Which Has a Better Return on Investment, New or Refurbished Servers?

When buying servers, you have two options: upgrade to the latest model or buy a refurbished one from a vendor or marketplace. The decision isn’t straightforward. It’s a problem that data centers and other enterprises face when adding more servers or replacing current inventory. 

On the one hand, companies want to increase workload handling and meet performance goals. On the other hand, they want to reduce costs. Those may not always go hand-in-hand as increasing capacity and performance requires purchasing new gear, which adds to the price. 

So is there a better way to make the right choice? 

In this article, we will discuss the following:

• How to measure ROI for servers.
• How to determine which has better ROI, new or refurbished servers.
• Where to look for your next server refurbishment.

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How Do You Measure ROI for Servers?

The basic formula for calculating ROI is profit over cost multiplied by 100. However, calculating ROI for servers may not be as simple. 

While you can use the basic formula using quarterly or annual profits and the cost of servers, many other factors may influence the profit numbers. So this won’t yield the most accurate ROI. 

A better way to measure ROI on your server purchase is to factor in metrics directly related to servers. This is typically performance metrics like requests per second, thread count, uptime, error rate, and network bandwidth.

Another valuable metric for calculating the ROI on the replacement server is power usage. If the server is energy-efficient, it will use less power and reduce electricity costs. 

Similarly, you may also use security metrics for determining ROI on server purchases. Although security relies on your security strategy and tools, a modern server with built-in security features may reduce the number of security incidents. 

The best way to determine the ROI on your purchase of servers is to consider metrics that best represent your goals with the server. For instance, if upgrading simply because of performance requirements, you should use the metrics that measure server performance to calculate the ROI. 

On the other hand, if your goal with the new server is increasing capacity (perhaps because your existing servers can’t handle the load), uptime and availability can help you calculate ROI.

ROI on Upgrading to New Servers 

The ROI for updating servers can vary based on several factors, such as the existing servers' age and condition, the business's specific needs, and the cost of the updates. 

For instance, if your old server was too old and failing, a newer, better server would show a significant ROI based on performance improvements. 

Updating servers can offer several benefits that can result in a positive ROI.

One of the main benefits of refreshing servers is improved performance and reliability. Newer servers often have the better processing power, memory, and storage capacity, which can help the data center manage workloads more efficiently and effectively. This can lead to improved productivity, reduced downtime, and a better user experience.

Another benefit of updating servers, which is intrinsically linked with its ROI, is increased security. 

Legacy servers may be unable to run the latest security software or receive security updates, leaving them vulnerable to cyber threats. By updating servers, businesses can help protect their data and systems against cyber attacks. That, in turn, spares them expensive downtime or non-compliance fines. 

2012 International Data Corporation (IDC) research found that updating new servers yielded an ROI of over 150 percent in three years. Moreover, it found that savings from the refresh covered the investment in less than 12 months. 

Overall, the ROI for updating servers can be pretty significant, particularly if the updated servers improve performance and help reduce ongoing maintenance costs. However, it's essential to carefully evaluate the cost of the updates against the potential benefits to ensure that the investment is worthwhile for the business.

ROI on Refurbished Servers

The ROI for refurbished servers can vary on a case-by-case basis. It depends on various factors, such as the age and condition of the server, the specific model, and the specific business needs.

The main benefit of refurbished, pre-owned servers is that they cost significantly less than new servers, which can lead to a higher ROI. The cost can sometimes be as low as half that of its new counterpart. This can result in a faster return for the business. 

Contrary to popular opinion, refurbished servers one or two generations older can provide similar performance and reliability as new servers. However, that may largely depend on the vendor and the refurbishing process.

If the vendor uses a comprehensive refurbishing process that includes extensive testing and replacing faulty components, you can get good performance out of such servers. 

ROI for a pre-owned server can be low or high based on your particular situation. For instance, if you’re not replacing but simply adding more servers to meet growing demands, the ROI may be higher than that of new servers because of the low cost of refurbished servers. 

Typically, the ROI for a refurbished server is not very high in the long run, as these servers would need to be replaced sooner and may require more frequent repairs after a couple of years.

Ultimately, the positive ROI for a refurbished server can be pretty attractive for enterprises that need to upgrade servers but have budget limitations. 

Evaluating vendors and the quality of their refurbishing process is crucial to ensure that the used server meets your performance requirements. 

Which Is Better for Your Business? 

The ROI on new servers is generally positive and high, but the ROI on a refurbished server can also be good. This has probably confused you further, but there’s a simple way to make the right choice and get the ROI that matters. 

If you can afford to upgrade servers in your data center, buying new ones is better. The performance and power usage improvements will return a positive yield in two to three years. And these servers will last long, even beyond the official end of life and end of service life should you keep them maintained. 

If you have a tight budget, want to increase capacity, or have servers for contingency, buying refurbished is more cost-effective than buying brand new. Your choice should be even more evident if your performance requirements are unchanged. 

A pre-owned server in reliable condition can quickly run for up to two years, which would immediately result in a high ROI. 

Choose the metrics based on your business needs and then calculate the ROI for new and old servers for both short (two years) and long-term (four years or more). You’ll have an answer backed by data!

Trust PivIT for Your Next Server Procurement!

Upgrading servers is a costly undertaking, whether you decide to buy new or search for used ones. 

No matter what your server needs are, PivIT has your back. As an expert procurer of data center hardware, PivIT specializes in procuring servers from major manufacturers with short lead times. 

PivIT has saved its clients millions in procurement. A private university saved over $4.2 million in three years with its hardware purchases through PivIT.

But if you want refurbished, PivIT’s tested and certified pre-owned servers eliminate all the guesswork. Pair them with OneCall (PivIT’s IT maintenance service), and you have reliable infrastructure at an incredibly lower price. 

Still trying to understand? Contact PivIT to discuss your hardware needs and talk with a professional to determine which new or refurbished servers are best for your business!