IT asset recycling: A step towards a sustainable economy

As the pandemic continues to disrupt economies and business models, digital transformation is accelerating at a rapid pace, with customers looking at new ways to consume IT services. Trends like remote working and pay-as-you-grow have led to increased cloud adoption across industries, and customers are embarking on data center exit journeys.

This transition is posing its own set of challenges. In addition to managing a plethora of applications that need a lift and shift or re-hosting/re-platforming, customers also have to deal with technical debt, that is, existing IT investments which could slow down cloud migration. Very often, customers are ready for digital transformation, but their existing platforms are not set up for the current and future needs, as customers have a combination of “in-use” and “out-of-use” assets. Pandemic-led financial constraints have also shrunk customer budgets available for transformation projects.

Considering these factors, there is the need for a global IT asset recycling solution that offers asset monetization services and enables the implementation of the latest technologies to support new business initiatives. This can be a two-step process:

1. Optimize: free up funds

   Extend and extract additional business value from existing IT investments through leaseback purchaseà client is paid cash upfront for existing hardware to fund transformation à client leases back hardware and sweats the assets.

2. Transition: return old and consume new

   Invest in new technology solutions that enable cloud transformation à client refreshes hardware and moves to the cloud à leased hardware is decommissioned and returned.

According to a 2021 report, the IT asset recycling market is expected to grow from USD 14.5 billion in 2021 to USD 21 billion by 2026, at a CAGR of about 8%. Some of the other drivers for this growth, besides cloud adoption, are regulatory compliances, such as NIST and HIPAA for end-of-life IT equipment management. Furthermore, organizations are now expected to adopt environment-friendly ways for asset disposal. There are two possible ways of undertaking this transition:

• Asset takeout (one-time):
  1. Customer requests asset pickup
  2. The vendor does deinstallation, packs, and ships with end-to-end logistics at the global scale
  3. Payback is done to customers
• Programmatic approach (ongoing):
  1. Customer signs services contract which covers processing, logistics, and revenue sharing
  2. Monthly/ quarterly settlement reports are published with serialized asset tracking
  3. Annual circular economy reports are published, including any end-of-life returns
  4. Chain of custody reports are shared with the customer
  5. Certified data wipes, media destruction with a certificate, and safe recycling are done with environmental compliance
  6. Maximized net recovery rates, the true market value are provided for assets
  7. Asset disposition managed to provide hassle-free transition

Assets covered under the program are desktop/laptops, servers, storage, networking, and other appliances except for some old generation models.

Other services that can be provided:

• Certified pre-owned products
• Virtual warehouse services
• POC enablement services
• Data center consolidation services
• Technology rental program

The HCLTech perspective

Keeping in mind the growing requirement of our customers to adopt cloud and have a minimum data center (DC) footprint, we can position IT asset recycling in the following scenarios:

• Pursuit: Develop asset strategy, and achieve financial targets by managing cash flow and asset utilization, leading to an optimized commercial model designed to increase win rate.
• Transition and transformation: DC migration from the customer data center to the cloud, managed disposal of assets in an environment-friendly and compliant way. This accelerates the migration and monetization of retired assets.
• In-life delivery: Extend the usable life of existing assets and legacy platforms, leading to a sustainable and circular economy.

HCLTech has an in-house asset monetization program called Cash4Assets along with tie-ups with partners like HPE Financial Services, which can provide asset buyback services in more than 35+ countries covering major economies in the Americas, EMEA, and APJ region.

How we can engage

• For any asset monetization pursuit, we would need inventory details, including configurations, year of purchase, and the netbook value of assets
• Reach out to us with these details at u4x@hcl.com to initiate the discussion.