Dan Gilbert joined Cisco in 2005 and took over their Reverse Logistics program at a point when Cisco’s returned products generated about 6 million pounds of scrap and costing Cisco $8 million per year!  That is equal to 12 football fields filled knee-deep with product that was returned and assumed not working or DOA.

He changed the corporations mindset from a “scrap it” mentality to a “recycle and re-use” mentality.  In fact, he found that over 80% of the returned and traded-in equipment coming back was in fact in good working condition.  He realized the equipment had a remaining life; a life with a second or even third career!  Dan went on to matched up these products with internal Cisco functions that had a need for refurbished equipment, using 44% of his returned products internally for customer demos, engineering labs, spare parts and charity opportunities.

Dan goes as far as to put on his sales cap and convince his collegues within Cisco that refurbished product could meet their needs as reliably as new product.  He demonstrated that in fact refurbished gear passed the same quality and compliance checks required of their new products.

So yes, Cisco themselves even use refurbished Cisco equipment as a way to save money and reduce their own corporate carbon footprint!  This is a great endorsement for all corporations to consider buying refurbished equipment for their internal use!  If the manufacturer themselves uses refurbished equipment internally, that speaks volumes to corporate IT staffs and for the validity of the $2 billion refurbished computer industry.

"Go Green"

Let’s face it, we all care about our world and managing the finite resources the good Lord has given us. The question really is, how can corporate America Go Green and at what cost?

Going Green always has a cost associated with it; monetary, time, effort and risk. Businesses can Go Green by recycling their paper and cell phones, buying office supplies made from recycled materials and using filtered water dispensers vs. providing bottled water to its employees. However, there is typically a cost for businesses to have a recycling company come in and pick up the recycled paper/cell phones and a cost premium of 10% – 20% when buying recycled office supplies.

The easiest way for a company to Go Green is for its corporate IT department to purchase pre-owned and refurbished computing equipment. Here’s why:

1. Buying pre-owned computer systems uses “zero carbon”.
2. Buying a new system requires the introduction of a new carbon footprint to our landscape.
3. Re-use before you recycle. Why recycle a system when it still has a significant useful life remaining? It would be a waste!

The reality is, corporate America can Go Green the easy way – re-use or purchase pre-owned IT equipment as a way to save money on hardware expenditures while reducing the carbon footprint of its company. Secondly, the company doesn’t have to pay a premium to Go Green. In fact, when you buy refurbished, you typically save 30%-80% of new prices.

As the owner of computer remarketing companies, we are doing our best to help corporate America reduce their carbon footprint by selling them refurbished IT gear. Let me know how I can help you and your company with your Go Green IT strategy.

MARKET

When corporations need IT equipment, they call their Account Rep from Cisco, Dell, HP or IBM. Others might call their Business Partner or VAR. Better yet, they don’t call, they log-in and order their new equipment on-line!

Virtually 100% of the time, when they place an order, it is for new equipment. i.e. Servers, Storage, Networking or Personal Computers.  But why the propensity to order equipment NEW. Why not buy used equipment, refurbished by the manufacturer or by a 3rd party or independent computer remarketer? “You kidding Me? You trying to get me fired?”

 THE PRODUCTS

Let’s face it. We as human beings like things new. It all started with our first gifts under the Christmas tree. Freshly wrapped; new box with its crisp corners and its tight, un-torn flap… nothing like it. You open the end carefully… not wanting to tear the cardboard and pull out the custom-made insert, holding the shiny new widget, with the warranty card and documentation carefully placed below in its own clear plastic bag taped shut. Us IT guys love the art of opening our new toys. IT REALLY REMINDS US OF CHRISTMAS! That’s why we got into the business…    But wait, is their a better way? With out all the wrappings and fixins’?

