(FORTUNE Small Business) – I am a hamster. We all are. For 20 years I have been on a wheel created by the PC industry, constantly feeling behind and racing to keep pace, buying new systems for my one-man software consultancy every 18 to 24 months. Early last year I bought three 500MHz systems that I use for testing computer software and hardware. About 18 months later, the same amount of money will buy 2GHz systems. Some people would conclude that my 500MHz PCs are outdated jalopies--today's machines have 300% more processor speed!--but I think I'm ready to jump off the wheel.

One of the old beefs about computers is their instant obsolescence. Will your new computers still be up to the task two years from now? How about one year? These questions have lost their bite, and now everyone from industry analysts to consumers to the PC vendors themselves has come to realize that the days of the two-year upgrade cycle are over. Dell gave Wall Street guidance that it expects the slowdown in PC sales to continue until spring 2002, when businesses may buy new computers to replace the ones bought in the pre-Y2K scare. That would put the new upgrade cycle at about three years. Gartner Group recently revised its recommendations, now suggesting that "power users" upgrade every three years and regular folks every four. Much of this analysis seems based on the fact that the rate of performance improvement in PCs has increased dramatically while normal business software is not demanding more from these burners.

However, that's just one part of the story. The increasing reliance on e-mail and the Web for business computing has taken the emphasis off of the desktop. Fast, cheap networking further enables the shift, and improvements in operating systems and network management software mean that a well-designed network can cut support needs and costs. The management software business hasn't yet addressed the small business market, but some of the benefits are available now. And the drowsy tech sector, still reeling from its burst bubble, has no killer app on the horizon that will add further value to PCs. If you buy the right PCs today and design your network properly, you can set your computer systems not just for the next three years but perhaps for the next decade. Here's how.

SPEED VS. POWER

The part of this story that folks like Dell and Gartner have caught on to is how the speed of PCs has outstripped the performance needs of the software that runs on them. Consider Microsoft Office XP, the latest version of the most important business application today. Its minimum requirements are a 133MHz or faster processor and, depending on your operating system, up to 64MB of RAM. You'd have to fire up your Way-Back machine if you wanted to buy a new computer this weak. For example, the slowest system Gateway sells these days is a notebook with an 800MHz processor and 128MB of RAM.

Processor speed is not really the point anymore anyway. Based on my observations of the systems I run, anything 400MHz and up is fast enough--today and for the foreseeable future--for any conventional business application. Rather it's the amount of memory in the system that you should concern yourself with. Random access memory (RAM), which, just to be clear, sits on chips and is not part of your hard drive, is where programs and data reside when the computer does actual work with them. If you increase the memory in your systems to between 256MB and 512MB, which should cost between $250 and $400, that will give you the horsepower you need regardless of processor speed. A PC with 512MB of memory is very high-end and will remain so for years.

There are applications that really do need all the processing power they can get, but they just aren't mainstream business applications. Games top the list, but I doubt that your profits increase with your employees' Doom scores. For years the PC industry has tried to persuade companies that heavy multimedia was a mainstream business need, but--big surprise!--adding video and sound to work just adds noise. Design and engineering applications, such as Adobe Photoshop or AutoDesk's AutoCAD, will often make good use of faster systems, but only for stressful uses of them, such as very large drawings.

When buying PCs, then, even the low end will do well for many of you. In fact, pay close attention to what the system's bundled with and feel free to throw everything over the side that's not relevant to your business needs. That means high-end 3-D video cards, DVD drives, and TV tuner hardware--all of which have far more uses for employee mischief than getting work done--can go. The cheapest video card and CD-ROM drive will do just fine in a business desktop. Even the CD-ROM drive may be unnecessary, since a desktop on a managed network can load any application or data from the server.

Disk space is another area where you can set yourself up for the long term and save yourself some money. New desktops tend to come with at least 20GB. That's more than enough for a normal system, and while doubling or tripling the storage will usually cost less than $100, unless you know you'll be installing lots of big programs, you're just giving employees an excuse to load up on MP3 music. The place to put lots of extra storage is on your server, where it can be shared.

All these same performance trends apply to notebook computers too, but the situation isn't exactly the same. Notebooks are more fragile than desktop computers, they are harder and more expensive to fix, and most important, they are less upgradable. You can't easily put in a bigger hard disk, RAM is more expensive, and there's usually less room for expansion. The fastest processors and biggest hard disks take longer to come out for notebooks as well. So if you're taking advantage of notebooks for their flexibility in letting you work at home or on the road, expect that they will have shorter life spans than desktops.

MOVING SOFTWARE TO THE SERVER

Your PCs, like pawns in a game of chess, are important to set up properly--but hey, they're just pawns. To meaningfully extend their life beyond a few years requires a rethinking of your office's computing environment. In the future, more of your software will be running on a centralized server (the office's king and queen) and less on desktop PCs, known as clients.

For that to work well, you need fast networking to ensure a rapid response between the client and the server. Luckily, fast networks are cheap these days: You can buy all the hardware necessary for a 16-user 100Mbit Ethernet network for about $325. (At Buy.com, Netgear's 16-port hub was $123.95, and SMC 10/100 network cards were $12.59 apiece.)

