Big IT shops get serious about asset disposal

If you're retiring old hardware, you would do well to investigate all your disposal options

IT departments that practice asset management are learning to master the art of retiring hardware at the right time. But making the decision to retire IT gear is just the beginning; tech managers also need to figure out what to do with the systems that are past their prime.

Gone are the days when IT managers brought used laptops home to their kids or companies sent trucks loaded with old monitors to the local recycling center (or, in even earlier days, to the dump).

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Now, thanks to privacy laws, environmental regulations, software licensing rules, and other factors, disposing of IT equipment properly requires companies to spend significant time and sometimes significant money.

Here's a look at everything you need to know about corporate hardware disposal, 2010-style.

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Review your corporate options There are myriad ways to get rid of old hardware, but not all of them are equally viable in the eyes of corporate IT. For example, refurbishing PCs and laptops for internal reuse is one option, but few organizations do this themselves, IT practitioners say.

There are myriad ways to get rid of old hardware, but not all of them are equally viable in the eyes of corporate IT. For example, refurbishing PCs and laptops for internal reuse is one option, but few organizations do this themselves, IT practitioners say.

Buying brand-new systems doesn't cost very much these days, whereas refurbishing systems internally requires significant amounts of time, money, and expertise. (Outsourcers will often refurbish systems for clients to redeploy internally, donate, or resell -- for a fee, of course.)

When it comes to larger items like data center equipment, some vendors now offer to haul away old systems to recycle or refurbish when a customer buys a new system (much like big box retailers do with refrigerators), but this practice isn't yet widespread.

Giving or selling old equipment to employees for personal use is another option, although the IT professionals interviewed for this article said their companies don't do that because of the cost and effort required to make old equipment truly usable. Also, employees frequently expect the corporate IT department to continue to support such systems, and that's a drain on resources.

That leaves recycling, donating and reselling (whole systems or parts, individually or in bulk) as the three most manageable hardware-retirement options for most companies.

Even after they've whittled down their disposal options, fewer companies than ever are going it alone.

While smaller companies with less hardware may be able to handle disposal tasks themselves, enterprises with tens or hundreds of thousands of PCs in locations across the globe are more likely to call in a third party to handle whichever options they've chosen.

Typically these outsourcers -- called "IT asset disposition" vendors (rather than disposal vendors) -- will repurpose or resell any components that are still viable. For the portions of, say, a PC that have no market value, the outsourcer will sell the steel to a custom house or a mill, which typically shreds it for reuse. Plastic is sold to processors that might turn it into pellets, and copper is sold to brass or copper mills, according Robert Houghton, president of Redemtech Inc., a Columbus, Ohio, outsourcer that provides asset management and life-cycle planning services.

In the end, virtually nothing is thrown away. "There may be a very small amount of material left over, which would be considered fluff, maybe 1 to 2 percent of the weight [of the original asset] that has to be disposed of in hazardous waste landfill," says Houghton.

As the market becomes more crowded, some disposition service providers have begun cutting corners, causing industry watchers to recommend that companies ask their outsourcers to prove they are taking care of assets in a legal and environmentally beneficial manner.

Protect company data

Regardless of what a company plans to do with its old equipment and whether or not it contracts with a service provider, the first step on the road to disposal is to protect corporate information by removing all data from hard drives.

"From an information-protection perspective, it's imperative that our assets are scrubbed, no matter what we're planning to do with them," says Sharon Dorsey, senior director of information resources at Marriott International's technology sourcing and life-cycle management group. There are plenty of off-the-shelf programs that will wipe hard drives, but Dorsey recommends using products that adhere to U.S. Department of Defense standards for data cleansing (download PDF). "The minimum [number of wipes] for DoD standards is three, but seven is optimal," she says.

Even though data removal is part of the package offered by disposal service providers that Marriott contracts with around the world, Dorsey's team still wipes the drives before they leave the company "as an extra step to limit risk," she says. "To reduce the risk to your company, you have to ensure that the data is scrubbed."

Protect the environment

IT employees at Marriott may take a first pass at wiping hard disks to protect company data, but when it comes to protecting the environment, the company completely entrusts to contractors the job of making sure the equipment is taken care of in an environmentally sensitive manner. In the U.S., Marriott uses Intechra Group.

"There's no way I want a Marriott asset disposed of inappropriately against local or state laws and regulations. There's environmental risk," Dorsey says. "A company like Marriott, with 3,400 locations in 68 countries, doesn't have the manpower to do this. Most of the [disposition] companies we deal with are large and have a presence not only in the U.S. but outside of it, too, and they stay current with the local regulations."

For smaller companies that operate only in the U.S., ensuring that assets are properly recycled is an easier process to manage, simply because there are fewer conflicting regulations and a smaller amount of gear to handle. Still, monitoring the process is essential, particularly for companies that have a green reputation to maintain.

Companies that use outsourcers for recycling need to be sure those firms are recycling and disposing of components properly. According to the Basel Action Network, which focuses on issues of global e-waste, as much as 80 percent of electronics that are collected to be "recycled" actually end up on barges to countries like China, Vietnam, Nigeria, Ghana and India (see video). Typically, the e-waste sits in landfills, since many countries don't have environmental regulations to prevent such practices.

