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What Exactly Is ITAD?

by Michael Vosnos, ITAD Consultant (CDIA+ and CITAD Certified)

IT Asset Disposition (ITAD) has been a burgeoning industry for the past two decades and with the continued proliferation of data bearing devices, its growth is expected to be exponential in coming years.  Yet outside the industry itself, there remains some uncertainty about what ITAD is and what it encompasses.  Moreover, most organizations only consider ITAD as an afterthought when they have to “get rid of stuff” rather than taking a proactive approach to their asset management. This is something to address given the growing and increasingly critical importance of ITAD within the greater IT field.

While different organizations and individuals have somewhat varying definitions of ITAD, at its core, ITAD is the management of decommissioning retired IT assets in a manner that ensures data security and environmental compliance while maximizing residual value.  ITAD vendors accomplish this through means of responsible recycling and remarketing, methods of data erasure that are NIST 800-88 compliant, and by partnering with certified downstream vendors.  The surest way for organizations to be certain that their retired assets are managed in a way that is both secure and ethical is to select an R2 certified ITAD vendor. Such vendors are rigorously and routinely audited by an independent third party to ensure compliance and implementation of best practices.  Among non-certified ITAD vendors and e-waste recyclers, standards and practices can vary greatly, often creating vulnerabilities for their customers.

As noted above, the quickening pace of technology has elevated the imperative of ITAD.  With tightening refresh cycles of traditional IT assets, cloud migration, and the emergence of the Internet of Things (IoT), this trajectory will continue into the foreseeable future.  It is therefore critical that organizations begin incorporating ITAD into their overall lifecycle management program now rather than later.  Unfortunately, the approach of most organizations to date has been of an ad hoc nature and to view ITAD as a “necessary evil.”  As a result, responsibility for ITAD is often delegated to a junior member of the IT staff with the seemingly cheapest, up front option selected.  This leads to un-recouped residual value of the retired assets, uncertainty of data security, and dubious environmental impact.

Conversely, organizations that have a robust asset lifecycle management program will plan their refresh cycles in a manner that optimizes the functionality of the devices while capturing the maximum residual value, making refreshes more fiscally sustainable.  The hidden costs of continued usage of less capable, mature or obsolete devices and their depreciation are significant.  In addition to CIO involvement, key stakeholders such as CFOs, COOs and other executive staff are included in the planning and decision making processes as a robust asset management program demands their involvement.  Finally, these organizations consult with a trusted, certified ITAD vendor.  A knowledgeable ITAD consultant will assist these organizations greatly in planning and optimizing their lifecycle management program, lending key industry insights.

While new technology is naturally more exciting to most people, end of use devices require an equal amount of planning and care as they exit an inventory.  The front end costs of proper planning and asset management are vastly outweighed by closing vulnerability gaps in data security, the costs associated with environmental compliance issues, and the loss of residual value of end of use devices.

At ARCOA Group, we provide quality asset retirement services designed to maximize data security and asset value. Being a leading certified company, we make it our duty to ensure our services meet our client’s exact needs. Contact us today or request a free quote.

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Better Call Art with Brett Apold of Arcoa

Short chat with Brett Apold from Arcoa. What Arcoa does and how they can help office equipment dealers increase revenue with adding a new profit center for ITAD services. In addition we discuss what's required to start providing ITAD services (IT asset disposition)

EFFECTIVE IT ASSET MANAGEMENT IN THE TOTAL LIFECYCLE COST ANALYSIS

By Michael Vosnos, ARCOA – Businesses today face numerous options and decisions in the acquisition phase of their IT assets’ lifecycle.  Myriad factors such as business requirements, the decision to lease or buy, support costs and budgetary constraints all impact a business’ decision whether to extend or shrink their overall IT refresh cycle.  Effective IT asset management is often an afterthought.  However, having a firm grasp on the real total cost of ownership over the life IT assets can yield significant cost savings and increased operational efficiency.

One of the first questions decision makers need to ask themselves is, does it make more sense to lease or buy?  Leasing is attractive to many as it offers the advantage of lower initial capital output, and often maintenance support can be included in the lease agreement.  However, the longer the lease term, the more a business will typically spend versus purchasing the equipment outright.

Purchasing comes with the advantage of ownership and the associated tax benefits of having a fixed asset as outlined in section 179 of the US tax code.  In addition to the benefits that come with capital expenditures on equipment, the depreciation of that equipment can provide significant tax savings over its life.  The downside to ownership is that businesses own the maintenance and repairs as well as their hardware.

