Stretching your IT budget

Fresh corporate investment in it infrastructure is a welcome signal of a budding recovery. Purse strings are loosening, but in some shops the change is so gradual that spending on new technology might seem irresponsible. Whether your budget is pathetic, miniscule, trifling, or (if you’re lucky) just inadequate, you can still do better with those limited dollars than maintaining status quo. Moving forward requires creative thinking and shedding long-standing ideas about where and how new equipment is acquired.

By necessity, nearly all of IT has already broadened its options. Companies have combined second-tier hardware suppliers, open source software, and outsourcing plans — including utility computing — with cuts in staff and square footage to rapidly shrink expenses. If you have made all of those changes and you’re still losing the battle, it’s not enough to think outside the box. It may be time to resort to some unorthodox alternatives when it comes to hardware purchases as well.

No matter how flexible you’re willing to be, there is no way to recover three years of lost time in six months. But if you’re willing to try something new or even radical when it comes to equipment purchases, you will land more capacity and long-term value than you imagined you could afford.

You can grab new and powerful vendor-financed hardware under a consolidation plan. Brick-at-a-time racks and blades let you ratchet up capacity whenever a buck escapes from the COO’s office. Take advantage of significant discounts on big vendors’ gear just by doing a little extra legwork. And finally, if you want to get three Camrys with your Ford Escort budget, go for the white box.

Consolidate It

You may not have dust bunnies in your server room, but you undoubtedly have a collection of older servers that should be off playing shuffleboard. If you can’t see how retiring some of your old gear will grow your capacity and stretch your budget, ask IBM Corp., Sun Microsystems Inc., or Hewlett-Packard Co. to come talk with you about consolidation. Then get ready to feel the love.

By cutting the number of physical servers, you’ll lower power consumption, make software updates easier, have fewer boxes to watch and fix, and substantially reduce service and support costs. For this plan to work, the savings in continuing costs exceed the payments on the new gear. If you’ve got a floor full of old Pentium II and Sparc boxes, a couple of HP Itanium or IBM Power servers might clean out the whole joint.

Consolidation plans have some nasty catches, though. The new architecture is probably not the same as the one you’re replacing. No matter how much more efficient the new hardware is, you won’t save a dime if your applications and data won’t transfer easily. There is also the issue of software licenses. In most cases, you can’t just move them. Don’t expect Oracle to congratulate you for cutting back from 16 CPU licenses to four. You’ll have to renegotiate, and that’s going to cut into your savings.

Hardware vendors are shouldering more risk by offering new, customer-friendly financing options. It’s not zero percent, no money down, but the deals are better than we’ve seen since the last recession. It costs you nothing to bring the big names in to show you their numbers. View the proposals with an especially skeptical eye and consider issues such as software licensing.

The only servers that sold well during the recession are 1U servers. Using these, you can start building the skyscraper of your dreams with just one brick. Bottom-end rack servers from major vendors sell in the US$1,000-to-$2,500 range. Buy three or four and you’ve got a basic cluster or load-balanced farm. Buy more as you can afford them and stack them up. This can be a cash-and-carry transaction planned for the start of each budget cycle.

Blades attract a lot of attention for their unmatched density. A frame packed with 16 single- or dual-processor blades squeezes into the same space as a trio of 1U servers. Saving space is always a worthwhile goal, but density isn’t a leading concern when you can only buy servers two or five at a time.

Almost New

Refurbished hardware is the safest way to buy the name plates you treasure at discount prices. Your vendor probably sells refurbs or will point you to other sources. You should also ask about unadvertised discount hardware. A vendor may have trade show demos, evaluation units, and customer loaners they’d like to unload. You can also go the scratch-and-dent route to get new, warrantied systems that are perfect in every regard but their appearance. EBay is a haven for such things, but I don’t trust it for business purchases; that’s my personal preference. I’d opt for direct purchases from established sources. In any case, the savings are rarely spectacular. A range of 10 to 20 percent off retail is typical.

