Hardware Procurement in 2024: Why it Matters and How to Optimize Your Process
In a business world where digital transformation is the new norm, most companies invest thousands (or millions) into IT hardware every year. Even though they spend a lot, many companies don’t have a standard hardware procurement process. That means they risk repurchasing too early or not replacing essential hardware often enough — increasing the risk of a system breakdown impacting production. In this article, we’ll break down what hardware procurement is, what it looks like in 2024, why it matters, and how to optimize it for your company’s unique needs.
What is hardware procurement?
Hardware procurement is the process of buying, replacing, or leasing hardware and software to ensure your business processes function normally. The goal is to ensure employees can access the digital tools they need to do their jobs effectively.
The actual act of procuring hardware is the most obvious part of this process. But the most important part of hardware procurement is everything you do before an employee makes an order to replace a server or monitor. You work on creating guidelines and asset replacement timelines and build strong vendor relationships. This underlying system is what results in a more effective hardware purchasing process.
How do companies spend their IT hardware procurement budgets?
In 2023, North American and European companies spent most of their budget on laptops, desktops, servers, and networking.
Laptops make up almost 20% of the entire IT hardware budget for the average company. After the desktops, servers, and networking to get the office online, 51% of its budget is gone. That isn’t a surprise to anyone who’s seen the inside an office over the last decade. But it does have some pretty significant implications for hardware procurement. Thanks to the advancements in technology, most companies rarely need tailor-made solutions. You can often get great deals from certain retailers by making bulk orders of what essentially are consumer-grade products today — a regular smartphone has more computing power than a 1980s supercomputer.
Main moving parts of a hardware procurement process
Let's break the process into its moving parts to help you get a better feel for how experienced companies approach hardware procurement.
Good supplier management is one of the pillars of a strong hardware procurement process. And it’s not just about cutting costs through remaining a loyal customer and buying in bulk. It’s also about creating a relationship of mutual trust where they’re comfortable prioritizing delivering some hardware you need to help you minimize downtime or other issues. You also need to find a reliable partner you can trust to deliver quality products on time and honor their service and warranty agreements. With modern technology, something can go wrong or break, and it’s not always easy to fix. So, finding a company that accepts responsibility when something inevitably happens is crucial.
Asset lifecycle planning and management
The next pillar is asset lifecycle planning. You need to map out a timeline for when you should replace hardware assets. You also need to set up a reliable maintenance schedule to improve the lifespan of your equipment. Clogged fans and other issues can naturally happen to laptops, desktops, and servers over time. If you don’t routinely clean and maintain your equipment, you will need to replace it much faster. Well-maintained equipment is less likely to fail abruptly before your scheduled replacement. That makes good hardware asset management a crucial part of a procurement strategy.
Financing and accounting
The last aspect is budgeting the money so your IT department can keep your systems running. Predicting how much you should spend on hardware in any given year can often be tricky. First of all, vital equipment can break at any time without any warning. Secondly, you may need to update equipment for security reasons after an exploit has been found. And thirdly, there could be a breakthrough relevant to your industry that means you need to replace or upgrade equipment to “stay with the times.” Your supplier relationships will determine if you have to tap into available cash flow to pay a lump sum up-front or if you can use an accounts payable process spread out over multiple months. To help you master all of these areas, including supplier relationships, we’ve created a step-by-step guide for you.
How to optimize your hardware procurement process
Want to optimize your hardware procurement process? Follow the five steps we’ve outlined below.
Establish a clear strategy
The first step is to establish a clear hardware procurement strategy. In this strategy, you outline the overall structure of your hardware procurement process. You should define the general scope — which hardware is covered — and what your overall goals with the program are. You also need to:
- Determine the mix of on-site & cloud-based computing. For example, if some tasks have fluctuating demand, it may be better to leverage cloud computing to handle analysis or storage during high seasons.
- Select suppliers and build relationships. For example, you can often get significant price reductions by entering an exclusive multi-year contract once you find a trusted vendor.
- Figure out financing. Decide which mix of debt, leasing, or liquid funds you will use to acquire the necessary hardware. You should also do the same for the maintenance financing at this stage.