A study done by Huntington Technology Finance examined the total cost of ownership throughout a typical three year and five year refresh cycle.  Taking into account the cost of maintenance to include software upgrades and patches, break/fix support, software development costs to support legacy systems, lost productivity when units require repair, drives become corrupted, and systems accumulate layers of software and security updates that require additional system resources and take up more drive space, the difference in total cost of ownership between a three year and a five year refresh are significant.  By hanging on to IT equipment beyond three years, where repair/upgrade costs begin to factor in on top of regular maintenance costs, businesses can end up paying for their equipment twice and by year five, these costs typically exceed the initial hardware costs.

In addition to maintenance associated savings, the study found that the typical PC laptop retained approximately 25 percent of its original value at the 36 month mark.  This residual value, if captured through a reliable ITAD vendor, can be applied to defray the cost of new hardware acquisition.  A case study based on 2,000 laptops compared the total cost of ownership between the same devices over a 36 month and 60 month period.  Over a 60 month period, the total cost of ownership for a business on a 36 month refresh cycle was $5,492,000 or $2,746 per device.  Conversely, the total cost of ownership for the business with the same devices on a 60 month refresh cycle was $6,886,000 over 60 months or $3,443 per device.

Each business will have its own unique factors and considerations that will feed into its acquisition decision making process.  However, as demonstrated above, simply “hanging on” to older equipment might not only not be in the best interest of a company in terms of operability and typically do not present the cost savings that many decision makers imagine.  It is imperative to examine the total lifecycle costs and to integrate a robust asset management plan into the decision making process that will minimize maintenance costs and capture the maximum residual value of assets.

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ARCOA President George Hinkle at the Fore on Capitol Hill

By Michael Vosnos, ARCOA – Last month, ARCOA President George Hinkle was among a group of the nation’s recycling leaders who went to Capitol Hill to meet with Congressional leaders and Trump Administration officials.  The group’s message to leaders was that while the nation’s industrial, commercial, and residential recycling infrastructure is strong, there are some key policy areas that require adjustment in order to yield larger economic, environmental, and strategic benefits.

Desktop computers ready to be recycled

The recycling industry in America today touches almost every aspect of life.  Taken together, the industry has created over 500,000 jobs with $33.5 billion in wages and approximately $110 billion in economic output.  American manufacturers have come to largely depend on recycled materials as a key resource stream and access to rare earth materials used in high tech products are a national strategic priority.  Processing recycled materials requires 60 percent less energy and generates 58 percent less CO2 emissions than raw materials and 2 out of every three pounds of steel made in the US comes from scrap steel.

Despite the essential role the recycling industry plays in the US economy, some significant hurdles remain.  The group of industry leaders voiced their support for a number of policy initiatives aimed at creating greater economic and environmental efficiencies.  First among these was their support for expanded access to international markets through global trade agreements.  Specifically, they pressed their support for approval of the US Mexico Canada Agreement (USMCA) which has a direct and immediate effect on the 135,000 US workers that support recycling export to the US’s closest neighbors.

Second, these leaders sought changes to federal policy which would recognize recycled materials as the valuable commodities they are and not as solid waste.  This classification is important as it impacts the way these materials can be used, exported and traded.  Currently, recycled materials arriving in foreign countries come with a bill of lading labeling them as “waste” when they are not.  This lack of clarity in classification places significant restrictions on the use of these materials despite the fact that they are environmentally and economically preferable to raw materials.

Finally, in an effort to further spur domestic demand for recycled materials, recyclers pressed congressional and administrative officials to employ recycled materials into infrastructure projects where economically and technologically feasible.  This would include the use of rubberized asphalt in the construction of roads, plastic in guard rails and the use of rebar from ferrous scrap.

Hinkle played a key role during the assembly of industry leaders, meeting with senior staff members of Illinois Senators Tammy Duckworth (D-IL) and Dick Durban (D-IL) and Congressman Brad Schneider (D-IL 10th District).  Last November, he was called upon to brief Senators John Boozman (R-AR) and Tom Carper (D-DE) on the environmental and economic benefits specific to electronics recycling.  And last fall, Congressman John Shimkus (R-IL 15th District), who chairs the House Recycling Caucus, toured ARCOA facilities in Waukegan, IL as part of his briefing from Hinkle on the unique features and policy challenges relating to electronics recycling such as data security, hazardous material, and reuse capabilities.

