Cash for clunkers: Old tech equipment boosts the bottom line

Some firms are recouping cash as they send old PCs, servers and laptops out the door.

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IBM, for example, offers a "fair market value lease" in addition to its more traditional full-payout lease, says Linda Demmler, director of worldwide sales for IBM's Global Asset Recovery Services.

Where companies with a full-payout option lease their equipment to own, she explains, the fair market lease allows them to pay a lower amount upfront and then, at the end of the lease, gives the equipment back to IBM, which can then refurbish and resell it on the secondary market.

Value can vary

Several factors can affect how much, if anything, an organization can get back when working with a vendor to sell on the secondary market, IAITAM's Rembiesa and others say. The biggest issue these days is the age of the equipment.

Many companies have been holding on to their IT assets for as long as possible, stretching out their refresh cycles to avoid having to spend during the down economy (see "The average life cycle of common hardware," below). But Rembiesa points out that they won't be able to get much, if anything, for PCs and servers if they're too old.

"The resell value depends on a few factors, including technology advances. The rule of thumb would be that anything over five years would start costing and would not have much resell value," Rembiesa says.

The average life cycle
of common hardware

Cell phones 2 years
Laptop PC 3 years
Desktop PC 4 years
Server 5 years
Networking gear 5 years
Monitor 8 years

The challenge, Rembiesa and others agree, is finding the sweet spot where the equipment is too old to justify supporting but still young enough to resell.

When RJ Juliano joined Brandywine Realty Trust four years ago, he looked at tax codes, maintenance costs and other factors in trying to develop an asset management plan that fit with the company's practices and policies.

Juliano, who is CIO of the Radnor, Pa., firm as well as a member of the Society for Information Management, noted that Brandywine counts most IT equipment as an expense, not an asset. He also considered his company's tax position and its margins when deciding how to optimize the value of technology as it neared its end of life.

Brandywine now has a mix of options to help get the most residual value out of its older equipment. Some pieces are refurbished by staffers and reused in-house for either backup or less critical functions. Some are kept for spare parts to use in more current equipment; others go to vendors like Five Stars Telecom, which gives him credit to use toward future purchases; and some are donated to charities. (See "Junk tech gear helps charity," on the next page, for one charitable option.)

Juliano can't say exactly how much these efforts have saved the company but notes that it's "not insubstantial." For example, Brandywine has earned about $100,000 in credits over the past four years by selling equipment back to vendors, he says.

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