 THE PROS

The reality is over 70% of all corporations purchase some form of used, pre-owned, or refurbished computing equipment. Secondly, the typical savings is 30 to over 80% off buying it new from your manufacturers account rep or VAR. The refurbished market is BIG and growing. The industry is growing and well into the billions and billions of dollars. Heck… even BusinessWeek just wrote about it. How can I justify buying refurbished equipment for my company? Wait… “Nobody gets fired for buying IBM!”

• SAVINGS – Buying high quality IT gear can save your department buckets full of cash.
• AVAILABILITY- Usually available for immediate shipment. No waiting for it to be build (Build To Order- BTO).
• MAINTAINABILITY - Majority of equipment is eligible for the manufacturers standard maintenance agreement.
• WARRANTY- Most reliable re-marketers offer a warranty on their equipment. Expect 30 days to 1 year; depending upon the Re-marketer  and the type of gear.

 THE CONS

But can I really trust bringing in used equipment into my company? The risk seems too high? What if it fails on me and my network goes down? I could be out of a job! But on the other hand, if I can bring in high quality refurbished equipment and save money, then I can implement more IT solutions that will make my company more competitive and therefore more profitable. Lower IT expenditures; increase competitiveness; increase profits… hhmmmm. Sounds like a fast way to the corner office!

• RELIABILITY – Used equipment has been USED and is less reliable… how long do I have before it fails?
• JOB SECURITY- I can’t bring in pre-owned gear? If it fails and we have an outage, my career is over!
• RISKY – It’s too risky… I just can’t afford to take the risk… for me or for my company.

 “THE USED TRUTH”

The arguments on both sides are valid. But the fact of the matter is life and business are full of risks vs. rewards. If we want to be successful in life, we must all take risks; their are no rewards without risk. The business world is overflowing with examples of managers, high level executives and business owners that have stepped out in faith and taken “educated risks” in order to become the best in their industry! Or even the best in their IT department!

Look… we all take risks. The question remains: “Is buying used computer equipment worth the risk?” Let me continue to be your guide…

G Unit

ARE WE GOING TO THE BALLPARK?

My first post ever October 30th 2008 titled “In the Beginning” ended with “Let’s Ride”.  So where are we going? O.K…let’s talk truth…

My plan is to start at the beginning, to educate Corporate IT executives in America in buying and selling used computer equipment and corporate technology.  What this means is, my posts will start as though you know nothing about the benefits and disadvantages of buying used computing.  I am going to assume you have never considered purchasing pre-owned equipment; I am going to assume you have no interest and are adverse to even the thought of risking your career and your company to buying even a spare part for your core network!  What idiot would even consider performing “Harry Carry” on oneself by buying refurbished systems?  Suicide… suicide for a career… suicide for a company.

IS THIS AN OXYMORON?

I think so.  Many a CEO has risen the ranks to the corner office based upon their unique skills as technologists, but more importantly as leaders and risk takers.  Not one good leader has raised the ranks without taking actual or perceived risks to become pinnacles in their companies and industry.  Executives must step out in faith to succeed.  I hope to make that step smaller… because there are big rewards in buying and selling used and excess equipment.  I will prove it.

ROOKIE IN THE MINOR LEAGUES TO THE MAJORS… AND FAST!

With over 27 years in the computer and IT remarketing industry, my plan is to take you from your Rookie season to the Minors and then into the Big Leagues; hopefully opening your eyes to perceived risks vs. actual risks of successfully implementing a refurbished equipment acquisition strategy and selling your sidelined equipment for the benefit to your career and the bottom line of your company.  For your benefit, I will CATEGORIZE each post whether or not it is FACT vs. FICTION, BUY vs. SELL, and ROOKIES/MINORS/MAJORS. The end result is you will have the knowledge and resources to make wise IT sourcing and disposal decisions while furthering your career and making you look good!  I think that means you’ll make more money, have higher prestige and eventually the corner office.

