Talent shortages and software innovations seem like the bane of every IT department. At least, as far as managing costs that feels true. In reality, money bleeds from every corner, and it is vital to identify every place where you can save money. Hardware pricing trends for 2018 can inform your spending decisions and help you put money where it will do the most good.
In general, hardware has become more powerful for less cost. The trend has run since the early 90s, and in most cases, it continues today. Within the last year and a half, there have been specific components that have jumped in demand and sophistication, and these components are driving the rising costs of hardware.
This is by far the biggest contributor to rising hardware prices. If you haven’t seen the news in over a year, you might have missed the surge in cryptocurrencies. Bitcoin, Ethereum and a few others gained massive popularity among traders, and that skyrocketed their value. The obvious follow up was a spike in mining these currencies. That created such an enormous jump in demand for powerful graphics processing that the average card price more than doubled in the span of a few months. Even though most cryptocurrencies have crashed, demand for miners hasn’t, and graphics processors remain inflated.
Now, many businesses don’t rely heavily on graphics processing, so you might be among those wondering why you should care. Primarily, this component cost increase has single-handedly inflated many other costs. The biggest sector that is hurt is research and development. Blockchain, Internet of Things, virtual and augmented reality, and machine learning are all leading-edge research platforms, and every single one of them relies heavily on powerful graphics processing. Any applications from these fields that you may hope to apply to your business are now more expensive because of the cryptocurrency bump. That doesn’t necessarily mean that they will be completely cost-prohibitive, but you may have to rethink how you budget around these powerful resources.
To a lesser degree, RAM demand has also jumped prices, and these trends are tied to cryptocurrency mining. The short story is that a lot of people have built and are continuing to build mining rigs, and this has pushed demand enough to inflate prices. It’s not as extreme as what is happening in graphics processing, but it’s worth noting. Simple RAM upgrades will cost more today than they did a year ago, and there is no sign of the trend reversing. Because the base increase is smaller, the rippling effects of memory cost increases will also be muted.
Storage prices are a more complicated subject. Certainly, some of the rising trends can be attributed to mining rigs and their impact on demand, but the larger contributor is simple innovation. Storage has long been the most limiting factor in processing and communication speed. Manufacturers have responded, and the last two years have seen a surge in the availability of faster and more powerful storage. Naturally, the newer and better components also cost more. The biggest difference between this cost increase and the others you just read is that this one is easier to avoid. You can simply purchase older, more affordable storage options if they don’t hurt your ability to perform tasks. That said, storage prices will have a small impact on the cost of IT research and development.
What good is it to notice pricing trends if there are no solutions to the problem? While no single company has the power to make these goods cost less, there are tricks to lessen their impact on your bottom line.
Buy Second Hand
This is not a one-size-fits-all approach. But, where it is appropriate, second-hand hardware can save big money. The best place to look is at server costs. If you need server expansion or upgrades, used parts and complete units are widely available. When the massive tech companies (think Google and Apple) need to upgrade their main systems, they supplement the cost by reselling the older units. You can get surprisingly powerful hardware at a fraction the price when you go this route.
This concept comes up frequently when discussing IT costs. Hardware pricing is one of the primary reasons for that. The increasing cost of components will raise the cost of cloud and remote computing, but as far as your bottom line is concerned, those increases will exist at a diminished rate. If the cost of a cloud server goes up by 10 percent, you might see your subscription cost rise by only a fraction of that. It disperses expenditure and is a clear way to manage cash flow.
This is another concept that is not universally applicable, but when it can be done, it is probably the best cost-saving technique of them all. The concept of bringing your own device (BYOD) is pretty simple. Employees are fronting some of the cost of equipment because it includes devices they would normally purchase anyway. The company insures the equipment when it is onsight and offers incentives to make it fair to employees. BYOD policies are at their best when you have access to bulk discounts on expensive software (e.g. Adobe suites). The secret to success here is to discuss the idea with employees before committing.
The last and most important way to save money on hardware applies to all components of IT -- and all components of running a business, really...
Never stop learning.
The biggest sources of runaway spending almost always stem from ignorance, so always commit to learning more about how every aspect of your operation functions. Informed decisions are always preferable to the alternative.
About the Author: Jeff Poirior
Jeff brings 25 years of telecommunications and information technology management experience in voice and data networking, server support, and telephony and security; with a significant emphasis on customer service. Prior to joining Valicom, he was chief of the infrastructure support section for the Wisconsin Department of Transportation. Jeff was the vice president of operations for CC&N, overseeing telecommunications, help desk, data and desk side support services. Prior to that, he served as the associate director of technical resources for Covance, responsible for managing systems and network operations supporting 1700 users in Wisconsin and Virginia. He has also led data center operations at Magnetek Electric, supporting mainframe systems, client/server applications, telephony systems, and computer-aided design. Jeff holds a bachelor’s degree in business administration from Cardinal Stritch University and a master’s degree in business administration from University of Phoenix. In addition, Jeff is a past board member of the Wisconsin Telecommunication Association.