People 'n' Issues

Retiring IT has a cost

October 27th, 2015
Executives are ever vigilant in finding ways to cut costs and increase efficiencies. In their quest, they have realised that decommissioned IT assets are an unnecessary cost and have potential economic value.

The influx of new technology creates a corresponding and often overlooked increase in decommissioned IT assets. As a result, outdated PCs, monitors, and other IT equipment tend to quietly pile up in storage. These rapidly depreciating, aged assets can pack a major financial punch.

Xperien CEO Wale Arewa says IT Asset Disposal (ITAD) presents unique challenges and potential costs that companies seldom consider. “Very few companies understand the principles of IT asset disposal and more often, cost is a driver of the fragmented approach to refreshing old assets. This can range from auctions and staff sales, to scrapping storeroom bound computers without proper consideration for data protection or the elimination of data from old computers.”

He says an ideal system should start with a policy to close the last mile of the IT hardware lifecycle. “This is often overlooked due to budgetary constraints and is common practice amongst IT service providers and their clients – the legacy of the disposal methods used prior to the introduction of the data protection laws.”

Company executives need to consider regulatory compliance, cost and more importantly, the protection of company information. IT disposal challenges facing companies in today’s environment include legislative requirements, compliance to Protection of Personal Information Act 2013 (PoPI 2013), the National Environmental Waste Management Act 2008 (NEMWA 2008) and the Consumer Protection Act 68 of 2008 (CPA).

Arewa says the biggest potential cost is the effect of data loss that may lead to reputation damage. “There are several components to the disposal cost including the cost of space the asset continues to occupy if it is not disposed of, the cost to process the disposal, and the opportunity cost of foregone residual value.”

Basic in-house disposal management costs could include administrative tasks (inventory, forms, accounting, etc.); backing up and sanitising hard drives; storage costs; packing and shipping; and disposal management fees.

Aberdeen research says that any organisation annually removing as few as 3 000 PCs can save $1 million (about R13-million) per year in unnecessary storage and disposal costs by implementing an effective asset disposition program.

“The value proposition of a well-executed IT asset disposition program will be compelling to organisations of all sizes. However, the opportunity to sell an IT asset in the used equipment market evaporates when the asset’s value drops below the cost of disposal,” he concludes.

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