PC shipments to businesses are expected to be substantial in 2004, a projected 12.7 percent increase from 2003 according to IDC[1] – good news for corporate users who have been waiting patiently for relaxed purse strings in order to obtain much needed PC upgrades.

When IT budgets tightened, one of the easiest ways to save was to extend the lifecycle of PCs. Until recently, companies were replacing PCs every 36 months and laptops every 24 months. Frugal corporations extended lifecycles from three to four years, and in some cases, to five years, to avoid large capital expenditures. With the advent of Internet applications, many realized excess capacity in these purchases and were no longer forced to upgrade as often to support operating system or application upgrades. 

Now, a wealth of Y2K PC’s are fueling much of the upgrade action. As the economy recovers, and with corporate IT spending expected to increase 5 to 8 percent this year, replacing aging PCs is again becoming a priority. 

Many corporations are quickly realizing that extending PCs’ lifecycles did not result in the expected savings, and that there’s a strong business case for making upgrades today, which includes four major benefits:

Lower Technology Costs. Newer PCs can improve manageability and increase availability. Meta Group predicts that organizations can save $350 per PC in extended warranty and support savings by accelerating PC refresh cycles. With extended warranties averaging $200 annually per PC, this expense can easily be avoided by purchasing newer PCs with warranties included. In addition, PCs older than 36 months and notebooks older than 24 months have been shown to generate additional support calls, averaging $21per call. A recent study by Alinean examining support records from service providers revealed that older PCs generate an average of 25 percent more calls in the fourth year, and 30 percent or more in the fifth year, causing consistently higher support costs.

For many companies, PC upgrades include operating system upgrades. Migrating from Windows 9x to 2003 typically yields a total cost of ownership (TCO) savings of 15 percent or more, and a 90 percent reduction in downtime.

When you add up the cost of extended warranties, support calls, administration and downtime, upgrading a workgroup of 50 PCs can yield TCO savings of more than $300,000 per year – easily justifying the accelerated investment cycle. 

Empower a Mobile Workforce. With new mobile and wireless PCs, users can have access to valuable business resources, such as e-mail and the Internet, from meetings, at conferences, while traveling, and at home. With these upgraded platforms, productivity is likely to increase as users extend their day by working at home, stay connected while traveling, and collaborate during meetings.  

In a study by Gartner Consulting, professional wireless users with notebooks reported 41 percent higher productivity gains and efficiency savings – an additional 7.5 hours per week – than wired professionals with notebooks.[2] More evidence: A study by Sage Research examined 20 North American companies and found that ‘employees realized an additional eight hours of productivity when using mobile PCs and wireless LANs.’  

The mobile and wireless empowered worker often provides a quick and conservative payback. According to Gartner, it takes as little as one to three hours per week of additional work being performed (such as checking e-mail from home or processing orders from the road) to justify the additional cost associated with the purchase of a notebook.[3]  Upgrading the right workgroup of 20 users from standard desktops to mobile/wireless laptops can result in annual productivity benefits of $300,000.   

Do More in Less Time.  Upgrading to the latest PCs can deliver significant performance improvements, leading to more productive employees. Industry-standard studies (SYSmark 2002) show that a new PC based on the Intel Pentium 4 processor at 2.80 GHz delivers six times the productivity performance gain of commonly installed systems that use the Pentium III processor at 500 MHz. By deploying the Pentium 4 processor with HT technology, users see an immediate performance impact and increased system responsiveness in today's multitasking environments – up to 25 percent. Upgrading a group of 50 users who spend 40 percent of their time using PCs for critical job functions can lead to conservative productivity gains of $40,000 per year.

Secure the Enterprise.  Rising rates and increased severity of viruses, worms and Trojan attacks are forcing corporations to rethink security strategies and increase budgets to prevent such attacks. One of the weak links in today’s enterprise security is the older PC.  It’s particularly vulnerable to virus attacks because the latest security measures cannot be implemented without degrading performance and damaging productivity. Today’s operating systems and business software contain great new security features, but you need PC performance to run them like you want to, without disrupting your business.  Consider Microsoft’s Encryption File System.  It’s a powerful feature that can greatly improve data security by locking down files on your hard drive in real time.  But it can cause a 300 MHz degradation in performance – that’s tough for an older PC to handle, especially if there’s just 500 MHz or 733 MHz to begin with. Real-time virus checks require similar performance capabilities. The typical 2,000-person organization experiences 2.1 virus attacks per year, resulting in $20,000 in respond-and-resolve labor costs and $150,000 in downtime costs.

Overall, the business case for PC upgrades and reducing the extended PC lifecycle back to three years for PCs and two years for laptops is compelling. For a typical 50-user workgroup, empowering the mobile workforce can mean more than $300,000 in annual TCO and security savings, and $350,000 in productivity enhancements. The risk-adjusted business case generates paybacks of less than six months and a 200 percent ROI in three years for most organizations, making it a priority in 2004 for many CIOs.