms, label printers, scanners, etc.)  That will help fill in their useful life to more closely reflect the Tax Life.

Hopefully this information will help make sense of the need for replacing equipment on a regular basis.  Create a policy within your organization for this replacement and stick with it.