A CIO.com survey found that the majority (77%) of companies surveyed buy second-hand or used IT equipment, including PCs, servers and networking hardware, and close to half of the respondents expect to increase their spending on used IT equipment in the next 18 months.
While the biggest factor in choosing used technology over new was to lower capital expenses, close to one third (30%) of respondents said that the performance of new equipment doesn't justify the investment or additional cost. IT professionals surveyed feel that used IT equipment is ideal in instances where high-performance is not an issue or where the particular system or technology is not mission-critical. In addition to savings of 50% to 75% off of new equipment prices in some cases, survey respondents also mentioned compatibility with existing systems as a benefit of second-hand technology. If the IT staff is familiar with a particular server, for example, thereís a minimal learning curve to get that system up and running, and downtime for system modification and configuration is minimized.
When asked about their biggest concerns, survey respondents listed reliability and quality of used IT equipment. In cases where the company did not purchase used IT equipment, respondents listed lack of warranties and unfamiliarity with the used market as reasons for not buying used IT.
Used IT Purchases
More than three-quarters (77%) of survey respondents said that their organization purchased secondary market IT equipment. The majority (61%) of IT professionals surveyed said that less than 20% of their current IT equipment was purchased on the secondary market. Our survey defined secondary market IT equipment as equipment purchased where your organization is not the first owner of the equipment including used, refurbished, pre-owned and recertified.
Close to half (46%) of the respondents expect their spending on used IT equipment to increase in the next 18 months while 47% expect their spending to remain the same. Only 7% expect their organizationís used IT equipment spending to decrease in the coming 18 months. On average, IT executives surveyed expect their used IT spending to increase by 15%.
Key Decision Factors
Forty-one percent of respondents cited lower capital costs as the primary reason that their company purchases secondary market IT equipment. Close to one-third (30%) said that the performance of new equipment vs. secondary or used does not justify the increased investment. An additional 15% cited budget constraints as the primary factor for purchasing used IT equipment.
When asked what their biggest concerns were regarding the purchase of used IT equipment, IT professionals most frequently listed the reliability of used equipment (57%), quality of equipment (50%), obsolescence (28%) and retaining service or maintenance contracts on used equipment (26%).
Types of IT Equipment Purchased on the Secondary Market
When asked what types of IT equipment they currently purchase second-hand, respondents most frequently listed servers [less than $100K] (45%), personal computers and workstations (38%), routers (33%), other networking equipment (26%), switches (28%) and storage (24%).
Companies most frequently contract with the original equipment manufacturer (44%) for service and maintenance contracts for used equipment. Twenty-one percent hire a third-party service provider. For the respondents that said they contract with the original equipment manufacturer, 26% said that their fees were actually higher for their used IT equipment compared to the fees for new equipment purchased from the same manufacturer.
CIO magazineís Second-Hand IT survey was administered online from June 1 through June 28, 2002. Visitors to CIO.com as well as readers of CIO Insider electronic newsletter were invited to take the survey. Results shown here are based on the responses of 164 IT and business professionals. Not all respondents answered all questions.
In terms of title, 44% of the survey respondents were CIOs, CTOs or vice presidents in charge of IT. Directors or managers of IT made up 33% of those surveyed and 11% were IT staff or IT consultants. In addition, 13% of the respondents had non-IT titles including CEO, COO, CFO, president, vice president, treasurer and director. On average, respondents reported an IT headcount of 37 and the average number of users supported as 2,643.
Survey respondents represented a range of industries including computer-related business (27%), manufacturing (15%), wholesale/retail/distribution (8%) and education (7%).
Fifty-three percent of our survey base worked at companies with fewer than 500 employees while 28% were from companies with 501to 2,499 employees. Thirteen percent of the survey respondents worked in organizations with 2,500 to 9,999 employees and theremaining 10% worked in companies with more than 10,000 employees.
When asked about company revenue, 56% reported annual company revenue of less than $100 million and 28% reported revenue between $100 million and 999.9 million. The remaining 15% reported company revenue greater than $1 billion. The IT budget represented 7% of company revenues on average.
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