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

IAITAM IMUG * 7-11-17

Is IT asset disposition a liability?


Or does it actually generate value?


What kind of discounts do you get on your IT assets?


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


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.


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


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)


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


What about . . .

The value of the asset at disposition

. . . and how it can reduce TCO?


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


Historical resale price models


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)


Desktop computers – Intel Core i5-2400 CPU @ 3.10GHz

0

100

200

300

400

500

600

700

$-

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6

2015 2016 2017

Count of Item

Average of Sale Price

Launched 2011

Monthly Depreciation Rate: 1.65% (Q3–2015 to Q2-2017)


Desktop computers – Intel Core 2 Duo CPU, E8400, 3.0 GHz

0

100

200

300

400

500

600

700

800

900

$-

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6

2015 2016 2017

Count of Item


Launched 2008



0

50

100

150

200

250

300

350

400

450

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6

2015 2016 2017

Count of AssetID


Launched 2011

Laptop computers – Intel Core i5-2520M CPU @ 2.50GHz



$-

$50.00

$100.00

$150.00

$200.00

$250.00

2 3 4 1 2

2016 2017

Launched Q2 - 2012

Laptop computers – Intel Core i7-3520M CPU @ 2.90GHz



$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00 20

15 -

1 2 3 4 5 6 7 8 9 10

11

12

2016

- 1 2 3 4 5 6 7 8 9 10

11

12

2017

- 1 2 3 4 5 6

Laptops Desktop Computers

Average Resale Price – all devices


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)


$-

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

1 2 3 4 1 2 3 4 1 2

2015 2016 2017

Launched Q4, 2011 for $649 (unlocked)

Apple iPhone 4s – 16GB Quarterly sale price Monthly Depreciation

Rate: 12% (Q3 – 2015 to Q2 2017)


Apple iPhone 5s – 16GB Quarterly sale price

$-

$50.00

$100.00

$150.00

$200.00

$250.00

1 2 3 4 1 2 3 4 1 2

2015 2016 2017

Launched Q3, 2013 for $649 (unlocked)

Monthly Depreciation Rate: 7% (Q3 – 2015 to Q2 2017)


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”

https://en.wikipedia.org/wiki/IPhone_(1st_generation)

https://en.wikipedia.org/wiki/IPhone_3G

https://en.wikipedia.org/wiki/IPhone_3GS

https://en.wikipedia.org/wiki/IPhone_4

https://en.wikipedia.org/wiki/IPhone_4S


https://en.wikipedia.org/wiki/IPhone_5C



https://en.wikipedia.org/wiki/IPhone_6_Plus


https://en.wikipedia.org/wiki/IPhone_6S_Plus

https://en.wikipedia.org/wiki/IPhone_SE


https://en.wikipedia.org/wiki/IPhone_7_Plus


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


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


TCO


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


Align Goals

Decrease TCO

Increase Productivity,

Impact, Performance,

& Value

How can the IT Asset Manager influence these goals?


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


Thank you!

Neil Peters-Michaud, CHAMP Cascade Asset Management [email protected] 608-316-6637 www.cascade-assets.com/iaitam

mailto:[email protected]

http://www.cascade-assets.com/iaitam



Making IT Asset Disposition a Value Generating Activity 7-11-2017... · eBay, Craigslist ....

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