‘Hewlett-Packard to lay off 12,500’; ‘British Airways sacks 8,000’; ‘WorldCom axes 17,000’. Some of the grimmest business headlines of 2002.

But such large-scale restructuring presents an unusual challenge to IT managers. When numbers drop substantially, what do IT executives do with all the surplus computer equipment – the mountains of PCs and printers, excess servers, an extra mainframe, the unused software licences?

Certainly, simply hiring a fleet of skips is not the answer. Organisations – whether they are managing a major IT asset disposal or, indeed, the day-to-day renewal of equipment – are faced with an increasingly complex, costly and time-consuming process. Specialists in this area suggest that to maximise the value of the kit, organisations need to quantify exactly what has become redundant, assess which items can be redeployed internally, find a market for the surplus kit, and dispose of the remaining systems – all while ensuring that the systems are cleared of confidential files and licensed software. Moreover, as legislation on dumping computers tightens in the next few years, organisations need to take heed of environmental directives.

While these are steps that experts recommend, few today are following them. Often surplus equipment gets thrown out before any reuse value has been assessed.

Alternatively, it is consigned to corporate basements or given away to charities or schools.

But in most cases companies simply rely on local authorities to transport it to landfill sites. According to UK government research, IT equipment accounts for almost 40% of all electrical and electronic waste collected in the UK. Of this, 80% ends up in landfill sites, although consumers are as responsible as businesses for this.

Risk profile

Ignoring the waste, companies need to be aware of the risks they run at each stage of the IT equipment disposal process, says Gerry Hackett, managing director at RDC, the equipment recycling subsidiary of UK-based IT services company Computacenter. He says that until recently “most large companies ran a huge risk by using a rag-bag of unauthorised local operators to dispose of their IT equipment”. That’s improved over the last few years, but most still have no formal process for disposing – and maximising the value of – old IT equipment.

And some risks are greater than others. Take the infamous example of merchant bank Morgan Grenfell Asset Management (now Deutsche Asset Management), which had an embarrassing experience in early 2000 when it upgraded its client portfolio management systems and hired a third-party to dispose of the old kit.

The problem: the PCs were offloaded to a second-hand dealer and eventually ended up in the hands of two UK journalists. They were able to access 5,000 documents, emails and spreadsheets, including hundreds that detailed the financial transactions of Sir Paul McCartney, the Cancer Research Campaign and a mystery Duchess.

The hard lesson Morgan Grenfell learnt when the Daily Express and Channel Four news unveiled the story was that to avoid outright embarrassment and ensure against breaches of the data protection law relating to privacy, organisations need to have all data erased from their hard disks as part of the decommissioning process. Reformatting disks may be enough for some, but to be sure every trace of data is wiped, some companies turn to third-party specialists who pass their disks through a high magnetic field.

Reducing waste

On a day-to-day basis, though, most organisations are less concerned with data leakage and more concerned about keeping costs in check – although many are unaware of how they can exploit the residual value of their IT equipment or how much money they waste on its disposal.

To maximise the value of their IT equipment, an increasing number of organisations are outsourcing their IT disposal activities to third-party recycling specialists such

	Gerry Hackett, RDC

as Computacenter’s RDC, CKS Recycled Technology, IT Waste Management or to IT service giants that work in this area, notably IBM Global Services and Hewlett-Packard (HP).

Suppliers typically charge customers a relatively low fee – between £15 and £20 – per PC handled. This covers a broad range of services such as equipment collection, a full audit of the machine’s valuable or toxic components, the resale of the equipment to a third-party where possible, and its disposal or transfer to a charity or school. Suppliers also provide guarantees that they will follow environmental and data-protection laws.

The process can be revenue-neutral or even marginally positive. Mike England, managing director of CKS, claims that customers typically receive more money back than with the original processing service. He cites the example of gas supply company Transco which claims it now resells about 80% of its used IT equipment, mostly through CKS, although its ability to see a return reflects the company’s policy of frequent upgrades. In such a case, a typical PC might render the company £20, says England.

Cascading costs

There is much that companies themselves can do to maximise the value of ageing IT equipment.

One popular method is ‘cascading’ or ‘food chaining’ in which high-specification equipment, originally bought for power users, progressively passes down the user hierarchy.

By adopting a cascading strategy, UK bakery group Warburtons has been able to cut the frequency of its PC upgrades, claims Colin Saunders, the company’s IT director, and deliver large cost savings. When the machine finally emerges from the bottom of the cascade, having passed through multiple users, it may not even be fit to give away, he adds.

Warburtons’ cascading policy also fits its thin-client, server-centric computing architecture. Applications delivered from a central server can be accessed by low-spec PCs, so the life of the company’s desktop computers is extended considerably, Saunders says.

In fact, Warburtons has the same cascading approach for its servers. “We work our servers into the ground and when they cease to be of use in our main theatre, we tend to find another use for them, such as on a pilot project,” says Saunders.

Irrespective of the methods they use to discard equipment, organisations need to wise up to the fact that a haphazard IT disposal strategy is a drain on their resources. At a basic level, a systematic approach can generate significant cost savings simply by reducing the scale and frequency of major IT upgrade projects, says Ken Turbitt, enterprise architect for Europe at asset management software supplier Peregrine Systems. With more comprehensive asset management and disposal strategies in place, IT managers should be equipped to deal with any level of corporate ‘rescaling’ that hits their company.