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AHEAD OF THE CURVE: Beware of post-recession bargains

AHEAD OF THE CURVE: Beware of post-recession bargains

Post-recession technology bargains are as irresistible as post-holiday bins full of dirt cheap greeting cards and tinsel garlands. But in some ways, this period carries with it more risk than IT faced when the economy was bottoming out.

The frugality that’s been the forced practice of late shouldn’t be abandoned as purse strings loosen. You have work to do before you start writing checks again.

IT management is under pressure to make up for ground lost during the worst of the recession. Employees and contractors are itching for IT to go on a buying spree, and they will point to vendor price cuts to support their argument.

Prices are attractive now, not just because shelves are full from a lack of buying, but also because vendors are pushing current pricing down to make room for newer, flashier, and higher-margin products. For example, Apple Computer’s G4-based Xserve was replaced overnight by the G5 Xserve. The G4 Xserves that remain on the new and refurbished market will probably be an excellent value. Microsoft is pre-selling Office 2004 for Mac by offering free future upgrades to those buying the current Office release. Advanced Micro Devices (AMD) is moving an awful lot of 32-bit Athlon processors as affordable alternatives to its own Opteron and AMD64 chips. Vendors are employing a variety of old-to-new methods to raise their revenues quickly and to pull new customers into their brands.

That’s smart marketing. But there is a deep trap here. IT has a strong desire not to fall too far behind the state of the art. There is still a compulsion to load the shop with enough equipment to satisfy peak demand, as brief as those peaks might be. The products in the “reduced for quick sale” section are newer than what’s in your shop now, and they cost less than what you paid for your current gear. So why not spruce things up a bit?

Because you may not need Xserves, Opterons, or new versions of Office. The pricing sucks you in the way interest free financing puts people in new cars they don’t need. Your organisation didn’t subject itself to the hell of firings, service cutbacks, and aborted projects to sock away some mad money.

What all that suffering bought you is a shot at staying in business another four months, with an option to renew if you’re very smart. Use this time to lay out strategies that will make the next set of fiscal challenges (as in the inflation that can follow a recession) easier to navigate. Fill the dire needs that you identify. But don’t dive into your stack of postponed purchase orders to figure out what’s needed. Have each requestor make a fresh case for new purchases. Conditions have changed.

It will sting to watch those great deals pass you by while you analyse your requirements. Sorry, but that’s what needs to happen. Do the things that actually save money without requiring new expenditures, and that add to your understanding of your infrastructure needs. For example, have vendors come in to diagnose and update all of your equipment that’s covered by warranty. Technicians will find outdated firmware and uninstalled field modifications that limit the usefulness of some of your critical systems. They may find memory modules and hard drives that went bad and were quietly disabled. Practices such as calling in warranty service and simplifying the structure of your networks are zero-dollar first steps toward determining actual need. Shiny boxes are fun and new equipment does a lot for morale.

Just wait a bit, and make sure everybody understands why the loading docks aren’t piled high with bargain-priced gear.


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