Such advocacy efforts have already born fruit in the policy arena.  For instance, the Unlocking Consumer Choice and Wireless Competition Act overturned the 2012 decision by the Library of Congress which ruled that the unlocking of smartphones was a violation of the Digital Millennium Copyright Act.  Effectively, this gave consumers the ability to switch cell phone providers without having to replace their phones.  While consumers were elated by this change in law, what few of them realized was that it was a result largely of the lobbying efforts of the electronic recycling industry.  It is hoped that similar efforts in Washington last month will yield similar results.

What is ITAD and Why is it a Growing Industry and Why Office Equipment Dealers Should Give it a Look

During the last few weeks I've been able have some awesome conversations with service providers for our industry.  I'm always on the look out for a product or a service that can help dealers expand their existing business or add growth from another service.

At Itex 2019 I was able to spend a few minutes with Ed Spriegel (President of Mid-West Copiers and Partner with ARCOA Group).  Ed was really excited about how well ARCOA is performing and stated I should chat with Brett Apold (Vice President of Sales with ARCOA) to learn more about the ITAD (Information Technology Asset Disposition) opportunities that are available to office equipment dealers.

After having an incredible 7 months of selling copiers I found the time develop some questions about ITAD.  Below is a transcript from our chats.  I also highlighted some facts that we should to pay attention to.

  1. What is ITAD and why is it a growing industry?

Information Technology Asset Disposition is the management of decommissioning retired IT assets in a manner that ensures data security and environmental compliance while maximizing residual value. Transparency Market Research states the ITAD industry will grow from $9.89B in 2015 to $18.18B in 2024. The factors contributing to that growth are cloud computing migration, big data analytics and the (IoT) Internet of Things. The increased number and complexity of legislative mandates for secure and environmentally compliant disposal of e-waste are also key contributors.



  1. If I’m in the Managed IT space why is it important for me to offer these services to my customers?
  • You will add additional revenue streams through asset buyback programs and end-of-life service offerings
  • It provides you with a differentiator in a competitive landscape
  • Allows you to provide your customers a complete lifecycle management program
  • Enhanced customer retention
  • Protect your customer’s brand with certified data security services
  • No capital investment needed to add additional revenue
  • Provide your customers environmental compliance through proper recycling methods



  1. We hear a lot about data security, especially related to data breaches. Where does ITAD come into play with helping customers protect their data?

Corporate information security is one of the leading enterprise tech concerns due to increasing reports of data breaches worldwide. Compromised enterprise information can lead to expensive recovery fees, legal repercussions and lost investor, employee and customer trust. A regularly overlooked, but imperative, aspect of data security is the destruction of residual data. Devices available for resale or recycling may still contain personally identifiable information (PII) from a previous owner. Utilizing NIST-compliant data erasure tools to ensure all PII is properly and securely wiped from a device is critical.

 

  1. What differentiates recyclers from each other? What am I looking for in a reputable recycler?

There have been many articles in the news about electronics recyclers and IT asset disposition vendors who have declared bankruptcy, been indicted or convicted for illegal export or storage of equipment, fraud and tax evasion. In order to avoid these risks, while supporting financially sound auditing practices, one needs to know what to look for. As a baseline, look for companies that are audited by an independent party on a regular schedule. Certifications such as R2 that audit processes surrounding the handling and treatment of decommissioned IT assets provide a great jump start on vendor due diligence.

You should audit your vendor. The vendor audit is all about risk management. Make certain that your questions and concerns are addressed to your satisfaction. Be leery of facilities and organizations that look too good to be true. Document any issues you find and determine whether that residual risk is acceptable to your organization. A vendor worth working with will pass your audit and minimize and/or eliminate the risks associated with decommissioning assets.

  1. At the end of the day we are all looking for ways to grow revenue…is a channel partnership with an ITAD vendor a way to do that?

 

Yes! A strong channel partner will provide you with new revenue streams that allows for your customers to spend more money with you. Residual value on decommissioned assets provides available dollars to your customers to spend with you that otherwise weren’t there.

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For me this seems to be a win win for dealers that are looking to add additional services with zero equipment investment.  In addition when you're in some of those larger commercial RFP's it's a service like this that can differentiate your company from the pack and increase your perceived value.

If you're interested or need to know more here's Brett's contact info.

Brett Apold
Vice President of Sales
 
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