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  Common Weaknesses in Today’s ITAD (IT Asset Disposition) Processes

  
  Jeff Guthier 7:44 am on October 7, 2009 | 0 Permalink | Reply
  Tags: IT Asset Disposition (2), ITAD, recycling, remarketing

  Part 2 of a 3-part Series

  • ITAD Processes are Reactionary – They are not the core competency of the company, so assets come out of use and are moved to the path of least resistance; internal storage, storage off-site, storage at consignment house. Once you decommission an asset without a plan to maximize the ROI, you are already headed down a process of increased overhead and costs to your company.

   • ITAD Processes are Redundant – Consignment models are the most common ITAD service offering. The very beginning processes force redundancy for companies to log the assets they are sending to a consignment house, where the first step is to inventory the assets and report back any discrepancies. Then both companies maintain an on-going inventory of those assets to their final disposition.

  • ITAD Processes are non-Transparent – The true overhead costs of consignment programs is not known to the owner of the asset. Final ROI of the ITAD program becomes blurred in the cost to inventory, tear down, recycle and maintain proper documentation. The recovery value of recycling or remarketing is often settled via a back end revenue share after the cost of doing business. The financials are easily and quickly distorted leaving the asset owner knowing they could be doing better, but not sure how. The Broker will provide the asset owner with a seemingly easy way to dispose of assets by offering pennies on the dollar for a pallet or truckload of assets. The asset owner doesn’t know the true value of their assets, but the Broker knows exactly which “golden nuggets” on that pallet or truck are going to yield high ROI.

  • ITAD Processes are Fragmented – A complete ITAD program may require the consolidation of several downstream partners. The consignment house uses a local recycler which uses a national refiner. Each time the asset changes hands it enters into a different tracking and reporting process that somehow must be maintained in the original asset owner’s back office systems. The internal IT and document control to manage this is another cost of the program.

  Stay tuned for Part 3 of the series, Recommended Best Practices for ITAD

  Visit http://www.servoterra.com to see how they’ve addressed these common weaknesses with a new SaaS solution.

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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

  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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