To help prevent that kind of behavior, the Basel Action Network offers certification through its e-Stewards program to help identify service providers that responsibly recycle and reuse electronics.

Some companies go as far as tracking the disposal process, even when it's being handled by a trusted third party. Financial services company Citigroup, for example, has a variety of disposal methods for the IT equipment used by its 300,000 employees around the world.

If an aging system isn't recovered for reuse and resale isn't an option, it will be "demanufactured" by one of the company's three main outsourcers, explains Jim Brown, senior vice president responsible for desktop asset management at Citi.

Brown, who is based in St. Louis, says he works closely with his providers to understand exactly where all of the materials in discarded equipment end up. "They tell us where the metals go -- that a component went to this plastic company. Some of it goes to Trex, which makes plastic boards, some of it is used to make pontoons on docks," he says. "We have a zero-landfill policy, and we take the long view on recycling."

The company set up its disposal process so that internal customers are encouraged to recycle, he says. Citigroup's department managers must account for the cost of equipment disposal in their budgets, so the more they can reuse in their departments the less they have to pay.

Brown established a centralized system whereby the disposal outsourcer pays Citigroup residuals on the components that can't be reused in their current form, based on the going prices of the broken-down commodities -- plastics, some precious metals and paper. Last year, Brown says, those payments more than covered the cost of disposal and actually became a source of revenue.

For true cradle-to-grave environmentalism, companies need to be mindful of not just the recycling and disposal process, but of the entire life cycle of the equipment.

As part of its IT equipment purchasing process, Seventh Generation, a maker of green household and personal-care products, considers whether an IT product can be recycled and the environmental impact of the process the vendor used to manufacture the system, says Nancy Stoddard, vice president of IT at the Burlington, Vt.-based company.

"People need to think about the whole picture, from the beginning to the end; not only the hardware but the [vendors] you're purchasing the hardware from -- are they being green?" she says. "Apple until very recently was behind the game, for example, and now they're ahead of it."

Consider the repurpose route

The equipment that Seventh Generation doesn't recycle is donated to local nonprofits or schools, or it's given to the Vermont Business Materials Exchange, a Web-based marketplace that takes reusable items from businesses, municipalities and nonprofit organizations and makes it available to the general public.

If the systems are going to be repurposed, the company wipes away the data, cleans up the machines and reimages them with the software they came from the factory with, explains Adam Quinn, manager of IT support at Seventh Generation.

(This can get tricky, however, since not all software licenses allow for transfer of ownership. For example, Apple operating systems are transferable, but applications aren't, so Seventh Generation loads old equipment with open-source applications to make them usable without violating licensing agreements, Quinn says.)

Seventh Generation does all of the retiring of equipment itself. Since the company only has about 100 employees, it's not such a daunting task. "If you're dealing with thousands of computers, it's hard," Stoddard says.

However, size can have its advantages. Citigroup, for example, leverages its clout with large vendors like Microsoft so it can transfer software licenses along with equipment that it's donating, says Brown, explaining that donations are facilitated through its Citi Foundation charitable arm.

When it comes to repurposing, the State of Indiana's Office of Technology is able to keep alive much of the technology equipment that has grown too old for its own 26,000 users by giving it to the state's school systems, says Paul Baltzell, director of distributed services.

"Schools use [older] PCs in classes where students are learning to keyboard and not doing complex things. Or someone in the office uses them, or if someone is learning to fix computers," he says. "That way we're getting a second life out of our PCs."

The state works with two outsourcers, Unicor and Workforce, to dispose of whatever equipment isn't passed along to school systems. These companies don't charge the state to pick up old IT equipment, disassemble it, sell what can be sold and recycle the rest -- but they don't share any of the proceeds from sales with the state either, says Baltzell.

Try for cash or credit

Some organizations can see some profit, or at least reduce the amount of money they have to pay to dispose of IT equipment, by allowing disposal service providers to sell the assets they take away.

Marriott's Dorsey says her outsourcers handle the resale -- either of entire systems, components or materials broken down into bulk plastic or metal -- and they charge the hotelier for items disposed of and pay it back for items sold, minus a commission.

[ Read our related story: Pulling the plug on old hardware: Life-cycle management explained. ]

"These vendors will charge a standard fee for desktop, monitor [or] printer. We have a set fee we've negotiated," Dorsey explains. "If they do a resell, they do it on commission, and they get x percent of the sale," says Dorsey, who declined to provide further details, because Marriott is in the middle of negotiating a new contract in the U.S.

When PwC's outsourcers resell systems like PCs or notebooks, which are relatively easy to refurbish and resell and are often in demand, PwC might share in that profit or receive carbon credits in exchange, says Lechner. However, this only works for equipment that's still popular. "Anyone trying to get rid of an old tube monitor would have to pay for it to be disposed," he says.

As complicated as the process of properly retiring old hardware is, it's important to spend the time and money figuring out what works best for your company. "Over the last couple years, it's become a bigger deal," Lechner says, "and we're getting better at it."

Garretson is a freelance writer in the Washington, D.C., area. She can be reached at caragarretson@gmail.com.

This story, "Big IT shops get serious about asset disposal" was originally published by Computerworld.

Copyright © 2010 IDG Communications, Inc.

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