The best prices on new, top-brand equipment pop up in what I call the “sweet spot.” That’s the brief period between a model’s end of production and the final clearing of inventory. These deals aren’t easy to find because vendors rarely announce that a model is at the end of production. This is a speculation game: How far will a vendor mark down the price before the shelves are clear? If this sounds like a fun challenge, you can reap 25 to 40 percent savings — more if the vendor has inventory that just won’t budge.

Surplus houses buy up a lot of discontinued systems. But since honest and helpful surplus resellers are as hard to come by as reputable camera dealers in Times Square, vendors are the preferred way to buy. However, the only vendors I’m aware of that consistently clear out their own shelves are Apple and Dell. New and heavily discounted Titanium PowerBooks and dual-processor Power Mac G4 desktops are readily available through Apple, even though these models have been replaced. Dell has outlet stores around the country selling discontinued and refurbished hardware.

Wanna Buy a Rolex?

Riddle: What’s the difference between a name-brand $1,200 desktop and a $2,000 server? Answer: The desktop comes with an AOL CD. Single-processor desktops and servers are functionally identical. Repurposing a big-brand desktop into a server makes sense, right?

Not on your life. IT could create an entire department just to coordinate desktop PC repair calls and to ship returns. Vendors explain that servers are subjected to higher quality control standards than desktops. (Funny, I don’t see “our desktops’ quality control is the lowest in our whole product line” in TV ads). The street vendor selling 10-carat plated “Rollex” watches, when pressed, is more forthcoming. Skip the brand-name desktop. Go the generic server route instead.

White-box systems are unbranded servers and desktops. You’re using them now, whether you realize it or not. In my opinion, the premium charged for a low-end system’s service and support nets the buyer little to nothing.

A bare-bones white-box system brings all of the price-stable parts together in an assembled unit: chassis, power supply, motherboard, and cooling. A builder can stock bare-bones systems and, when they’re needed, stuff them with CPUs, memory, and disks at current market prices. The performance and longevity of the best VAR and builder-supplied systems matches branded machines that cost twice as much. And unlike the big brands, VAR and system-builder hardware can be expanded and repaired with off-the-shelf parts.

The Handyman Can

I doubt there is any budget-stretching idea as unpopular as building your own white-box systems from components. It is the only way to get three servers for the price of one, but if you present most businesses with the do-it-yourself option they’ll say, “I’d rather buy one server than build three, or five, or 10 for the same money.”

I can’t help you decide where custom white-box systems fit in your organization, if anywhere. However, I will dispel a pair of damning myths that keep many from even considering this alternative: the PITA (pain in the neck) factor and poor quality.

Building a system requires two hand tools and is similar in effort to building a prefabricated particle-board bookcase.

To cover repairs on self-built systems, buy one set of spare parts for every six or seven systems you build. Fix them yourself or pay a local VAR to do it as needed — no on-site service contract to pay. As for support, component resellers have answers or will put you within four of five clicks of them. A Google search on the model number of any component will unearth forums and knowledge bases that address any problem you’re having. If white-box systems had no other redeeming qualities, deliverance from level-one tech support (“Is it plugged in? Good. Reformat and reinstall”) would earn my undying devotion.

The elite of the system-building community, the enthusiasts, have raised the quality of components and shared knowledge to unimaginable levels. These hard-core developers and gamers build themselves new systems every four to six months, each one far faster and prettier than the one before it. They have pumped so much cash and knowledge into this sleepy market that AMD designed its Athlon FX-51 processor specifically for them. Enthusiasts drove single-unit component prices down to wholesale, and they ruthlessly push junk vendors out of the market. Their white boxes are never boring beige.

Spend a Little, Spend It Well

No two companies have the same objectives or budgets. Making the most of what little cash you have may require broadening your options to possibilities you considered off-limits. There is a lot to gain from pushing those limits.

Researching those options will sharpen your knowledge of new technology. Getting your staff involved will boost morale. And in the process, you’ll find ways to update your company’s infrastructure that fit within your budget, however thin.