IT Asset Management:
It’s All About Trade-Offs
Cost, performance and application
compatibility are some of the
interlocking issues impacting
hardware replacement decisions.
By Bob Violino
Managing the life- cycle of IT infra- structure compo- nents has likely never been more
important. Deciding when to retire or
extend the life of hardware such as servers, mainframes, network equipment
and other large systems can have a huge
impact on costs, energy consumption
and how effectively IT delivers services
to insurance firms and their customers.
“There are many factors that influence a carrier’s decision to replace, refresh or upgrade hardware,” says Martina Conlon, principal in the insurance
practice at Novarica, a New York-based
consulting firm serving the insurance
and financial services industries.
Clearly, carriers want to stay current
with their hardware to mitigate the
technology risk of unsupported platforms, Conlon says. Upgrades and re-freshes are also often driven by the requirements of applications that run on
the hardware.
“By far, the most important consid-
eration [in a hardware refresh] is the
applications required to support tomor-
row’s business,” says Tom Pettibone,
founder and managing partner of Tran-
sition Partners, a Reston, Va., IT man-
agement consulting firm, and former
CIO at New York Life Insurance Co.
“Frequently those applications drive
middleware and hardware decisions,”
Pettibone says.
In a few cases, the applications that
are running on the hardware can in-
deed limit replacement options, Conlon
notes. “Upgrading or replacing a major
application can require a significant in-
vestment,” she says. “If the carrier is not
in a position to upgrade or replace the
application, they can become locked
into supporting obsolete hardware to
keep the business running. Carriers have
been known to shop e-Bay for older
hardware or replacement parts so that
they can extend the life of the platform
to delay the cost and disruption of an
application replacement.”
COST AND CRITICALITY
Another key consideration is the cost of
maintaining and supporting hardware.
“All these decisions take TCO [total cost
of ownership] into account,” Pettibone
says. “At some point the cost of mainte-
nance and the unreliability of older
equipment exceeds the cost to up-
grade.”
At Penn National Insurance in Har-
risburg, Pa., decisions on what to do
