Ways to Successfully Navigate the Secondary Market of Used IT Equipment (a.k.a. the Wild, Wild West)

By: Frank Kobuszewski, vice president of the technology solutions group at CXtec

Source: Pixabay

Navigating the secondary market for used IT equipment can be tricky.

There are a number of potential pitfalls to look out for – sometimes it might even feel like the Wild, Wild West to IT professionals trying to make their way through. But the value provided by this market can be undeniable, which makes it a worthwhile effort to learn the tricks of the trade.

Implementing used hardware as part of your network infrastructure can not only save previous budget dollars, but can also help extend the lifecycle of your technology by providing products that have become end-of-sale or end-of-life by the manufacturer. But how can you be sure you’re getting a reliable product from “uzedITguy” on eBay? Hint: you probably can’t.

There are many factors that should be considered to ensure you’re getting products that are reliable and that are going to fit with your desired solution. When navigated effectively, the secondary market can provide tremendous value for your organization. If you’re already a faithful purchaser of used equipment, read on. If you’re still having doubts on the value of used equipment, definitely read on. This one’s for both of you.

Gartner Research on Used IT Hardware

Gartner, Inc., has recently published research on the used hardware market with several notable findings and recommendations.*

First, “For prospective customers to better understand the capabilities of the used-hardware resellers, an on-site visit to the provider's depot is recommended. Such a visit should include a review of the provider's testing labs to help gauge inventory size and standardized processes for logistics.”

Before you purchase used IT equipment, make sure you know the details and capabilities of your vendor’s facility. Are they selling Cisco switches out of their garage or do they have a warehouse? Don’t get me wrong, many reputable technology companies started out of garages. But you should know the details before you trust them with something as important as your network equipment. Additionally, does your vendor have enough inventory to provide the products you need, when you need them? Ask questions. If possible, take a tour of the facility so you can see firsthand where your equipment is coming from.

Second, Gartner states, “Regardless of whether the hardware is ‘new in box,’ or has been used in a production environment, it is critical that the provider presents details and documentation relating to the processes and methodologies for quality control and testing facilities.”

Check for Proper Testing Processes

The importance of a rigorous testing and certification process in the used IT marketplace cannot be debated. There are many questions to consider in relation to this. Does your provider use automated scripts in their testing processes? Automated scripts can help reduce human error in testing, in addition to maximizing efficiency and allowing for more units to be tested simultaneously. This means you are able to get the equipment you need more quickly, resulting in projects completed on time and within budget. Load testing is also a critical part of the testing process.  Consider it “no port left behind” – load testing simulates real-world traffic passing through every port to ensure each unit is ready for your production environment.

Okay, so your vendor passes the tests above. Now, is their facility protected against electro-static discharge (ESD)? ESD is a charge created when two surfaces come together and separate, thus creating a spark. Your network hardware does not play well with ESD. These sparks created when handling equipment can significantly damage sensitive electronic components within devices. Research indicates that at least 60% of device failures are ESD-related. Do you want to take that bet in your network? Probably not. Make sure that your IT provider is testing your equipment in an ESD-protected facility with technicians trained to defend against this threat.

In addition to testing, your vendor should have documented quality control procedures. One way this can be achieved is through ISO certification, which is the internationally accepted basis for evaluating quality systems. Providers that have ISO certification have shown dedication to implementing quality controls, documenting processes that affect product and service quality, and ensuring emphasis on improvement. ISO certification is also noteworthy on the “Used IT Provider Checklist” because it means quality control procedures have been approved by a third party source.

Now that you’ve done your homework in search of a reputable provider, what can you expect to gain from your investment in used IT equipment? Well, that depends. Gartner’s findings note, “Depending on the complexity, location, age and product density of the equipment on order, savings can be 50% to 70% off the discounted price of new, functionally equivalent hardware.” 50% to 70% can be a big difference.

Let’s Paint a Picture With a Real-Life Scenario

Imagine an organization that is looking to move from 100MB to 1G on a Cisco chassis. Currently, they use a 6509 with SUP2 and 6148 blades. With a traditional approach, the organization may choose to buy new from a local Cisco VAR for 60% off list price. Seems like a pretty decent discount, right?

This approach would require an upgrade on several products: WS-X6748-GE-TX blades for $6,000, VS-S720-10G-3C SUP engine for $15,200, and WS-CAC-3000W power supplies for $1,200. If new, the solution would require two of everything for redundancy in each chassis for a grand total of $44,800 per chassis. With a strategic approach using the secondary market, this solution could be accomplished with 6148A-GE-TX blades for $1,850 each. At two per chassis, a total of $3,700 each. With 21 chassis, and savings of $41,100 per chassis, this approach saved the organization more than $863,000 on a single project. Add in third-party maintenance options to that solution and the total saved could skyrocket.

What could your organization do with that money saved?

As IT professionals responsible for a seemingly endless list of projects, and with technology changing at a faster pace than ever before, it’s important to understand the options available for you to do your jobs easier and to make your bosses happier. The secondary market isn’t a one-size-fits-all solution for every organization. Sometimes it makes sense to implement used equipment, and sometimes it doesn’t.

When it does make sense, knowing the appropriate questions to ask when vetting a used IT provider can be the difference between success and failure. The secondary market is a viable source for used IT equipment and is part of a strategic approach for organizations to lower the total cost of ownership of their technology infrastructures. But it can be like the Wild West out there if you’re not prepared. With the knowledge to make smart choices, consider yourself armed and dangerous.

*Gartner, Inc., Used-Hardware Resellers Offer Hardware and Support Cost Savings, Eric Goodness, Christine Tenneson, February 5, 2015.

Want to hear more from Frank? Check out his blog on Network World.