What are cost-savvy CIOs doing today to reduce expenses?
In today’s tough economic climate, agile CIOs are turning to professionally-refurbished computing devices as a cost-effective option that can help keep jobs safe.
In a digital business environment, everybody needs a computing device to perform their jobs. From leave requests and booking catering, through to mission-critical business processes, everything takes place online, and from anywhere.
But hard-pressed CIOs and ICT decision-makers are finding the cost of procuring, maintaining and supporting all these devices wreaking havoc with IT budgets, just at a time when the business’s demands on IT departments are growing.
For several years now, CIOs have been saying they are being asked to do more with less, that IT budgets are under pressure, while the business nevertheless demands greater strategic inputs and initiatives from IT.
Of course, this ongoing conundrum is being profoundly exacerbated by the COVID-19 lockdown and the apparent disruption in business models. For example, Gartner forecasts worldwide IT spending to grow 6.2% in 2021, while it notes that worldwide IT spending declined 3.2% in 2020, as CIOs prioritised spending on technology and services that were deemed “mission-critical” during the initial stages of the pandemic.
The inescapable conclusion: cloud and cloud-like thinking and models are going to dominate not only how technology is provisioned and used, but also how it is paid for. And in a world in which remote working is becoming increasingly quotidian, intelligent management of device procurement, and the device lifecycle generally, is going to become more critical than ever.
One increasingly common response to this need for more devices and pressure on IT budgets is to forge relationships with IT equipment rental companies. The aim here is to stretch budgets, move devices off their books, along with all the hassles of managing equipment lifecycles, including disposal of outdated equipment.
Thinking laterally about procurement
In response to these needs, professional refurbishers have entered the IT ecosystem. These companies refurbish equipment to the highest standard and will upgrade as necessary in line with the client’s desired profile.
Machines need to be subjected to stringent quality control checks as they are brought up to current standards. They must also receive a thorough cosmetic overhaul; the result must be that they are virtually indistinguishable from new machines.
CIOs are fast adopting refurbished devices for their mainstream users to great effect.
CIOs are fast adopting refurbished devices for their mainstream users to great effect. Typically, these mainstream users constitute the majority of the workforce; therefore, adopting refurbished equipment for these users has resulted in significant savings.
Savvy CIOs are spending much more time initially scoping the technology needs of each job category, and then matching IT spend against each user profile. User analyses or segmentation will inevitably pinpoint a proportion of mainstream users who will be well-served by using professionally refurbished machines that are fit-for-purpose but can be acquired or, even better, rented at a substantial discount when compared to buying or renting new devices.
Typical end-user devices being offered by professional refurbishers to corporate clients are i5, 8GB Ram, 256GB Ram, Windows 10 with a standard three-year warranty – these specifications assure no drop in performance and reliability when compared to using new devices.
In opting for refurbished equipment, CIOs are free to stipulate both the brand and specifications, in exactly the same manner as when purchasing new equipment.
It's all about optimising the budget to ensure value for money without compromising corporate performance and freeing up IT budget and resources to undertake more innovation.
Despite the high standard of today’s refurbished devices, they can generate savings of up to 50%, depending on the desired specifications. And because they can also be leased, the benefits associated with moving the budget items onto the operating expense side of the balance sheet, kick in, as the refurbished equipment leases comply with IFRS16 as off-balance sheet leases.
Renting or acquiring refurbished devices ensures CIOs can fine-tune their IT spend to ensure they do not overspend on the devices the business needs and that only suitable technology is deployed.
In short, this approach supports the CIO’s ability to manage the IT lifecycle much more effectively, especially as the responsibility for device maintenance rests with the rental company or refurbisher.
Due to the low cost of refurbished laptops, CIOs can accelerate the implementation of their mobile workforce strategy. Refurbished laptops are much less expensive than new desktops, therefore it becomes logical to reduce cost and execute on the previously “expensive” mobile strategy without breaking the bank.
Another compelling reason to consider using refurbished machines is to support the so-called “circular economy”. The phrase refers to the emerging concept of an economic system aimed at eliminating waste and reducing our reliance on new resources.
Mining for the rare earths and other minerals needed in production contributes to environmental pollution and even exploitative labour practices, while electronic waste contains highly toxic elements, so its disposal is increasingly regulated.
By prolonging the life of existing devices, and thus reducing the need to produce new devices, refurbishment has an important role to play in the circular economy, and thus our communal responsibility to protect our planet.
Last but certainly not least is the fact that refurbished IT equipment offers a great way to bridge the digital divide globally and integrate as many people as possible into the digital economy.
co-founder and CEO of Qrent and 2ND Life.
DJ Kumbula is co-founder and CEO of Qrent and 2ND Life, organisations that specialise in the provision of current-spec, repurposed, tier-one IT brands to large enterprises in South Africa and the UK. He is a chartered accountant and a member of the South African Institute of Chartered Accountants, as well as the Institute of Chartered Accountants in England and Wales, with over 20 years’ experience in the industry.