Almost any programs that require data entry--most notably database applications for maintaining customer records and product information--should run on the server, even if you're a small shop with just a few users running a simpler database such as Microsoft Access. Managing it will be much easier, and if you connect the database to a Web server, workers will be able to use a browser to input records and view data, and you won't have to install and update the whole program on every PC. This may require some custom development, but it'll be worth it.

For other applications, the best way to migrate them is to run what's known as a terminal server. This is a system in which the programs run on the server itself; the desktop computer sends keystrokes and mouse movements to the server, and the server does the work, which it sends back to to be displayed on the desktop screen. Since the desktop is completely dumb (and it's not that smart now when you think about it), even "ancient" systems running old versions of DOS, Windows, and non-Microsoft operating systems can run today's apps. This sort of architecture also makes it easier for remote users--working from home, at a branch office, or on the road--to access the network.

One of the great things about a terminal server is that you run the same software you are used to running. Microsoft Office, Intuit QuickBooks--almost anything that runs on a regular Windows PC--will run on a terminal server. Users' desktops, files, and applications are no longer tied to a particular computer, perfect for when employees move to a new desk. Microsoft and Citrix dominate this market. Citrix's tools are better and support more types of clients, but Microsoft's product is cheaper.

Of course, if you're going to move your programs onto the server, your server has to be up to the task. Whatever you buy should handle the job today but leave room for growth by having space for additional processors and disks, which can significantly improve performance as you rely on your server more. A name-brand one with a high-end processor, room for a second, lots of memory, and plenty of unused space for disk drives should run you an eminently reasonable $3,500.

You'll also need a fast connection to the Internet, to take advantage of emerging third-party services offering solutions such as sales-force-automation and customer-relationship-management software that aren't necessarily feasible to run on your own servers. These players, referred to as application service providers (ASPs), are admittedly a bit downtrodden right now, as the experiment of the past couple of years running business software over the Internet has been largely a resounding failure. "We're going to focus on the existing needs of our existing customers," says Steve Bennett, CEO of Intuit, who had been aggressively pursuing Web-based applications for small businesses. "We're still excited about the Web, but we're going to wait until we can prove that this stuff works and that customers want it."

Bennett's statement acknowledges the slow migration to ASPs, but also implicit in it is that this stuff is inevitable, and I agree, because it solves so many problems, the biggest of which is the obsolescence of client hardware. Web-based applications let the software vendor, or whoever is hosting the application, maintain and upgrade the app, backup your data, and provide support and access from anywhere much more easily--without having to bother you. They also put almost all the management and performance issues in the hands of the hosting service, and your local systems become "smart" terminals with a much longer life span. Although small business' limited access to affordable broadband Internet service today will slow this move to ASPs, relying on your Net connection and outsourcers will be a major part of how you do business to take the load off your own computers and people.

BETTER MANAGEMENT

The worst, most unreliable aspect of PCs over the years has been the software running on them. Operating systems like Windows 95 and Windows 98 are like the average teenager: There's a limit to how much you can trust them. Windows 2000 and Windows XP bring a level of reliability and performance to desktop PCs that rivals anything out there and that beats older versions of Windows by a long shot.

While the improved reliability is a welcome change, where this really comes into play is in managing your desktops. The current situation is far from ideal, but it's better than what small businesses had before to manage their PCs, which was nothing. There has been management software for network administrators for many years, from companies like HP, Tivoli (owned by IBM), and Computer Associates, but it has always been targeted at large enterprises, with the requisite multizeroed price tag. All of these products require substantial expertise to use, the kind that one can only afford with a large IT department.

But even without a real network management system, modern network operating systems let you do a lot of centralized management. And because new desktop operating systems were designed to be part of a network, your flexibility increases. Administrators can diagnose problems before the user sees them, install programs on the desktops without even visiting them, back up files and system configurations, and so forth. All these capabilities make computers more reliable and easier to support, albeit not as efficiently as if you were using a big, honking system like Tivoli's.

Still another problem is that even finding people who will be network administrators for this kind of setup can be prohibitively expensive. The answer to the management problem for small businesses will eventually be outsourcing. A full-time network administrator and a full-blown management system may not make sense, but a monthly service for managing your PCs may. Although no management software company would talk on the record about conventional management services for smaller companies in the next few years, I did get an acknowledgement that it's a likely eventuality.

The way this would work is that a version of their software would run on your systems but be administered remotely through a secure virtual private network by a contractor, such as your value-added reseller (VAR). For a rudimentary peek at the possibilities, check out Hewlett-Packard's new e-diagtools (www.hp.com/

desktops/diagtools), software that runs on its latest professional PC lines to diagnose hardware problems and report them back to a VAR or HP.

For years, analysts have argued whether computers are "fast enough." Are we there yet? The answer is a qualified yes, only because management software and broadband for small business are not further advanced today. But barring any miraculous breakthroughs coming from someone's garage, the trend is quite clear: The era of upgrade after upgrade is coming to a close. Just clean out the crumb tray every once in a while, and they'll last forever.