Windows 7 upgrades. Downsizing. Standardizing platforms for mergers and acquisitions. System refreshes.
These are just a few of the situations that create the need to dispose of old computer hardware, or IT asset disposition, a term Forrester Research defines as “processes to redeploy, remarket, donate, recycle, or dispose of IT assets in compliance with data security, environmental, and industry regulations” which you and I might call, “Getting rid of our old computers.”
This area of IT asset management can no longer be an afterthought or a “waste-management” issue. Cost-savings imperatives, and security and environmental accountability have pushed IT asset disposition to the forefront.
That’s a good thing. Caring for your corporation’s IT equipment in the proper way is an opportunity for IT to generate savings and to protect the company’s brand reputation both in terms of privacy and green reputation.
Maturing the IT Asset Disposition Strategy
Don’t get the impression that CIOs and IT managers are allowing companies to become IT equipment graveyards: a basement office littered with discarded PCs and a dusty old dot-matrix printer. In fact, Forrester found that four out of five companies it surveyed had IT equipment recycling programs in place.
Robert Houghton, president of Redemtech, an IT asset management company with a focus on green practices, agrees with that finding: “These are issues that most larger organizations are quite aware of and most have some sort of practice and policy.” Still, he says that many organizations still consider IT asset disposition a “waste management issue.” However, a mature IT asset disposition strategy “can be a source of considerable savings for the enterprise through reuse and resell programs and it can add to the corporate social responsibility goals of the enterprise through donation of surplus equipment to nonprofits,” says Houghton.
The authors of the Forrester report, “Q&A: IT Asset Disposition,” agree. They point out that IT asset disposition strategy “can help reduce costs and operational risks throughout the IT asset life cycle.” For example, a mature strategy can offset the purchase of new equipment through the revenue gained from reselling end-of-life assets or through vendor credits. The authors point to the example of a large U.S. government agency that used Dell’s Asset Recovery Services to receive $166,000 in equipment exchange credits, which gave the agency significant staff savings by cutting removal times from six months to five days.
According to the Forrester report, a proactive IT asset disposition strategy (under a comprehensive IT asset management program) can be an effective part of identifying legacy equipment at risk for failure and in need of a refresh, thus reducing operation risks.
Refurbish for Savings
The 3 R’s—reduce, reuse, recycle—is not just a slogan applying to the EPA and upheld by the environmentally minded, says Houghton. “It also makes tremendous financial sense.” He points to one of Redemtech’s clients, a large bank that has a robust redeployment program cutting across all technology platforms—everything from big servers to PCs to teller equipment to phones. Houghton says that when comparing the amount of deferred procurement against the cost of reusing a refurbished item that the banking company already owns, the ratio is $1 to $14.50. In other words, for every dollar the company spends in new IT equipment, it saves $14.50 in procurement expenses.
Reusing can’t take the place of buying new equipment, of course, he says; there’s an appropriate time to retire equipment from the enterprise. However, when you’re strategic and judicious with redeployment, you can really save the business a lot of money. “These are capital savings as much as expense savings; this is stuff that the CFO cares about every bit as much as the CIO,” he adds.
Elvis Cernjul, VP of IT for retailer Spiegel Brands, follows this principle at his company. Cernjul maximizes savings through waterfalling servers and network gear from production to a lab environment. Though a once high-performing server may no longer be suitable for a particular system, it may be so for other applications. In addition, when Spiegel’s IT department replaces power users’ desktops, they reallocate those assets to other users using Citrix (for example, in the call center and warehouse). “Bottom line: We try to extract as much utility out of our assets as possible.”
Donating Old IT Equipment
Donating old hardware to charity is another option for old equipment. First off, you need to identify which charities you’d like to donate to and make sure they actually need and want what you’re willing to give, says Angie Singer Keating, VP of Compliance and Security for Reclamere, an asset management and security consultancy. Cernjul has simplified the process of choosing by focusing on low-income schools.
Donation is not without its issues, however. What you donate must actually be useful for the organization, and many software licenses cannot be transferred. Plus, says Keating, many companies find that when the nonprofit runs in IT trouble, they call on the donating company for the technical fixes; that said, donating IT time is also an option for charitable donation. For software issues, open source can give computers a longer life and provide usable equipment for charities. You can also work with a vendor that provides support in dealing with donation issues.
Resell Programs for Savings
Alternatively, you may choose to work with a vendor to resell equipment outside the enterprise, which can be a powerful method of recouping revenue from old equipment. There exist a number of vendors to help you with this process (a process that starts with data wipes). Many vendors will jump to the recycling option for old equipment, says Houghton. However, both for financial reasons and for environmental reasons, it pays to work with a vendor who can give old equipment new life. Of course, refurbishing old equipment for resale is a complex issue and must be looked at on a company-by-company basis. However, an inoperative laptop that may be worth only $150 in parts but, restored to working condition, can be resold for more money. This strategy gives the equipment longer life (lessening ecological impact) and generates more savings for the company.
Although the economy may be showing signs of recovery, a corporate emphasis on savings isn’t likely going anywhere soon, predicts Houghton. “Thrift will be one of the key drivers in enterprise asset management—money will be tight, capital will not be abundant—and business leaders will continue wanting to get their money’s worth: In the future we will be much more sustainable out of necessity.”
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