Map out the ideal lifecycle for all your hardware
Once you have your strategy, you need to figure out your timeline. How often should you replace different types of hardware? How often should you service the equipment? The ideal renewal interval will vary significantly based on the type of hardware. For example, a laptop for a field sales rep will need to be replaced more often than your average desktop. There’s simply more wear and tear, so you’d need to purchase new laptops more often. The same also goes for your maintenance or service schedule. It should be adjusted to reflect the equipment's wear and tear and durability. Many states also have laws mandating the recycling of e-waste, so you need to plan out the last stage of the life cycle. (Even if yours doesn’t, a robust e-waste recycling program is good for your company’s reputation and the environment.)
Invest in the right tools
Once you have a strategy and a planned asset lifecycle, you need an excellent way to implement this process in the real world. Spreadsheets and manual assessments can work for smaller companies, but it can quickly get confusing. The last thing you need is employees mistakenly replacing the wrong equipment because of a flawed system. Robust digital asset management software makes it much easier to track the age and state of all your hardware assets.
First, it gives you an easy-to-use database of all your hardware’s age and current maintenance status. You can even add the scheduled purchase date for a replacement so it’s easy to estimate if it will follow the estimate during service checkups. Second, an asset management platform makes it easy to keep track of different hardware. As laptops or desktops get moved around, it’s much easier with a unique ID in a system. The best way to implement this at scale is with unique asset tags and a tag reader. For example, RedBeam works with the handheld Zebra TC52x, an enterprise-grade handheld tag reader. With the Zebra TC52x, a staff member could scan your assets and immediately get information on their age, previous maintenance, location, and more. Plus, they could update the necessary fields right then and there without using another device.
You can also use the checkout function to find patterns in wear and tear on equipment. It makes it easy to identify if certain employees have a history of treating equipment without respect.
Set measurable KPIs and benchmarks
To see if your new hardware procurement process is making a positive impact, you need to set up KPIs (key performance indicators). Only with measurable metrics can you make accurate data-based decisions. You can’t know if you’ve inched forward toward your goals if you're not measuring anything. KPIs keep you focused and moving in the right direction and show you where your issues lie. Here are a few ideas for KPIs: The number of IT-related complaints you get in a month or quarter. The number of incidents (like unexpected downtime) due to IT issues per quarter. The average age of your hardware assets. Asset utilization — the percentage of assets currently in use. When broken down by asset type, this can help you adjust your procurement budgets to the areas that need it the most. The percentage of “stale assets” — assets that are currently unusable because of compromised software or other issues. It’s also important to set benchmarks by measuring current performance. Without benchmarks, the metrics alone don’t tell you if you’ve improved. So, determine which metrics to measure, set your benchmarks, and work toward improvements based on them.
Assign clear responsibilities for monitoring the process
It’s not enough to set goals, pick KPIs, and agree that you’ll “work toward them.” Transforming your hardware procurement process is a long-term project. If you want concrete benefits — like lower expenses, fewer issues, and a more productive workforce — you need to treat it like one. So, assign clear responsibilities. Outline who’s responsible for improving which areas of the process. For example, the IT manager could be responsible for onboarding the new asset management software and teaching staff to follow the guidelines. The purchasing department would work on improving supplier relationships. And the business owner or an executive could own the overall strategy and KPIs. Clear responsibilities are a way to ensure buy-in and continued progress over the long term. If the staff who make purchasing and maintenance decisions daily don’t change their process, the only thing that has changed is your strategy. Changes in the real world come from execution, not ideation alone.
Level up your hardware procurement process with RedBeam
It‘s difficult to keep track of hardware assets, maximize their ROI throughout the lifecycle, and minimize costs. Luckily, the right software can make the whole process much less complex. With the ability to scan assets and access (and then edit) all relevant data, you make it easy for your employees to do proper asset lifecycle management. With easy access to utilization, maintenance, age, and other statistics, managers and accountants can make better decisions on investing your hardware budget. These are just some reasons why RedBeam is the perfect tool for helping you improve your hardware procurement process. If you want to optimize your hardware asset management, try RedBeam for free for 30 days.