Beyond the Asset: How Financing Can Support Total Device Lifecycles
by Rick Trobman May/June 2022
Data and electronic devices are so pervasive in our everyday lives that it’s easy to forget how much information is moving around as well as where all that data goes when it’s time to replace it for something newer. Rick Trobman, president of the tech solutions global business unit at DLL, explains how finance experts can assist in protecting data, the environment and clients alike.
Rick Trobman, President, Tech Solutions Global Business Unit, DLL
Look around your workspace. How many devices are you surrounded by? A laptop? Maybe a tablet? Most likely a work phone?
For the sake of this argument, let’s hypothetically say you’re reading this article on your work phone. That phone has data — your email, files, contact information, pictures, passwords — you name it. After a length of usage, any phone will eventually need an upgrade. But what happens to your old phone when you trade it in for the upgrade? Does it go to a landfill, and if it does, what happens to the data and the device components?
These questions only provoke more questions. How would you assess whether or not your phone could be resold? Regardless of the answer, how would you go about wiping the data before you handed it over?
Now imagine this situation from a customer’s perspective. Let’s say you’ve leased this client 1,000 laptops. The contract is up, and the client doesn’t want to buy the laptops. They’ll be asking the same questions you did about your work phone.
The hard truth is our electronic devices have evolved beyond mere physical hardware. They now have “lifecycle stages,” or how they’re reused and disposed of once they’ve reached their “end of life” stage. For purposes pertaining to our industry, “end of life” means your customer doesn’t want to buy the leased asset. This is when these typical “what now?” questions come up and, subsequently, provide an opportunity for you to show value as a financing expert.
Why Device Lifecycles Matter
On a broader scale, device lifecycles can help businesses build sustainable practices. According to a recent study from the International Data Corporation, more than 60% of companies surveyed were recycling or reusing IT equipment.1
Device lifecycle stages also help businesses think about data security. If a device is reused, how will sensitive data be managed?
The “circular economy” is another part of the equation. Circular economies are models that ensure assets and their components are reused and don’t have a one-way ticket to the landfill. Consider device lifecycle stages as one of many “wheels” (or practices) keeping circular economies moving. Consumer behavior adds to the momentum. More and more, we see consumers with increased interest in, and engagement with, businesses demonstrating sustainable practices.
Where does financing fit into the equation?
How Financing Supports Device Lifecycles
Let’s go back to the scenario with the hypothetical client. You’ve leased 1,000 laptops to a customer — it’s the end of their contract and they don’t want to buy them.
Now your customer needs to answer device lifecycle questions. Can they reuse or recycle the laptops? Where will they transport these laptops for recycling or reuse? How will they remove data?
These questions take time and resources to answer — both of which are often in limited supply for your customer. The end of a device’s “life” can also signal compliance requirements they may be unaware of, such as device disposal.
This is where we as equipment finance professionals can step in as financing experts. I’m not suggesting that we become experts in handling device lifecycle stages, but what we can do is offer IT asset disposal (ITAD) services by including them in financing contracts. You manage the ITAD services so your customer doesn’t have to worry about the “what now?” questions.
Besides peace of mind, here are other key areas where ITAD services can benefit your customers:
So, what are these benefits? I’ll explain by continuing the hypothetical customer scenario.
Work devices are an access point to sensitive data.
We know this hypothetical customer doesn’t want to buy the leased laptops. Regardless of how they’re reused or disposed of, the laptops will likely have residual data. It could be financial information, customer contact details, employee information or more. The delete button won’t cut it for every speck of information on a hard drive.
Ensuring the data is properly removed means meeting required data erasure qualifications, such as International Standards Organization (ISO) 27001 or National Association for Information Destruction (NAID) AAA.
Let’s explore two scenarios.
The laptops are reusable
“Reuse” commonly refers to remanufacturing, recertifying or refurbishing an asset (in our case, the laptops). Remanufacturing refers to when an asset has been returned to its original performance. The warranty is either the same or better than a newly manufactured product. Refurbishing/recertifying refers to when an asset has been repaired, cleaned and had parts replaced to return it to as close to a new product as possible (including factory certification and minimum warranty coverage). After an asset is remanufactured or refurbished/recertified, it can be remarketed or entered into a new financing contract.
Device reuse also has environmental benefits. Since we’re talking about laptops, here are a few facts from Circular Computing, a laptop remanufacturing organization. According to its “Sustainable IT Calculator,” reusing a single laptop can:
Lead to 316 kilograms of carbon reduction
Save more than 190,000 liters of water that’s typically used to extract, refine and produce new computer components
Save valuable minerals used to create the devices and reduce electronic waste
The laptops are past their prime
Maybe the laptops aren’t in a reusable condition. Recycling could be an option — you can manage ITAD services where the laptops are taken apart to see what’s salvageable.
One example is computer chip recycling. After the data is sanitized, the chips could be used for other purposes. Besides sustainability benefits, you’re circumventing supply chain issues. As we’ve seen with the COVID-19 pandemic, there is a computer parts shortage.
In fact, according to a 2021 BBC news article, IBM says the chip shortage could last two years, with Jim Whitehurst, president of IBM, quoted as saying, “We’re going to have to look at reusing, extending the life of certain types of computing technologies, as well as accelerating investment in these [fabricating plants], to be able to as quickly as possible get more capacity online.”
In some cases, your customers may need to present data to validate sustainability efforts. For example, they might need to show the number of laptops they’ve reused.
By offering ITAD services, you can provide them with that kind of data. It could be in the form of a “report card” highlighting overall device lifecycle data (i.e., how many devices they’ve reused). Another option is self-serve asset management portals. Think about any monthly bill you have. Depending on the provider, you can log in to see your billing information and other account details. The same should apply for device lifecycle solutions. Your customer should be able to log onto a portal or have one central place where they can view all their applicable device lifecycle data.
It’s about providing your customer peace of mind and awareness and, overall, protecting and reinforcing an ongoing relationship.
Show Your Value
Part of “going beyond the asset” means actively showing customers how you bring value as a financing professional. Managing ITAD services for them gives you an opportunity to avoid one-off transactions. Managing device lifecycle solutions for your customer creates the opportunity for an ongoing relationship. By managing ITAD services for them, you can provide guidance on sustainable business practices.
Further understand your customer’s ecosystem. Many countries have sustainability regulations. Managing ITAD services that take these regulations into account make you a trusted and valuable partner.
Help your customer stay ahead of the curve. The only constant in life is change. The same goes for technology. Supporting different device lifecycle stages means you can help your customer manage these changes (typically, upgrading to a new technology) in a sustainable, efficient manner.
Take an active role in your customer’s business. Employees often have different device needs. For example, graphic designers will have different computer requirements than an employee in finance because graphic designers create and manage high-resolution images and video files. This means there could be a difference in the length of each computer’s device lifecycle, such as a need for upgrades. You can help your customers anticipate these needs and manage them accordingly via ITAD services.
The thought I will end with is “going beyond” also means thinking about the long term. As an industry, when we finance device lifecycle solutions, that’s what we’re doing. We’re providing our customers future-forward, meaningful financing to sustain not only their business, but the environment.
1Used Equipment Market Survey, International Data Corporation, October 2021.
Rick Trobman is president of the tech solutions global business unit at DLL. For the last 25 years, Trobman has helped finance technology sales for manufacturers, distributors and resellers. At DLL, his team provides technology financing and leasing solutions for many of the largest technology providers in more than 30 countries.
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