Saying Goodbye to Technology Assets

The lifecycle of computer equipment at most enterprises has a lifecycle of just a few years. Rapid advancements in processing power and exponentially increasing demands for data storage can result in IT hardware becoming obsolete on a fairly regular basis.

Many information technology departments have turned to asset management systems and practices to help them manage the procurement and tracking of this equipment, but when it comes to IT asset disposition many companies rely on ad hoc disposal processes that are costly and inefficient. This can result in "ghost" assets remaining on the books, or outdated equipment lingering in storage rooms or data centers. Improperly junking this not only poses both security and environmental risks -- in many cases it could be illegal. Old computer equipment can also be refurbished, reused or sold, providing procurement savings or even a new revenue stream.

"This is not exactly a well-managed process in many organizations," says Peter O'Neill, principal analyst at Forrester Research. "Most companies don't have a formal process for scrapping equipment."

"Companies should look at asset disposition and plan for it in the same way they plan for procurement and end user support," says Robert Houghton, president of IT recycling and refurbishment company Redemtech .

It is estimated that as many as 150 million obsolete PCs are being stored by businesses. That equipment is not only taking up space, but also losing value every day it sits idle.

A number of trends are now forcing many companies to take a second look at how they manage old computer equipment. Because of the potential loss of proprietary information or customer data, hard drives must be thoroughly wiped clean of any information that may pose a security risk. New environmental regulations have also put limits on how computers, which contain a number of harmful chemicals and elements, are disposed of.

Financial compliance initiatives now require greater accountability for IT assets, so non-IT departments like procurement and accounting are getting involved in managing the IT asset lifecycle, according to Forrester's research.

"Companies are starting to catch on that it's better to keep up with managing old equipment and getting rid of it," says Lisa Collins, sales and marketing manager at electronics recycling firm Global Investment Recovery. "The longer things sit around waiting for disposal, the greater the risk that someone will take them, and the more risk there is of a data breach."

IT recycling company Redemtech estimates that raising reuse rates of desktop and laptop business computers in the U.S. to the level of the rest of the world reduce solid waste equal to the weight of 2,490,000 bricks, in addition to reduce energy use and carbon emissions.

This takes advanced planning. "A decision needs to be made about the length of the lifecycle," Houghton says. "A lot of organizations are going to a longer lifecycle because the computing power of the hardware is more than sufficient to current software systems. It's feasible to go from a three-year refresh to a four or five-year cycle, and you gain cost of ownership benefits that way. But you have to integrate end-of-life processes into your planning."

As O'Neill points out, Europe is a bit ahead of the U.S. in terms of disposal processes. IT manufacturers there are required by law to take back old equipment for recycling, so companies (and individuals) have a much easier time getting rid of equipment. However, internal processes are still required to make sure data has been wiped from the systems, and that the disposal is properly recorded.

There are potential cost benefits to getting a better handle on IT asset disposition. Removing "ghost" assets from inventory can reduce a company's tax burden, and reusing old equipment elsewhere in the enterprise can result in significant procurement savings, as well as reductions in software licenses and maintenance fees.

While asset management software can help, there are some limitations in many systems. Most IT asset management programs will issue reminders that equipment is reaching its retirement age. IT departments need to design standard operating procedures for disposing of these assets, ensuring that proprietary data and licensed software is removed from the computers, and that these transactions are well documented.

"The asset manager will get a report saying that these systems are now fully depreciated, and the discovery system will tell them if they aren't being used," O'Neill says. "But someone then needs to make a decision about what to do with those systems."

"If you do that formal end-of-life planning, you already know what you're going to do with the equipment at that point," Houghton says. "That planning is useful whether you handle disposal internal or outsource that function."

A number of third-party companies offer recycling and disposal services that often include data erasure and record-keeping services. Redemtech, Blancco, Global Investment Recovery, among others, provide services that range from recycling computer parts to managing resale programs. It's important to identify how a third-party provider is actually disposing of equipment. Redemtech, for example, guarantees that it does not put equipment into landfill or ship scrap overseas (an increasingly common practice in the recycling industry).

"You need transparent, accessible visibility into what's going on," Houghton says. "Documentation also helps ensure the provider's financial accountability."

While there has been an emphasis recently on recycling old IT equipment, it can be more cost-effective (and environmentally responsible) to refurbish, reuse, sell or donate those assets. Research from the United Nations University indicates that reusing a PC is up to 20 times better for the environment than disassembling and recycling its components.

"Socially responsible companies are concerned about protecting confidential data and reducing their environmental footprint," says Markku Willgren, North American vice president of business and sales development for Blancco. "As an alternative to physical destruction, full disk overwriting permanently destroys sensitive data, eliminating the fear of data theft, while preserving the potential to refurbish the computer for future use."

"Most hardware, if it's still operational after the first month, can run for eight or nine years without much effort," Houghton says. "Most of our refurbishment activities don't have much to do with the hardware. Mostly, we test to make sure its reliable and then we clean it up so it looks brand new. Many refurbishment programs fail because people don't like the equipment they are getting -- it's more of a human challenge than a technology challenge. You want to make the equipment look like something that the users will be happy to receive."

Refurbishing old equipment can also help save money on new purchases, or generate revenue when the equipment is resold.

According to Redemtech, one of its banking customers realized $9.2 million in cost avoidance by redeploying 10,400 IT assets over two years. Redemtech helped the company's IT asset management personnel gain visibility into its redeployable inventory, and to refurbish and deploy assets in the field more quickly than in the past.

"The best asset management strategy is to have visibility of that idle inventory," Houghton says. "When idle equipment is identified, you have to recover it quickly and move it rapidly into available inventory. Speed is money."