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FacebookWhat 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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Value of Excess & Obsolete Materials
Karl Larson -
The Importance of Transparency
Karl LarsonWhen you own an asset whether it be an automobile, camera, server, computer, or a piece of medical equipment that supports your thriving business, one day you will need to upgrade.
Why you upgrade can be a personal choice, or a business decision set by your business needs and requirements.
With business IT equipment, your company has invested capital in the asset and depreciated it over time. Disposing of the asset can be a problem however because you may not know where it goes. Not too long ago 60 Minutes did an expose on companies’ assets that end up in e-Waste cities in Southeast Asia. This happens all too often when companies find out that they cannot simply throw the electronics in a landfill, they just let someone take it away sometimes for free sometimes for a fee, and if they were lucky, they might have been paid for it.
In truth, a lot of equipment does still have value in the secondary market. And when you sell it, give it away or pay to have the material taken away, you must have transparency to understand where exactly the equipment is going. The equipment that was found in Southeast Asia was traced to companies who thought they had disposed of their unused equipment in a responsible manner. Imagine their shock to be part of such a damaging expose.
Transparency gives you the ability to track your equipment and know where it is going. Always make sure that you have transparency whenever you are de-commissioning the equipment you own. Insist that the vendor who takes away your equipment provide documentation of exactly where the equipment went. There can be costly fines involved with equipment showing up in the wrong place, not to mention the public relations nightmare of improper disposal. -
Is Liquidation Really Asset Recovery?
Karl LarsonIf you are a business owner or senior manager at a medium or large corporation, you are probably involved in one way or another with the procurement and disposal of your IT assets such as laptops, desktop computers, monitors, printers, routers, hubs, wireless devices, mobile phones, servers, telephony and networking gear.
These technology devices have become so pervasive in our daily business lives, even handymen, plumbers, electricians, dentists, doctors, real estate professionals have websites and a computing footprint. No matter what the industry or business, or size of the revenue generation, we all require some level of technology to remain competitive in our respective marketplaces.
How often we upgrade differs from company to company and industry to industry and country to country. Not too long ago in our own presidential elections, Twitter and social networking sites were used in the election monitoring process just as when the Sichuan provence had an earthquake, it was first reported via Twitter and other social networking sites rather than the traditional news networks.
Why is this important? When technology becomes this pervasive it also becomes mandatory for use not only in our personal lives but in our business lives as well. Ensuring your business is at the top of its game with the latest technology is not an inexpensive proposition.
In the current recession, companies that can stay alive have done so by cutting back services, lay offs and not upgrading in their normal cycles. The chickens will come home to roost very soon. Business-minded individuals cannot rest when it comes to technology refresh. They must refresh to stay competitive, and when the economy does pick up hiring new people will enable new technology refresh. This is when there is great opportunity to liquidate the old technology or to attempt to gain a higher value back by planning and managing the re-sale event.
What does a Liquidation event get you? In most cases you may call in a liquidation specialist who uses formulas to calculate the value of your equipment. There is a well known variable formula, and I say variable because it uses such functions as Yield and Transportation but it goes like this:
Retail value $500
Multiplier as low as 50% and high as 75%, $250- $375
Then Mutiply by the Yield (depends upon the commodity but the range is 50-85% for $125-$318
Then divide by 2, range = $62 – $174
Minus Transport, again a range 10%-25%, $46 –$157
A $500 valued product will get you between $46 – $157 a 9% -30% range from high to low.Treating these assets as a recovery project as opposed to a liquidation event can reap you higher returns for merchandise that is in good working order, even used. The above calculations take into account only the current market value, not the price you originally paid for the items; so that $500 item could be a three year old server for which you paid $3500.
Planning the sale of the asset can focus your efforts on real buyers who are looking for a bargain not a steal. They might prefer to purchase the asset from you for $350 because the current market value is $500 this is a 70% return as compared to 30% (at it’s highest) for the liquidation event. You can get as much as double the return in a planned resale event versus liquidation and 5 to 7 times as much as the worst case event.
To learn more about planning best practices, visit http://www.servoterra.com/seller/?id=b0724
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ITAM and ITAD Done the Right Way
Karl LarsonIT Asset Management and IT Asset Disposition Done the Right Way!
Companies that own IT assets must at one point manage these assets, then upgrade them. It doesn’t matter if the assets are as small as a wireless router or as large as a rack server, the assets must be maintained and constantly monitored for the best performance possible. Software license keys must be checked and monitored to ensure that you are meeting compliance regulations. Then at some point they must be replaced with newer, better designed equipment.
