Before I wrap up my contribution to ITRenew’s data center decommissioning blog series with best practices to improve value recovery and maximize your Total Return, let’s recap the ITAD remarketing-related content that has been addressed throughout the series:
- Data center ITAD is distinctly different than ITAD for corporate IT equipment and requires specialized, expert service capabilities. This is particularly true in ITAD remarketing because the value recovery opportunity for data center IT assets is upwards of 100 times that of corporate IT equipment.
- The proliferation of the Cloud, and cloud-based catalysts like big data, everything-as-as-service (XaaS), and Internet of Things (IoT), are driving massive growth in the data center. With constant demand for more compute power and storage capacity to support these cloud initiatives, data center IT equipment lifecycles are shortening. This means the financial opportunity from data center ITAD remarketing is not only more substantial, but the hardware value recovery delta between these two ITAD subgroups will continue to favor the data center.
- Remarketing data center IT equipment is particularly challenging for a variety of reasons including:
- The huge volumes of homogenous data center hardware decommissioned from IT refresh projects cannot be sold effectively through popular e-commerce platforms such as eBay or Amazon.
- The secondary marketplace for used data center IT equipment is comparatively niche, making it increasingly more difficult to sell to the correct buyer group that will maximize remarketing value.
- The necessary market understanding and operational efficiency to capitalize when individual components of data center IT equipment are worth more than an IT asset that is remarketed in whole.
- A data center ITAD specialist will understand these challenges, as well as how the laws of supply and demand uniquely impact data center remarketing. A data center IT hardware remarketing specialist will deliver greater net value recovery returns to the customer by:
- Employing a revenue share model, instead of a buy-out, where the upside of higher IT asset resale prices is shared with the customer.
- Avoiding the use of asset broker channels. Instead they will develop direct-to-end-user channels for high-value, high-volume data center gear to net higher resale prices.
- Knowing the optimal velocity to release data center IT products into the secondary market so as not to oversaturate the market.
- Waiting out secondary market conditions to sell used hardware at its highest price point.
- Deploying data erasure software designed for the data center so that hard drives are not unnecessarily destroyed and resalable hardware yield is optimized.
Best Practice Policies for Data Center Decommissioning and ITAD Remarketing
Here are a few best practices to improve your data center decommissioning and IT asset remarketing performance and maximize your Total Return ROI opportunity:
- Implement an ITAD program that separates corporate IT from data center IT. Handling the IT asset groups independently may be more work in the beginning, but the additional revenue and data security protections will make it all worthwhile in the end.
- Never utilize a dual-vendor approach with the same products. This creates a “race to the bottom,” lose-lose competition scenario between the two ITAD vendors. Which, ultimately, will result in a loss in revenue and control of the economic supply. This is not to say that I suggest giving one ITAD company product exclusivity. Instead, if using multiple ITAD remarketing companies, parse out exclusivity for specific product categories. This will allow each vendor to go to market at optimal times. Otherwise, in the course of competing with one another, the same inventory may be introduced to the secondary market at the same time. This will artificially inflating market inventory drive down the resale price of that inventory.
- Question the remarketing strategy and capabilities of your current or prospective ITAD service providers. You should be looking for proficiency in two areas:
- Experience selling high-end data center equipment specifically, in mass scale.
- General expertise in the IT asset remarketing ecosystem. This means the ITAD vendor should possess a demonstrated mastery of geographic demand and channel optimization. It also means they should have the necessary internal systems capabilities and technical expertise to repair, recondition, and reconfigure data center hardware, as well as to harvest system components from scrap equipment, to maximize remarketing value. Which dovetails into the next important policy.
In the end, you should pay very close attention to your ITAD vendor’s remarketing performance, which is what ITRenew’s Total Return ROI methodology allows you to do. After all, the value recovery opportunity is particularly high for data center IT equipment. The potential financial returns are only going to increase as data center IT refresh cycles continually shorten to satisfy cloud computing demands, and the decommissioned hardware has higher resale value. So, why not capture as much value as you can, all the while improving data security and environmental sustainability at decommissioning? Stick to the best practices outlined in this blog series and you will soon improve your data center ITAD remarketing and maximize your Total Return ROI.