Making IT Asset Disposition a Value Generating Activity 7-11-2017... · eBay, Craigslist ....
Transcript of Making IT Asset Disposition a Value Generating Activity 7-11-2017... · eBay, Craigslist ....
Making IT Asset Disposition a Value Generating Activity Neil Peters-Michaud, CHAMP CEO, Cascade Asset Management
IAITAM – Member User Group (IMUG) Webinar
July 11, 2017
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Is IT asset disposition a liability?
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Or does it actually generate value?
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What kind of discounts do you get on your IT assets?
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Agenda
Understanding IT asset value depreciation ▫ How to get paid for your working IT assets
▫ Total Cost of Ownership and asset disposition
▫ Asset disposition values and trends
▫ Maximizing asset recovery value
▫ Planning for the lowest cost and highest value of your IT assets
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Selling your reusable IT assets Retail / Direct Wholesale / Indirect Employee Sales Partner with ITAD firm Donations Brokers eBay, Craigslist Resellers – Computer shops Surplus auctions, public sales
Equipment Maintenance Organizations
Put items out to bid Specialty equipment depots
May get more money up front, but more hassle and internal costs.
Outsource the hassle, for a fee. Others may have access to more markets to increase value.
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Outsourcing options Sell outright
• Cash up front • Known price • Potential lower
returns • Adversarial
relationship with buyer
Revenue share
• Cash after sale • Mutual interest
to maximize return, but value not guaranteed
• Need to ensure process is legit and payment is made
Subscription/lease
• Disposition value embedded in the cost of product
• Should reduce initial purchase price
• Requires items to be returned in good condition, or penalties
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What goes into the cost of a PC?
• Total Cost of Ownership is a method for the systematic accounting of all costs (direct & indirect) related to IT investments
• The initial purchase price is relatively small part of total cost or owning and operating IT products.
“Locked and Well-Managed Desktop”: $3,310 TCO 27% hardware/software, 72% operations, 1% disposal (Gartner, 2013)
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Examples of Costs
Life cycle Costs Acquisition & Procurement
• Hardware purchase or lease, including all accessories • Software licenses • Admin costs (bid specs, contracts, tracking purchases,
delivery, installation)
Operations & Maintenance
• IT and personnel training • IT support such as network and software management,
help desk • Internet, energy, furniture and floor space costs • Software & hardware upgrades & related staff downtime
Disposition costs • Admin costs (asset management, inventory tracking, contract services)
• Sanitizing data • Storing, shipping and disposition costs
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What about . . .
The value of the asset at disposition
. . . and how it can reduce TCO?
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Cascade Asset Resale Data • Cascade has provided ITAD services since 1999. Gartner Magic
Quadrant for North America (visionary); ISO 9001, ISO 14001, e-Stewards, and NAID certified
• Since 2007, Cascade published reports on the resale value of IT assets we refurbish
• In 2016, over 230,000 assets inventoried and processed for reuse or recycling; more than 81,000 assets refurbished
• Equipment owned and retired by healthcare, financial, insurance, government and manufacturing firms. No OEM or lease returns
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Historical resale price models
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Current data analysis methodology • Sales period reviewed: 2015 – June 2017
• Good, Working Desktops, Laptops, and iPhones ▫ Tested to perform to manufacturer specs ▫ Some cosmetic cleaning and repair ▫ No Operation Systems ▫ Predominant Brands, with ~10% White Box desktops
• >74,000 desktops and >34,000 laptops
Dual Core (Intel Core 2 Duo, AMD Opteron) Quad Core (Intel i3, i5, i7; AMD Opteron)
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Desktop computers – Intel Core i5-2400 CPU @ 3.10GHz
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2015 2016 2017
Count of Item
Average of Sale Price
Launched 2011
Monthly Depreciation Rate: 1.65% (Q3–2015 to Q2-2017)
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Desktop computers – Intel Core 2 Duo CPU, E8400, 3.0 GHz
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Count of Item
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Launched 2008
Monthly Depreciation Rate: 2.25% (Q3–2015 to Q2-2017)
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Count of AssetID
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Launched 2011
Laptop computers – Intel Core i5-2520M CPU @ 2.50GHz
Monthly Depreciation Rate: 1.5% (Q3–2015 to Q2-2017)
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Laptop computers – Intel Core i7-3520M CPU @ 2.90GHz
Monthly Depreciation Rate: 3.0% (Q2–2016 to Q2-2017)
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Laptops Desktop Computers
Average Resale Price – all devices
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What’s our conclusion?
