Since the concept of yield has never really been a major topic of discussion in the IT asset management industry, we understand if you might be asking yourself, what is yield, and why is it a silent value killer?
Simply put, yield is the success rate achieved by data wiping software. If you have 100 hard drives to erase, how many times did the process succeed? The answer gives you the yield rate.
Yield (or more accurately the failure to yield) is the silent value killer because it’s a metric very few organizations pay any attention to in evaluating their IT asset disposition performance. But it’s also the one with the greatest potential impact on Total Return. More on that in a bit.
For those who may not have been following our blog series thus far, Total Return is a methodology that enables data-centric organizations to take a more holistic approach to measuring the actual performance of data center ITAD. In this installment, I’ll help answer:
- What you can expect in terms of yield rates
- What are the Total Return impacts from the failure to yield
- What you can do to improve your yield and boost Total Return
I should note there’s no hard industry average yield rate, but from customer experience we see rates hovering in the 50-60% range with competitive products. Rates can vary based on the type or size of the drive, or by its condition, for example:
- Decommissioned drives: these are working drives retired from service during routine refresh, consolidation or lease return activity. Independent of the variables below, this is where you should see your highest yields. Using our Teraware software, our yield rate on these drives is consistently above 97%.
- Loose drives: that failed in production or were flagged at risk. As these drives have health issues, the rates will typically be much lower. However, our yield rate is consistently 75-85%.
- Solid-state drives: where HDDs use magnetic storage, SSDs use flash memory and firmware to find and store data. SSD yields will be impacted by firmware support or firmware that has rendered the device inoperable. ITRenew has developed methods to recover or workaround these firmware states and as such we have an 85-90% yield when erasing SSDs.
- High-capacity drives: which have a capacity of 2TB or more. With more blocks comes more opportunity to fail, but also software compatibility for newer drive technology that increases the sector size 8x from 512 to 4,096 bytes. With Teraware, our large-capacity drive yield is 75-85%.
Yield’s Impact on Total Return
The average cost of a data breach is $3.5 million, but in looking at the top five most expensive data breaches of all-time, you’ll see it runs from $25 million to $2 billion. As our VP of Corporate Strategy Aidin Aghamiri so eloquently states in Part 1. Security: At What Cost?, the fear of data breach can cause organizations “to get panicked into spending more for security, even if it’s not very cost effective or efficient. And conversely, to get forced into poor security because of cost or productivity constraints.” If your security response is to shred all drives, it’s a poor Total Return practice. That’s not only because you are destroying residual value, but because without verifiable eradication, you are also increasing your risk of data breach. What if a drive you thought was shredded made its way out the back door? And, by the way, how does destroying an otherwise reusable drive align with your sustainability objectives?
Then, there’s lost remarketing revenue. Let me cite a recent case study we developed as an example. We increased their average yield from 50% to 90% netting them $4.8 million of additional remarketing revenue per year. But that wasn’t all. The previous solution could not erase SSDs or high-capacity drives, so ALL of these were getting destroyed. No calculator is required to figure out that’s 0% yield. Keep in mind: these are the drives that will soon be coming out of service in droves as the equipment you purchased two to three years ago makes its way to end-of-life. To the customer’s delight, we actually recovered 60% of the drives that previously failed to erase using another industry-leading tool (you’ll have to download the case study to find out which one).
To put the remarketing opportunity into further perspective, in 2014 alone ITRenew wiped 2.4 million drives for its customers. If we increased the yield by “only” 30%, 720,000 drives would be rescued from the mouths of destruction. Let’s figure an average value of $30 per drive. That equates to nearly $22 million in savings.
But it doesn’t end there. If a drive is unable to erase, the most common practice is to shred onsite, which comes with a cost. If you figure an average $7 charge per shred, you can add another $5 million to the savings. We’re talking real money here, folks.
Another consideration is the lost RMA opportunity. We delve deeper into this in Part 4. RMA: The Daily Grind, but if a drive fails during its deployment, it will usually be covered for full value refund, replacement or repair through the manufacturer’s warranty. But if you destroy the drive, you may not receive any refund or may only receive partial credit. There’s no such thing as a free lunch, so even if you are getting some credit, you’re probably paying for it somewhere.
Finally, there’s erasure software licensing. Other erasure tools will focus on an ability to sanitize a drive and if it fails, it fails. The software vendor charges a wipe license regardless. But our Teraware license manager will only activate a license on successful sanitizations. Another reason for our higher yields is that we are a Gartner Magic Quadrant ITAD service provider and NOT JUST A SOFTWARE COMPANY. As such, our software is put through the rigors of annually processing more than 600,000 IT assets of all different types, configure and age. No software-only company can replicate that daily testing environment.
Let me conclude with just a few suggested practices.
- Get informed. Ask your team or demand that your vendor document your yield rates. Find out where you may have issues, and estimate the impact. ITRenew has a proprietary calculator that allows you to easily quantify the Total Return opportunity and is offering free appraisals, just contact us.
- Negotiate SLAs. Require minimum yield thresholds and set goals for improvement.
- Pilot. As demonstrated in the case study, pilot-testing alternative data wiping solutions can pay huge dividends.
- Test before you deploy. Planning for sanitization at procurement may seem like a novel concept, but it’s one some of our top clients practice. Compatibility issues are among the primary causes of failure. Early engagement allows us to develop support for the latest technologies and ensure compatibility BEFORE new technology ever enters your environment.
I welcome you to post questions here or otherwise hope you’ll return for the final three installments of this blog series. You can sign up to receive alerts as blogs are posted as well.
Read our case study to see how we helped one customer achieve a $14+ million Total Return annual savings ❯❯
5 Key Impacts to Total Return
Learn what contributes to and detracts from Total Return in our blog series: How to Improve Your Total Return from Data Center Disposition.