The once-traditional 'upgrade every three years' cycle has taken a battering in recent years, as businesses have faced increasing pressure to justify every cent of their IT spend. Is the traditional upgrade cycle as we know it dead? How long can you afford to maintain older equipment, and what strategies can you use to do so? And what are the signs that your IT infrastructure simply has to be upgraded?
The gradual move away from a conventional three year upgrade cycle can be explained away with one simple word: finance. "Organisations have been holding onto their existing PC clients (desktops and notebooks) longer for two reasons: money is scarce and the systems in place have been doing an adequate job," IDC analysts Roger Kay and Crawford Del Prete noted in a commentary earlier this year.
In a 'classic' upgrading scenario, desktop PCs were refreshed across an enterprise every three years or so. At the same time, applications and operating systems were often refreshed across both desktops and servers, and other elements of the infrastructure (such as networks and printers) were assessed to see if they needed renewal.
Such an approach generally ensured that companies were not working with outdated technology. Beyond that, however, the justification for such upgrades was often minimal, with many being driven by little more than sheer habit. "Not many people had a well thought out thesis on how the business was going to use new technology," says Sean Forbes, vice president marketing and business development for customer services software company RightNow.
That situation has changed markedly in recent years. "The skill level now required by CIOs to justify things has gone up," says Len Augustine, director of marketing and alliances for SAP ANZ. "The 'it just has to be done' argument doesn't cut it any more. To get an upgrade accepted, you need to be turning on something new--either taking advantage of new features or switching on dormant features."
"The software and hardware markets have gone through a period where upgrades could just be done on this arbitrary basis, and now what we've seen is outright rebellion," concurs Forbes. "What we're seeing is a shift in the locus of control that dictates how and when things happen."
"The whole upgrade cycle has changed," says Kevin Ackhurst, director of enterprise services for Microsoft. "People don't change all of their infrastructure every three years."
"What's really happening is that the CEO and the CFO are getting much more involved with software planning," says Raju Parrab, ANZ area vice president for Citrix. "If a quantifiable asset isn't there, they'll look for alternatives."
Two notable concerns have made upgrade cycles a pressing issue in the second half of 2003. The first is perhaps the final legacy of systems upgrades carried out to avoid the millennium bug: systems which were replaced in 1999 are now approaching four years of age, so the conventional upgrade cycle has already been stretched. Simultaneously, Microsoft will stop supporting Windows NT 4.0 at the end of the year, meaning that customers who in the past have held back from switching to Windows 2000 or its successors now have rather less choice in the matter (see The Windows Factor for a more detailed discussion of this issue).
Those factors, combined with a cautious sense that tight budget restrictions may be ever so slightly eased, mean the tide is turning somewhat in favour of upgrades. "We see a continued, but gradual recovery over the next 18 months," IDC analyst Stephen Minton commented earlier this year. "Barring economic wild cards, IT spending will benefit from pent-up demand, infrastructure upgrades, product innovation, and corporate profit stability, whilst remaining inhibited to some extent by the corporate focus on short-term value, costs, and returns. The recovery is already underway but the pace remains slow."
"It's all about the infrastructure," Minton adds. "The mood of cost-control and caution persists, but alongside a realisation of the urgent need for infrastructure upgrades." The need to upgrade was ranked as the top concern amongst executives in a recent IDC survey, with PCs and servers requiring the most urgent work.
Nonetheless, some believe changes in the upgrade cycle have been overestimated. "The cycle hasn't really changed that much," says Graham Kittle, GM of enterprise sales and marketing at Lexmark ANZ. "GST and Y2K put a focus on software, but the cycle has got back to the three-year model in the last 18 months."
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"Many large enterprise and education users will upgrade their large servers and storage devices on a three-year cycle," says Ken Cross, product sales manager for Sun Microsystems Australia. "Smaller organisations are likely to upgrade on a longer cycle, typically four to five years."
Determining what the pattern will be in the long term is more difficult. Some market watchers maintain that the conventional model is poised to disappear completely. "Upgrade cycles and maintenance cycles are an antiquated concept," says Doug Farber, director international marketing for networked CRM vendor Salesforce.com. "There's no need to inconvenience your users."
"The process can still become more business-friendly," says RightNow's Forbes. "The old model of 'you must change' is going to end up with customers looking for alternatives."
Most, though, believe that whatever their length, upgrade cycles aren't about to evaporate completely. "There is a buy-digest-come-again cycle in IT," says SAP's Augustine.
A common mantra these days is that upgrade cycles need to be driven by assessments of business value rather than technology. "In IT, you tend to get a little bit excited about new releases," says Scott Petty, chief operating officer for Dimension Data. "You've got to ask yourself 'what business value is that going to give?', and if the business value is not there, then it's not worth doing an upgrade."
"At the infrastructure level, there is no longer the luxury of having a periodic cyclic refresh. It's driven by needs," says Andrew Merton, head of professional services at Equant. "People are very much looking to understand what the upgrade is going to deliver."
One common outcome of this approach is that upgrade cycles may become longer. "If you do the analysis properly you can stretch out the time between upgrades a lot more than most people do, and if you manage your environment effectively you can achieve a much longer life cycle," says Petty.
That doesn't necessarily mean that all new technology purchases are barred. "People are willing to invest in upgrades if they can see a fundamental business value," says Howard Charney, senior vice president for Cisco. "Even if it's a forklift upgrade, they'll do it if the numbers are right."
"Most people are looking for new technology, provided they've got some benefit," agrees Peter Sate, director of services for Getronics.
Nonetheless, the sheer size of some enterprises will restrict their ability to take on new technology. "Business needs are tempered by your ability to digest what you've already got," says Augustine. "I don't think you can break that in larger organisations."
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