World Class ITAM/ITAD
What is world class IT management? It starts with knowing what you have deployed, who has the equipment, where its deployed and what configurations you have. Is all of the equipment compliant with the hardware warranties and the software license deployment? Next is monitoring your applications and your hardware performance. Performance is key to meeting the productivity challenges that face every company. You need to make sure all of your hardware and software licensees are being fully utilized. Then comes the technology refresh to ensure that you are staying ahead of productivity and power improvements, saving your company money down the line and ultimately reducing operating costs.
Moore’s Law and how it effects competitive cost
There is a technology law that drives technology refresh, innovation cost reduction, and gives us higher capacity, faster processing, and lower power consumption. It’s called Moore’s Law, and it says that technology will double in capacity or speed and/or reduce in cost by half every 18 months or sooner. “Moore’s original statement that transistor counts had doubled every year can be found in his publication “Cramming More Components onto Integrated Circuits”,Electronics Magazine 19 April 1965. For 40 years this law has stayed true, driving the technology innovation boom that we all have witnessed in our lifetime. It affects processor speed, power consumption and cost; it affects hard drive and memory cost and capacity curves; it affects television and image processing.
Every day you are touched by this law: telecommunication, medical, automobile, entertainment, food and beverage production, banking, the stock market, communications, retail, the internet, and the world economy have been driven from this innovation law. Little did Gordon know or maybe he did, that this law shows no slow down for the next decade or two. This means that any business that relies on technology will need to keep up or get out.
About every 2 years the technology deployed can be replaced by technology that is faster (productivity), more capacity ( less expensive storage and speed), lower power consumption (less expensive to run), and cheaper (less investment for the same tech, or more tech for the money). One thing is for sure, any corporation that is looking to stay ahead of the cost curve needs to update the technology as often as it can to remain competitive.
This often means shrinking life-cycles of technology. Do you really want your field sales people sitting on an internet connection waiting for the contract to upload, or do you want them interacting with the customer? Do you want that prospective customer clicking away from your website because they had to wait too long for the page to change? This means that you must stay ahead of the curve and upgrade faster to compete, it you don’t your competitor will.
Technology refresh done well!
How is technology refresh done well? One word – planning. When you wish to have something done well, planning is the key. In today’s technology refresh environment most of the emphasis is placed on the new technology replacing the old. In the best case scenarios the planning starts and ends with the sourcing and procurement of the new equipment. In most if not all cases, the current equipment that you own is more of an afterthought, ” oh yeah, what do we do with the old equipment?”
Believe it or not there are markets for this older technology. Lower technology companies or school systems, up and coming economies are all good candidates for this retired tech. But how do you connect with these buyers of equipment? Today there is a whole market built around servicing these customers who purchase used equipment. Much like a used automobile, some just choose to buy used and use it until it dies.If you plan, then execute, you can manage this for a higher return on your original investment, however; if you simply react to the resale event you might not fare out so well. Good planning is the key to success in most any activity, this is no exception. How do you plan for the technology refresh with your used assets in mind? First you need to know what you have, using a robust ITAM solution helps. Having a robust ITAD solution is key to understanding not only what you have an how much it’s currently worth on the open market; but a great solution would connect you directly to the buyers of these used assets.
Planning will help you offset the procurement cost of the new equipment giving you a net budget. All too often this aspect is overlooked as a value today, and the budget is drawn up for the gross cost of the new equipment. The resale of the used equipment is treated as a windfall profit without focus or merit. Planning the purchase and the resale event at once gives a controlled and focused approach to the event, ultimately saving more money on the purchase of the new equipment and ensuring that the used equipment gains the highest value and doesn’t end up in a land fill.
Managing and planning your IT equipment can be easily managed with the right tools and applications. Check out http://www.servoterra.com they can help you with planning & ITAM and ITAD management.
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Why SaaS?
Karl LarsonSaaS (also known as Software As a Service), is an on-demand delivery model that is changing the landscape of enterprise software and provides significant benefits to businesses. On-demand means software that is made available to the user via the internet, where the service provider (or hosting company) is responsible for managing the software and its availability.
Advantages of SaaS
- Financial Simplicity – No up-front capital investments to purchase software licenses, no maintenance contracts, no software to install, manage or upgrade
- Get started quickly with no barrier to entry
- Daily backups and on demand restores, your data is secure
- 24/7 Monitoring
- Automatic Software upgrades
- With the on demand model, a single version of the product is supported and it’s always the latest release. This simplifies the process of introducing new product capabilities and every customer gets upgraded as changes are made.
- You receive software upgrades easily with no tedious process. You gain immediate value seamlessly and painlessly.
- Worldwide high bandwidth access
- Leverages Force.com Secure Cloud Computing platform
- Highly Secure
- Entire business focused on service delivery so you can focus on your core business.