For PCs and laptops ▫ Prices drop dramatically in the first 3 years after introduction
(year 3 is ~25% of purchase price) ▫ After year 3, price drop is less dramatic and items can have value
up to 10 years after introduction ▫ Resale prices are not declining as fast as in previous years ▫ Equipment value is greatly influenced by condition and
completeness. Missing batteries, hard drives, and A/C adapters have a significant impact on value.
Generate even more value ▫ Repurpose devices – replace the hard drive (and battery) and
reimage (works just like new and great for many applications)
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Launched Q4, 2011 for $649 (unlocked)
Apple iPhone 4s – 16GB Quarterly sale price Monthly Depreciation
Rate: 12% (Q3 – 2015 to Q2 2017)
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Apple iPhone 5s – 16GB Quarterly sale price
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Launched Q3, 2013 for $649 (unlocked)
Monthly Depreciation Rate: 7% (Q3 – 2015 to Q2 2017)
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iPhone lifecycle •iPhone (2007–2008) •iPhone 3G (2008–2010) •iPhone 3GS (2009–2012) •iPhone 4 (2010–2013) •iPhone 4S (2011–2014) •iPhone 5 (2012–2013) •iPhone 5C (2013–2015) •iPhone 5S (2013–2016)
•iPhone 6 (2014–2016) •iPhone 6 Plus (2014–2016) •iPhone 6S (2015–present) •iPhone 6S Plus (2015–present) •iPhone SE (2016–present) •iPhone 7 (2016–present) •iPhone 7 Plus (2016–present)
Initial user: 2 years (always use latest model)
Secondary user: 2 years (use previous model)
Value significantly drops if item is “2 generations old”
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Factors Influencing Recovery Value
• Security - do items need to be destroyed? • Refresh rate - age of devices • Donation, employee sale, executive favors
Company Policies
• ID and retrieval of end of use assets • Condition of assets (complete & quality) • Coordination of disposition program
ITAM Program
• Market conditions – demand for assets • Access to buyers • Global currency rates (value of the dollar)
External
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Equivalent Annual Cost
• For a given refresh cycle, what is the average annual total cost for that IT asset? ▫ Total cost of ownership divided by refresh cycle =
Equivalent Annual Cost (EAC)
• Good for budgeting to a set refresh period ▫ For a 4 year refresh, replace 25% of assets each year ▫ Establishes accrual cost for assets ▫ Spend the same each year on
acquisition/maintenance
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TCO
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What’s the optimal refresh rate? • From a cost perspective – the one with the
lowest Equivalent Annual Cost
• From a value perspective, also consider the positive impacts of the device to the organization
• Often, these two criteria come up with the same refresh rate
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Align Goals
Decrease TCO
Increase Productivity,
Impact, Performance,
& Value
How can the IT Asset Manager influence these goals?
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Consistent refresh = lower ITAM costs
• By retiring equipment on a consistent basis ▫ Reduce storage costs ▫ Reduce maintenance costs from supporting old and broken
technology ▫ Reduce compliance costs ▫ Reduce personal property taxes ▫ Stop subscription charges ▫ Get paid for retired assets
• Reduce your costs and keep resale values consistent ▫ Offset product purchase costs ▫ Keep devices in good working order and complete ▫ 3 – 4 year refreshes can cut 19 – 28% off original purchase price
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Thank you!
Neil Peters-Michaud, CHAMP Cascade Asset Management [email protected] 608-316-6637 www.cascade-assets.com/iaitam