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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, there’s 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.
Key
Findings
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 organization’s 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.
Biggest
Concerns
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%).
Service
Agreements/Fees
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.
Methodology
CIO
magazine’s 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 the remaining 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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