HP recently opened a Technology Renewal Centre in Erskine, Scotland, owned and operated by HP Financial Services, the company’s leasing and asset management subsidiary. I had a chance to get some more background on the facility from Jim O’Grady, Director of Asset Management, HP Financial Services. (He also talked me through the ‘Six Myths of IT End of Life’, but more of that later).
The new centre will offer a range of IT legacy asset management and recovery services to HP’s customers in Europe, including the remarketing and recycling of IT equipment. The Centre can refurbishes a range of products, both HP and non-HP, including PCs, servers, network products, storage, etc. from the 8,400-square-feet facility, which was previously an HP/Compaq manufacturing site.
As part of HP’s Financial Services operation, a primary purpose of the facility is to realise the value of products the company takes back at the end of leasing agreements. The residual value of devices, i.e. their value when they’re returned, is an important part of the business, helping the company keep costs down and stay competitive with its leasing contracts. The most effective way to maximise value is to see products re-sold in the marketplace, so it’s in the company’s interest to refurbish as much as possible.
There’s a significant market for used equipment – estimates are in the multi-billion dollar range. Much of that demand comes from IT operations looking to scale out their legacy equipment to prevent upgrades, i.e. rather than buy all new IT systems, a company may just want to get its hands on more of the same ‘old’ equipment it has now. But the kit may no longer be available new, given the frequent upgrades and new versions on the market, so refurbished products can fill the gap.
As well as ensuring the hardware is up to scratch, refurbishment entails cleaning the data. Security is, understandably, a significant issue in this business, so HP has developed a range of protocols to ensure data is completely secure, including during transport and storage. The companies using the facility are charged for collection, cleaning the data, assessing the value, etc. but the revenue from subsequent sales is split between HP and the previous owner of the equipment.
The refurbished kit goes back into HP stock as either products or parts, which means that much of the original value is retained. Products are sold on to HP clients, with certification or warranty to back it up. Putting refurbished equipment back in the market could impact sales of new products, but the company makes sure that the supply of legacy equipment are part of a customer’s IT strategy. What helps HP is that it knows its customers and the equipment they have installed, so can proactively offer refurbished products that will work with existing equipment.
Refurbishing for resell is a far more sustainable alternative than even recycling, so HP’s Renewal Centre sounds like a fine green IT initiative. And so it is, but the company is not doing it for altruistic reasons, it makes sound business sense. Nor is it about supplying a discount market – HP is meeting a demand for old equipment with used products that come with their own guarantees and vendor backup. But the fact that the company will even sell refurbished products they don’t actually have in stock and then acquire them through special upgrade offers to clients shows that business takes precedence.
Nonetheless, a facility like that at Erskine does dispel a number of wide assumptions about what can and should be done with IT equipment when it’s no longer required. I’ll expand on the ‘Six Myths of IT End of Life’ next week.