Network by eBay;
The Inexpensive IT Solution
By Steve Mooar
Manhattan,
NY, September 7, 2005 – I have told the story of building a
company around information technology (IT) systems purchased at
eBay to many startup and small business clients and always get a
disbelieving response. But, the fact is I worked on a team that
started a company in 2003 and all the information technology was
purchased on eBay or similar auction sites as well as sites that
handle refurbished equipment with the exception being a few
desktop PC’s and software. I purchased the desktop PC’s new
because it is so inexpensive to get new desktops with on site
service and more horsepower than is needed in a business PC.
The company
was a Consumer Electronics Startup that was selling products to
national music store chains as well as big box electronics
stores and mass merchants. So, in addition to having PC’s on a
network with Internet access, the information technology systems
needed to support accounting, inventory control, manufacturing,
and Electronic Data Interchange (EDI) transactions. I did have
an advantage that made this approach possible in that I could
build the system over a 4 week period, which gave me the time I
needed for the auction sites.
The Budget
My
Information Technology Budget was $25,000 including software and
hardware. To create this budget I made a list of the hardware
and software that I needed and then went shopping at retail.
When I refer to buying something at “retail”, I am buying new
items at retail price through a brick and mortar like CompUSA or
a Internet Retailer like Amazon or Dell. The result was a
comprehensive list of equipment including manufacturer, model,
price, and retailer. The Internet has made it so easy to shop
prices that when developing an IT budget there is no reason not
to use actual prices.
As I
mentioned earlier, I purchased desktops new. I purchased them
with the operating system and Microsoft Office Professional. I
purchased all additional software and the operating system for
the server, Windows 2000 Server at retail. I also purchased 3
Uninterruptible Power Sources (UPS’s) at CompUSA. I figured
with the weight of the batteries, freight expense would be high
and I wanted new batteries. The following is a list of the
remaining equipment in my budget and how I went about purchasing
and when you look at prices remember this was back in 2003 and
computer equipment was a lot more expensive back then.:
- Server –
Purchased an IBM Server to act as a file server and database
server for the accounting and inventory applications. The
server had 2 years left on the warranty, but came with no
hard drives. Purchase was through
Ubid.com
- Server
Hard Drives – Purchased two hard drives for server one
primary and one mirror. 60 GB drives were $36 and $28
through eBay.com.
- Router –
signed up for a business DSL promotion with SBC that came
with a free Netopia appliance that acted as a DSL modem,
router, and 4 port hub.
- Switch –
since we had more than 4 devices on the network, I purchased
a 28 port 100 base T unmanaged switch through
eBay.com.
- Copier –
I was originally going to purchase a 30 page per minute
copier and separate fax machine and network laser printer.
But I found that I could get a refurbished copier with a lot
more features for significantly less. I settled for a Ricoh
Aficio 450 with the sorter, stapler and whole punch from
Copier Discount Centers (www.copierdiscount.com).
The Aficio also acted as a fax machine and network attached
laser printer and could also be used as a scanner. I
strongly recommend finding a local copier service provider
and set up a service plan.
- Phone
System – I purchased a used Bizfon system from another
company located in the building that the startup was moving
into. If you are moving into a new office, it pays to walk
around the building and talk to other companies about their
experience with local suppliers. It was in one of these
conversations I found out about the Bizfon system not being
used. I did some research on the Internet and found
bizfon.com and decided
to buy the system.
- Rack &
Patch Panels – When we looked at the office space the
current tenant was still there. For $80 I got them to leave
the rack and patch panels. The best part is I was able to
get a copy of their wiring schematic and when we moved in I
just plugged everything into the existing wiring.
How Did I
Do?
Of the
$25,000 in my budget, $7,800 was for software, PC’s, and the
UPS’s that I purchased at retail. The following table shows how
I did with the balance of the budget, $17,200:
ITEM |
SUPPLIER |
BUDGET |
ACTUAL |
SAVINGS |
Server w/ Drives |
Ubid & eBay |
$2,000 |
$664 |
$1,336 |
Router |
SBC |
$200 |
$0 |
$200 |
Switch |
eBay |
$200 |
$28 |
$172 |
Copier |
Copier Discount |
$5,000 |
$3,995 |
$1,005 |
Fax |
NA |
$300 |
$0 |
$300 |
Laser Printer |
NA |
$1,000 |
$0 |
$1,000 |
Phone System |
NA |
$8,000 |
$800 |
$7,200 |
Rack & Patch Panels |
NA |
$500 |
$80 |
$420 |
TOTAL |
|
$17,200 |
$5,567 |
$11,633 (68%) |
If I did the
math right I saved $11,633 or 68% on the equipment purchased
through non-retail suppliers. In terms of the complete $25,000
budget this is a 47% saving.
Conclusion
If you are
setting up IT systems for a startup or upgrading current systems
and the installation is not tomorrow, spend some time
researching and take a look at the non-retail sites to save
money. Saving $11,000 now results in $11,000 available for
other projects or is added to the bottom line.
I think you
will find that the people at PC World agree with this approach.
Check out the article, Use
Auctions to Save Money on Tech Gear, in the September 2005
issue (http://www.pcworld.com/howto/article/0,aid,121768,00.asp).
About the
Author
Steve Mooar
has over 10 years experience in Operations and Information
Technology and has worked on numerous Startup and M&A projects.
He is the president of Eagle Strategy Group, which provides
Strategy Consulting Services to small and medium sized
businesses. Eagle specializes in developing strategic solutions
in Operations, Information Technology (IT), Startup, and Merger
and Acquisitions (M&A), as well as provides interim management
support. For more information go to
www.eaglestrategygroup.com.
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