Updates from September, 2009

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  What is ITAD and how big an issue is it for companies?

  
  Jeff Guthier 3:48 pm on September 30, 2009 | 0 Permalink | Reply
  
   

   Part 1 of a 3-part series 

   “IT Asset Disposition (ITAD) is a means for the proper disposition, removal and recycling or remarketing of assets, while ensuring compliance to local and national data security and environmental regulations.”

  This is a significant issue for companies of all sizes and in all industry verticals as it is not their core competency and is considered a sunk cost just to maintain compliance.  They are often left to create internal processes that tie to ITAD service partners and then staff to support those programs.   Companies are good at IT Asset Management (ITAM); managing acquisition cost, maintenance and uptime of their IT Assets.  They usually have solid data security policies and programs in place, even if it means removing hard drives prior to the asset leaving their possession.  And, they are aware of being environmentally and socially responsible.  These are all core to maintaining a sustainable business. ITAD becomes secondary and reactionary.

  Having first learned of RoHS and WEEE as a member of a leading mobile phone supplier’s Global Environmental Team, it was apparent that legislation and responsibility placed on the OEMs for take back and tracking of eWaste was creating a large, yet highly fragmented, industry for ITAD.  It was equally clear that large OEMs were more concerned about brand image and the negative PR associated with their equipment ending up in landfills across the world, then they were with the cost to maintain take back programs and implementing 100% destruction and recycle policies.   It occurred to me that a properly maintained “reuse” program could help off-set some of those costs and have a larger impact on protecting the environment.

  A colleague of mine  (now COO/Co-Founder of ServoTerra) had since moved on and ended up at a local California certified collector recycler of eWaste.  He had seen the industry and market potential and was brought there to take a local brick and mortar based collection facility into the board rooms of large OEMs and Contract Manufacturers to build a global reach including WEEE take back programs and remarketing of assets.  I joined him there to develop the back office processes and infrastructure to support an operation on that global scale.  This is where I learned the just how fragmented the offerings are in ITAD from Consignment, to Broker, to OEM Trade-in programs and the many challenges of linking those processes to downstream recycling and refining to include data security and certificates of destruction reporting. 

  Stayed Tuned for PARTS 2 & 3 to include common weaknesses in todays ITAD processes and Recommended Best Practices.

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  IT Financial Management and it’s Role in the Asset Life Cycle

  
  Jeff Guthier 1:49 pm on September 21, 2009 | 1 Permalink | Reply
  Tags: Asset Tracking, IT Asset Disposal, IT Asset Management, IT Financial Management, ITAD (2)

  A question was recently asked in one of my online communities, “how common/important is it for an organization to align it’s IT asset management (asset names, tags, descriptions etc…) with controllership depreciation schedules?”

   An astute consultant argued that it was very important and commented that if you are correctly tracking the receive date of the IT asset, it is very easy to track the depreciation schedule in most cases. Knowing this makes it easier to perform global adjustments to assets within the database. Before disposal, one of the entry criteria should be “has the asset been financially depreciated” and either store, reuse or dispose of the assets accordingly. He also added the following questions an asset manager should be able to answer:

   The age of the current IT Assets (by platform/model)?

  • The ability to report and identify “Where” the Asset is within its expected Lifecycle. This is key for future IT finance budget planning.  Maintaining this attribute also allows for the close collaboration between the cross-functional groups of Procurement – IT Finance and Accounting and as a result places the IT Asset Management team in a stronger SOX supportive role where it should be.

   While I agree absolutely with the consultant’s comments, there is one piece missing in this scenario. The actual final asset life cycle management piece is knowing the current market value of the used asset and leveraging that against the depreciated value to maximize the replacement ROI of the asset. This brings the Total Cost of Ownership to its natural conclusion and enables the IT professional to bring value added decision making to the CFO and CPO.

  Forrester recently published a report finding IT Financial Management Software to be the next fastest growing market in this space.

  “Forrester defines IT financial management as:  The discipline of planning, budgeting, monitoring, and controlling the use of a firm’s total IT budget (operations/maintenance and new projects/investments).  IT financial management software provides an application that allows companies to support and automate the process of IT financial management. This is done by applying general cost accounting principles to IT.

  The phenomenal growth of the IT Infrastructure Library (ITIL) as the de facto standard for IT service delivery and IT service support processes has raised the bar for internal IT department process maturity considerably. Most internal IT departments today can be considered to be in the stable stage, rather than the chaotic stage of a few years ago. The obvious next step for IT then is: Run IT like a business, just like service providers do — and that’s what IT financial management is all about.”

  ServoTerra addresses this need by providing out of box, forward thinking solutions. Asset owners are enabled to make value added business decisions which impact all stake holders throughout the corporation. We extend best practice requirements from ITIL into the ITAD arena. Our application completes the necessary enterprise suite of solutions around asset acquisition, asset management and final asset planning for profitability and disposition. We mitigate risk by connecting the asset owner directly with the buyer or recycler/refiner as the asset is being decommissioned; eliminating the changing of hands through mid-level services in the ITAD (IT asset disposal) space. So, the risk vs. reward calculation becomes more about control within world class business processes and decisions and not as much about finding gold nuggets.

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  Value of Excess & Obsolete Materials

  
  Karl Larson 4:34 pm on September 14, 2009 | 1 Permalink | Reply
  

  What is your excess and obsolete material worth in the open market place? Do you know? More than likely it is not worth what you have on your books. In the case of components the material might be less value than your book value, unless there is a tight supply for a commodity component which is very hard to predict. In the case of IT gear, your accounting system more than likely posts a 24-36 month depreciation schedule. Market intelligence is the best way to understand the value of your gear, but where do you find it?  Most asset management software does not provide you with a valuation of your equipment. There are others that know, but go to great lengths to ensure that you, the owner, does not know. That is how they make their profit. While we don’t yet have a Kelley Blue Book for IT equipment, ServoTerra is getting close with its SaaS planning application, designed to provide you with the information you need to reclaim the residual value of your excess inventory.

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