Fulfillment of Legal Requirements and Corporate Social Responsibility, Combined with
Recognition of Asset Value and Bottom Line Revenue is Fuelling Reuse & Refurbishment
Business consumption of refurbished IT equipment is moving to mainstream, and although many companies remain confused about EU legislation on equipment disposal and its impact on their business, buyers overall are becoming more informed - not only about purchasing refurbished IT equipment, but also selling their company’s redundant / end of life IT and networking assets to obtain bottom line revenue. These are the key findings from the latest research commissioned by World Data Products Ltd., the largest independent provider and global market leader for refurbished server, storage and networking hardware solutions.
World Data Products commissioned a survey of 202 IT Directors & IT Managers in large UK enterprise organizations across the Finance, Government, Retail, Utilities and Telecommunication sectors. The research was conducted by eMedia Ltd in September and October 2006.
“Buyers are waking up to the fact that they don’t need to purchase brand new equipment in every single instance,” Neil Vill, CEO of World Data Products. “Manufacturers often push upgrades long before the equipment has reached the end of its life, and in many cases long before the customer is ready to migrate. Legislative drivers around IT reuse and disposal, and a strong focus on ROI are resulting in smarter, and more environmentally aware purchasing decisions. The penny has dropped with UK businesses and they realise there’s no reason to be giving away or throwing away valuable assets.”
Refurbished IT equipment is moving to mainstream. Forty seven percent of organisations surveyed said their company uses a recycling / refurbishment specialist to dispose of redundant and end of life IT and networking equipment. However, 13% of companies surveyed said they still throw away equipment at local tip or hire a skip, which is illegal under the pending EU legislation. A third of companies (30%) use donations to charities or sell / give away equipment to employees as a means of disposal.
An encouraging 40% of organisations said they now have a formal policy in place for re-using existing IT and networking equipment. A further 25% of companies surveyed are currently using refurbished IT or networking equipment.
However, there appears to be considerable confusion over pending EU legislation, particularly the Waste Electrical and Electronic Equipment (WEEE) Directive. The Directive aims to reduce the waste arising from electrical and electronic equipment and improve the environmental performance of all those involved in the life cycle of electrical and electronic products. When asked if they were aware of the implications of the upcoming WEEE directive on their business, 39% of respondents said they understand the directive and its implications. However, 36% said they had heard of the directive but were not entirely sure what it means for their business. A quarter of respondents (25%) said they were not aware of the implications and / or the directive and its impact on their business.
Businesses, and specifically IT Directors, are savvier when it comes to understanding the true value of their IT assets. Almost half (47%) of all respondents said they were aware that selling their company’s redundant / end of life IT and networking equipment meant they could obtain bottom line revenue and exchange for new or refurbished items. Likewise, 53% of respondents said they were aware that refurbished IT can extend their existing equipment lifecycle and delay forced migrations and upgrades by manufacturers. More than half of respondents (54%) said they would consider using refurbished hardware for non-critical tasks, such as software testing environments.
“One multi-billion pound organisation told us they gain a seven to one asset recovery ratio to the top line through IT refurbishment,” added Vill. “For every £1 they can recover through IT asset disposal and put back into the business, equates to £7 of turnover. Just because a server is amortised over a three year financial accounting period, its associated utility value does not expire within that same period. On the contrary, even when its value has been amortised to zero within the organisation, it may still have a huge amount of utility left, and therefore by implication it has commercial value. As the IT industry continues to become increasingly commoditised, businesses are realising the true value of their IT assets, rather than being prematurely forced down the upgrade and migration path by manufacturers.”
In April 2005, World Data Products did a similar survey with London Business School with a respondent base of 70 UK IT Directors / Managers. At that time, only 10% of companies had bought more than one refurbished item and hardly any had a formal recycling/refurbishment policy. Only 12% of respondents had purchased refurbished IT equipment more than once.
The move to ‘Green Computing’ enables fulfillment of Corporate Social Responsibility whilst satisfying the ‘capital starved’ IT Director. This is made possible as a result of the strong ROI and economic benefits of buying refurbished IT equipment, using refurbishment specialists for third party maintenance to provide difficult to source parts and spares, and then selling it on to refurbished specialists when it comes to the end of its useful life.
On average, vendors promote upgrades every three years, when in reality, the true life of most hardware is closer to five years. In addition to reducing direct capital costs, there are substantial indirect savings that come from replacing hardware based on its true life, including: elimination of migration expenses, training costs, downtime and incompatibilities in infrastructure. World Data Products provides operational savings through refurbished IT equipment that extends the useful lifecycle of hardware, enables consolidation and standardisation for operational efficiency, and allows companies to make procurements based on hardware lifecycles that are more in line with the time frames and requirements for their business.
About World Data Products
Founded in 1987, World Data Products is the largest independent provider and global market leader for refurbished server, storage and networking hardware solutions. With annual revenues of approximately $70 million, World Data Products serves more than 4,000 customers worldwide, processes more than 4,000 transactions per month and holds a multi-million dollar inventory. World Data Products helps enterprises and governments increase the yield and useful life of their IT investment and improve IT asset manageability. This is achieved in three key ways: first, by providing fully refurbished and tested hardware solutions; second, by facilitating the economical acquisition of system components and parts, upgrades and replacements; and third, by purchasing excess hardware, thereby maximising residual returns for customers. World Data Products’ global customer base includes large, blue chip organisations, as well as smaller companies looking to maximise their IT return on investment. The company has customers in finance, healthcare, insurance, media, transport, distribution, consumer products and government.
For further information, please contact:
Tel: +44 (0)870 242 7469
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