Is your storage room rapidly filling with old computer equipment?

Does your network administrator's office look like something from the 1970s sitcom Sanford and Son?

According to the National Safety Council, there are 315 million personal computers ready to be junked. Many of them are being stored in offices and homes, rather than being sold or recycled. Does your firm have a policy for disposing of old hardware? Or have you tried the following strategies, like most firms?

* Selling them to employees or others.

* Giving them to charity.

* Putting them in the dumpster.

* Hiding them in the basement.

Many of you may admit that you have tried all of the above, but are concerned about the risks and problems associated with each solution. As the problem grows, so does the amount of legislation regarding what is now referred to as e-waste, as 315 million PCs would make a pretty big pile of toxic trash. This, coupled with existing federal, state and local regulations concerning the disposal of hazardous materials, makes this an issue for firms of all sizes.

Granted, it is more exciting to be in charge of information technology implementation than information technology disposal (though there are some accountants who may disagree). Still, your firm should have a plan. Chances are that your unique ability is not recycling or running a second-hand computer store. The first reaction of some will be, why do we need a plan and why should we do anything differently than we have been? Out of sight and out of mind is a common operating philosophy, but not necessarily a good one.

Chances are that the problem is not high on anyone's radar screen for accountability. Perhaps it should be, due to the potential costs and risks of keeping old or unused office equipment. Some potential costs and risks include:

* Storage costs;

* Property taxes;

* Insurance;

* Administrative costs;

* Software licensing;

* Value is reduced by 10 percent or more each month that the unit is stored, until it is worthless;

* Cost to sanitize hard drives;

* Cost to pack and move;

* Cost to sell or recycle; and,

* Verification and documentation (removing asset tags and tracking for policy compliance).

From visiting many firms, we've learned that the retirement and disposal of old hardware is a real problem, and one that should be dealt with now, as the problem will only grow.

This, perhaps, is the negative side of Moore's Law.

The Business Software Alliance has also gotten into the act. In September 2003, they made the following statement. "If a company breaches its software license agreements by copyright infringement, or if old software falls into unlicensed hands, the company getting rid of the software and the recipient could face legal action that includes paying penalties of thousands of dollars." As with any problem, if it becomes acute enough and there are enough dollars involved, someone will come up with a solution.

The major hardware vendors, such as Dell, IBM and HP, recognize the problem and have taken action. They now offer what are commonly referred to as asset recovery services.

According to recent research by The Aberdeen Group, around 36 months is the right time to dispose of a computer, not the 48 months that many firms and corporations have adopted as standard. If disposed of early enough, there is still economic value.

On the other hand, it is expensive to internally delete licensed software and, more important, cleanse data and sanitize the hard drives. This is often performed incorrectly. The Aberdeen Group further estimated that an internally administered disposal program will cost a company from $115 to $387 per device. The fact is that most organizations don't know what it is costing them, because either no one is responsible or it is a low priority.

With those kinds of costs being added to a firm's total cost of ownership, it behooves firms to look for alternatives and save time in the process. Dell has multiple options for disposing of used IT equipment (from any manufacturer). The first is Value Recovery - in cases where the equipment still has economic value. The cost is $59 per system (monitor and CPU) if pre-packaged by the firm or company, and $69 per system where Dell manages the entire operation.

The second option is recycling - generally for equipment over four years old. The cost is $49 per customer-packaged system and $59 per Dell program-managed system. These prices include transportation costs.

Upon completion of the equipment resale/recycling, the customer receives two reports:

1. Settlement report. This report lists each specific piece of resold hardware, along with its value, and documents any recycled equipment.

2. Certificate of disposal. This report verifies that hard disk data was overwritten and that any inoperable disks were shredded. It also verifies that any recycling was done in accordance with EPA guidelines.

Recently, we learned of one large firm that is building these disposal costs into their desktop and notebook leases. It makes sense to use a reputable service. Larger companies, such as Dell, IBM and HP, have a geographic presence and are held accountable as good corporate citizens. While there are smaller local companies offering similar services, it is important to evaluate shipping costs as well as reporting capabilities.

You can learn more about asset recovery services at www.ibm.com, www.hp.com and www.dell.com.

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