PRESS CLUB

I figure I have over 85 original topics I need to discuss with you.  Topics such as…

• Make Money While Downsizing
• Nobody Gets Fired for Buying IBM
• CIO’s Fastest Way to the Corner Office
• Can I Have My Cake and Eat It Too?
• Computer Room to Board Room
• How To Benefit From the (Coming) Recession
• The Economics of Refurbished… My Major and Soon Yours
• Cherry Picking or Buying The Farm

Take a swing and enjoy the ride.  I encourage feedback, comments, suggestions and rebukes.  I know many of you have knowledge from your experiences that can add value and make a difference to TheUsedTruth.  Please speak, so you can be heard!  We welcome it.

G Unit

Author - BusinessWeek

Wow. What perfect timing I have!

Check out this great article from Rachael King at BusinessWeek.com (UCLA Grad like me!)  about the “NEW RAGE AT WORK: Used, Revamped IT Gear“. Was published this morning at 12:01AM EST.

From my experience, you will see more corporations, large and small, adopting a Refurbished IT strategy as part of their hardware sourcing.   IT budgets are being slashed all over corporate America, but CEO’s more than ever realize the “strategic and competitive advantage” technology can bring to their bottom line… especially during a RECESSION (yes, I said the “R” word).

Watch and listen… more and more CIO’s and Directors of IT will be receiving a call from their bosses, bosses, boss asking, “Do we buy refurbished IT gear?  If not, why not?”  The rule of thumb is over 70% of corporations buy some sort of used or refurbished equipment as a way to save money.  My expectation is you will find businesses “running” to refurbished resellers… especially in the next few months as the Elections end and our new President takes office.

Would love to hear your thoughts about Racheal King’s article?  Have any questions or comments, let me know.

Would you purchase refurbished computers as a way to save money for your company?
( surveys)

Thanks for taking my poll!

Commodore64

In the beginning, my world started with the Commodore64 computer, hitting the market in August 1982 and being pulled from the shelves in 1994 after selling 30 million units!  Then came my dream come true… the IBM Personal Computer.  I can remember it now, new to the IBM Corporation as a trainee in 1983, with my white starched cotton button down long sleeve dress shirt (and ”IBM Blue” tie) looking at the newly deployed IBM PC perched on my desk.

Original IBM PC XT

Then later came my PC XT with a 10MB Disk Drive!  Oh boy…no more diskettes!  Ring a bell ladies and gentlemen? Well, my years at IBM were filled with unreal amounts of training, studying, and selling under the helm of Lou Gerstner, the then Chairman of IBM and many others. 

But the fact of the matter was IBM could not overcome and beat its biggest competitor!  We constantly lost deals to these guys and it was always because of price… not support, not because of quality, not because the competitors products were faster and not because they had better software than us!  Who was this behemoth competitor?  Ourselves… IBM.  But how could this be? It was IBM systems being purchased, refurbished, and re-marketed by 3rd party companies.

In training, it was ingrained in our heads… “Our biggest competitor is ourselves”.  And it was true!  The fact of the matter was there were companies buying up used System/36, System/38, 4381, and S/390 mainframes from end user companies and reselling them to other customers at a fraction of the price of buying new.  The KICKER was the U.S. Justice Department Consent Decree imposed upon IBM (because the US Government felt IBM was becoming a monopoly) mandating among many things that IBM must ACCEPT their “preowned” systems under an IBM maintenance agreement.  This enabled savvy 3rd party companies to purchase refurbished mid-range and mainframe class IBM systems to run their corporations a fraction of the cost of buying new from IBM.  On top of it all, the US Government decree “guaranteed” IBM must maintain these used systems at their published maintenance rates! WHAT A DEAL! … And Still Is!  Although the Consent Decree has expired, many of the terms still hold true; not only for IBM, but now virtually all computer, storage, networking and peripheral manufacturers. 

This is my beginning and I hope over time to share my wisdom and expertise with you.  There are many Pros and Cons to sourcing, using and eventually selling your refurbished, pre-owned, or used computing equipment. Let me be your guide and … ENJOY THE RIDE!

LET’S RIDE!