It might come as a surprise to some how big the IT asset disposition industry is. According to research firm MarketsandMarkets, the ITAD market was valued at more than $10 billion in 2015. By 2022, it’s expected to nearly double to over $20 billion.
For ITAD service providers, this is great news. It means the ITAD industry is of considerable size and will bustle with growth for the foreseeable future. Nonetheless, as I posed in my previous blog, the closer you look at ITAD including the strategies that are employed for data center and corporate IT assets, the more obvious the inherent issues become.
The MarketsandMarket report cites technological advances in cloud computing, big data analytics and the Internet of Things (IoT) as catalysts that are reducing the lifespan of IT equipment and thus increasing the dependence on ITAD services. Looking closer, however:
- Those cloud-based innovations are driving demand for more and more computing power and storage capacity in the data center, not within corporate IT.
- More emphasis on data center workloads, in turn, is creating shorter IT lifecycles in the data center, not within corporate IT.
- And, as we’ve touched on briefly in the blog series thus far and I will explain further below, traditional ITAD solutions were designed for corporate IT environments, not the data center.
So, what does all of this mean for you, the customer? It means that data centers are where you will be experiencing the most rapid rate of refresh, and thus have the greatest need for ITAD services, yet is the least developed part of the industry in terms of specialized IT asset recovery, data security and remarketing capabilities. Why is this, and what are the prospects for closing these gaps in data center decommissioning ITAD services? That’s the subject of today’s blog.
Traditional IT Asset Disposition: Designed for a Different Time and Purpose
IT asset disposition solutions and ITAD service provider programs as we know them were developed decades ago for the traditional corporate office environment. They were designed to recover desktop computing devices and peripherals, as well as general office equipment such as copiers, faxes and PBX phone systems, from corporate locations for transport to an ITAD facility where they would be processed, primarily for disposal.
In fact, when Gartner came out with its first Magic Quadrant for IT Asset Disposition, the analyst firm described ITAD as “a core set of functions required to dispose of IT assets properly.” Over time, industry certification programs including R2 and e-Stewards surfaced to police this disposal-related activity. ITAD service providers further defined their ISO environmental management systems (EMS) and quality programs to help audit their compliance with these disposal-focused certifications. All of which is great, as it led to more environmentally responsible recycling practices at disposal. But therein lies the rub: most data center IT coming out of production today isn’t—or at least shouldn’t be—going to disposal. IT asset lifecycles in the data center are shortening and a majority of this equipment has significant residual value remaining. The priority should be reuse of ITAD equipment over recycling, which is 20 times better for the environment anyways.
While managing e-waste compliance was a primary concern in the formative years of the IT asset disposition industry, protecting sensitive data throughout the ITAD process quickly ascended to top priority as the number of data privacy laws increased and the costs of data breach grew exponentially. However, most ITAD service providers use third-party data erasure applications that, like the ITAD solutions, were designed for processing corporate IT offsite, where dozens of computers could be hooked up to a bench and erased in batches. Data center decommissioning is a completely different animal, requiring onsite data erasure with the ability to scale for rack-level sanitization over network.
These are just a few examples of how the asset disposition industry has shifted focus, yet the ITAD solution strategies fail to align with the modern-day needs of the data center.
The Current ITAD Market: Consolidated and Stuck in Neutral
Given its estimated growth, it’s not a surprise that the ITAD industry has undergone major consolidation during the past decade. So much so, in fact, the consolidation led Gartner to first expand its Magic Quadrant globally since there were so few eligible ITAD service providers to rate, and to then suspend the MQ indefinitely.
The issues with this mass-consolidation are several. At one time, there were a dozen or so independent ITAD service providers who, like ITRenew, developed specialized capabilities for the particular needs of their target customers. But, over time, the more specialized reverse logistics solutions of the legacy ITAD companies were standardized to fit the forward logistics operations of the electronics distributors who acquired them. While the companies that bought their way into the industry may claim standardization is good because it can create efficiencies and cost savings, it also means you must run your ITAD program how it best suits the way they run their business. And let’s not forget, the legacy ITAD solutions they bought were designed for a different time and purpose.
In addition to the electronics distributors, original equipment manufacturers (OEMs), value added resellers (VARs) and leasing companies long controlled a majority of corporate IT volumes: offering to remove the old equipment as they would sell (or lease) you the new. But what do all these companies have in common? First, none are ITAD companies by trade. In fact, some don’t even have their own ITAD operations, instead they farm it out to a hodge podge of low-cost providers. And while they may boast an impressive list of global locations, relatively few are set up to perform ITAD services. Second, their primary business interest is pushing new technology. Getting rid of the old is a necessary evil. Yet more examples of misalignment with the priorities at hand.
Corporate ITAD: Not a Good Solution for Data Center Decommissioning
In recap, the ITAD industry today is made up of a small number of service providers that possess the capabilities and global coverage to meet the needs of Fortune 500 businesses and major cloud companies.
The technological factors driving ITAD’s rapid growth most significantly impact the data center. Yet, current ITAD processes are designed for corporate IT. They are furthermore in the control of companies that lack both the financial motivation and the domain knowledge to reengineer a solution specifically for the data center.
ITAD providers have further invested in developing capabilities that do not address the real-world needs of the data center. For example, refining recycling practices for commodity corporate IT instead of developing specialized remarketing channels for high-value data center gear. Or developing vulnerable data security workarounds instead of solving the problem of erasing data center equipment onsite.
Meaning, all told, that the ITAD industry has lagged for your most pressing area of need (in the data center) and for your highest priority objective (eliminating data security risk). But not entirely.
Several years ago, we faced a crossroads and had to decide whether to follow in the industry’s footsteps or forge new ground. Fortunately, in collaboration with several great clients who welcomed us into their data center environments, we now have the industry’s most battle-tested decommissioning solution that can scale for any size data center need.
In my next blog, I’ll get into the unique operational challenges that data center presents and what you’ll need from your decommissioning solution to overcome these.