In a recent podcast discussion, I tapped two HP executives on how to best manages productive transitions of data center assets -- from security and environmental impact, to recycling and resale, and even to rental of transitional systems during a managed upgrade process. I spoke with Helen Tang, Worldwide Data Center Transformation Lead for HP Enterprise Business, and Jim O'Grady, Director of Global Life Cycle Asset Management Services with HP Financial Services.
Here are some excerpts:
Helen Tang: Today there are the new things coming about that everybody is really excited about, such as virtualization, and private cloud. ... This time around, enterprises don't want to repeat past mistakes, in terms of buying just piles of stuff that are disconnected. Instead, they want a bigger strategy that is able to modernize their assets and tie into a strategic growth enablement asset for the entire business.
Yet throughout the entire DCT process, there's a lot to think about when you look at existing hardware and software assets that are probably aged, and won't really meet today's demands for supporting modern applications.
How to dispose of those assets? Most people don't really think about it nor understand all of the risks involved. ... Even experienced IT professionals, who have been in the business for maybe 10, 20 years, don't quite have the skills and understanding to grasp all of this.
We're starting to see sort of this IT hybrid role called the IT controller, that typically reports to the CIO, but also dot-lines into the CFO, so that the two organizations can work together from the very beginning of a data center project to understand how best to optimize both the technology, as well as the financial aspects.
Jim O'Grady: We see that a lot of companies try to manage this themselves, and they don't have the internal expertise to do it. Often, it's done in a very disconnected way in the company. Because it's disconnected and done in many different ways, it leads to more risks than people think.
You are putting your company's brand at stake, through improper environmental recycling compliance, or exposing your clients, customers, or patients' data to a security breach. This is definitely one of those areas you don't want to read about in a newspaper to figure out what went wrong.
One of the most common areas where our clients are caught unaware of the complexity of the data security, and the e-waste legislation requirements that are out there, and especially the pace of its change.
We suggest that they have a well thought-out plan for destroying or clearing data prior to the asset decommissioning and/or prior to the asset leaving the physical premise of the site. Use your outsource partner, if you have one, as a final validation for data security. So, do it on site, as well as do it off site.
Have a well-established plan and budget up-front, one that's sponsored by a corporate officer, to handle all of the end-of-use assets well before the end-of-use period comes.
Reams of regulations
E-waste legislation resides at the state, local, national, and regional levels, and they all differ. There's some conflict, but some are in line with each other. So it's very difficult to understand what your legislative requirements are and how to comply. Your best bet is to deal with a highest standard and pick someone that knows and has experience in meeting these legislative requirements.
There are tremendous amounts of global complexities that customers are trying to overcome, especially when they try to do data center consolidation and transformation, throughout their enterprise across different geographies and country borders.
You're talking about a variety of regulatory practices and directives, especially in the EU, that are emerging and restrict how you move used and non-working product across borders. There are a variety of different data-security practices and environmental waste laws that you need to be aware of.
A lot of our clients choose to outsource this work to a partner. But they need to keep in mind that they are sharing risk with whomever they partner with. So they have to be very cautious and be extremely picky about who they select as a partner.
This may sound a bit self-serving, but I always suggest for enterprises to resist smaller local vendors. ... If you don't kick the tires with your partner and you don't find out that the partner consists of a man, a dog, and a pickup truck, you just may have a hard time defending yourself as to why you selected that partner.
Also, develop a very strong vendor audit qualification and ongoing inspection process. Visit that vendor prior to the selection and know where your waste stream is going to end up. Whatever they do with the waste stream, it's your waste stream. You are a part of the chain of custody, so you are responsible for what happens to that waste stream, no matter what that vendor does with it.
You need to create rigorous documented end-to-end controls and audit processes to provide audit trails for any future legal issues. And finally, select a partner with a brand name and reputation for trust and integrity. Essentially, share the risk.
Total asset management
Enterprises should well consider how they retire and recover value for their entire end-of-use IT equipment, whether it's a PDA or supercomputer, HP or non-HP product. Most data center transformations and consolidations typically end with a lot of excess or end-of-use product.
We can help educate customers on the hidden risk and dispositioning that end-of-use equipment into the secondary market. This is a strength of HP Financial Services (HPFS).
Typically, what we find with companies trying to recover value for product is that they give it to their facilities guys or the local business units. These guys love to put it on eBay and try to advertise for the best price. But, that's not always the best way to recover the best value for your data center equipment.
We're now seeing it migrate into the procurement arm. These guys typically put it out for bid and select the highest bid from a lot of the open market brokers. A better strategy to recover value, but not the best.
Your best bet is to work with a disposition provider that has a very, very strong re-marketing reach into the global markets, and especially a strong demonstrative recovery process.
From a financial asset ownership model, HPFS has the ability to come in and work with a client, understand their asset management strategy, and help them to personalize the financial asset ownership model that makes sense for them.
For example, if you look at a leasing organization, when you lease a product, it's going to come back. A key strength in terms of managing your residual is to recover the value for the product as it comes back, and we do that on a worldwide basis.
We have the ability to reach emerging markets or find the market of highest recovery to be able to recover the value for that product. As we work with clients and they give us their equipment to remarket on their behalf, we bring it into the same process.
When you think about it, an asset recovery program is really the same thing as a lease return. It's really a lot of reverse logistics -- bring it into a technical center, where it's audited, the data is wiped, the product is tested, there's some level of refurbishment done, especially if we can enhance the market value. Then, we bring it into our global markets to recover value for that product.
We have skilled product traders within our product families who know how to hold product, and wait for the right time to release it into the secondary market. If you take a lot of product and sell it in one day, you increase the supply, and all of the recovery rates for the brokers drop overnight. So, you have to be pretty smart. You have to know when to release product in small lot sizes to maximize that recovery value for the client.
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