Depreciation, Maintenance, and the Three-Year Asset Refresh Cycle
August 8, 2018
Very few things appreciate in value after purchase. If you bought a Picasso in 1910, diamonds in 1960, or Apple stock in 1985 you’d be pretty happy with your investment today, however most consumer goods, particularly technology-based ones, don’t fare so well. Whether you’re buying a vehicle, a computer, or heavy equipment, value starts to drop the moment you take possession and continues to drop as the years pass.
While depreciation is well understood, something that may be overlooked when considering equipment in a corporate setting is depreciation plus operating costs…the true total cost of ownership (TCO). As the value of equipment declines, the cost of keeping it running increases, and the cost to maintain a fleet of equipment at productive business-level operating standards increases with each passing year.
When it comes to PCs in a corporate setting, support costs include everything from software upgrades and patches to break/fix support and software development costs to support legacy systems. You also need to consider lost productivity when units require repair, drives become corrupted, and systems accumulate layers of software and security updates that require additional system resources and take up more drive space.
Studies show the economic impact of longer in-service lifecycles of four and five compared to a three-year lifecycle. Consider the following charts:
The decisions you make relative to selecting your refresh cycle can serve to mitigate risk, improve recovery values, save time and resources, and reduce the total cost of ownership.
Optimizing Value: Safeguard Return on Investment at Asset End-of-Life
While choosing a three-year refresh cycle is a major contributor to ROI, preparation when you send assets to your ITAD provider also has a major impact on the value you receive for your assets.
Naturally you’ll need to secure all devices prior to transit to prevent unauthorized access, both for data security and to prevent assets from being cannibalized. Many employees still believe they’re doing the right thing and saving the company money by scavenging an extra power cord or peripheral from a pile of equipment they assume will be recycled. Sending whole assets to your ITAD partner – and following your partner’s guidelines for equipment preparation – will increase the return you receive on your retired assets.
Mary Couse
Mary has been involved with the IT Asset Disposition (ITAD) industry since 2004, however she’s been passionate about reuse and recycling since her college days.
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