Can IT leasing support a more circular tech economy?

Tackling waste and maintaining up-to-date IT systems may sound at odds, but running old hardware may mean it gets sent to landfill.

According to a recent study by USwitch, the UK has the second largest per capita technology waste in the world. On average, according to the research, we each generate just shy of 24kg of e-waste every year. And it won’t be long, if current trends continue, before we overtake Norway and secure top slot.

When it comes to the part business plays in tech waste, Matt Dredger, General Manager Payment Solutions at IT transformation services business SCC, says it’s a situation that is often made worse by businesses being “stuck in Jurassic Park” when it comes to their IT.

The typical scenario he describes is a familiar one: a company decides to upgrade its systems and asks the head of IT to formulate a business case or costed plan and take it to the leadership. This happens and in time the new kit arrives. And the company duly leaves behind Jurassic Park and embraces the bright lights of new technology.

But while the original IT plan may have suggested keeping this kit for three to four years, unpredicted events and cost cutting mean this timeframe extends to six or even seven years. As Matt puts it, in the gap between three and six years, the company finds itself back in Jurassic Park. 

A circular approach to IT

This, Matt explains, is the result of a traditional, linear model of buying new IT equipment outright, often with cash. His firm is looking to replace this model with a more circular approach, based on leasing.

“Our aim is to bring our customers out of Jurassic Park,” he says. “They’re often using kit that is old and creaking and probably no longer supported. It means the IT department is spending a huge amount of time and resource on maintenance, which is often a hidden cost no one is tracking. And when the kit finally breaks down it is likely to end up in landfill.”

In the meantime, Dredger says that companies will also have missed out on a whole lot of software and hardware developments. “IT is an area of constant innovation and evolution. By the time these companies are ready to repeat that linear process and buy new stuff, their old kit has no value in the second-hand market and goes to scrap.”

How old IT can avoid going to landfill

Matt says this is the trap of the linear economy. “Raw materials are extracted and forced through this ‘take, make and waste’ cycle. The persistent use of cash leads to this approach.”

The SCC approach is to break that cycle. “In our scheme, the kit is leased for three to five years and, because it is on this scheme, it gets replaced at the right time.” Returned kit is then remarketed, through SCC’s Recyclea scheme. Anything that can’t be remarketed is ground down for the materials to be recycled.

Here, a difference of a few years makes a lot of difference. Dredger explains that 100% of three-year-old kit they get back can be remarketed, while at four years it drops to 75% and at five years is down to 50%. By the sixth year, it is 0%.

A cash buyer holding onto tech for six years to try and maximise the return is operating under an illusion. “They are losing the chance to remarket the kit, which in most cases means probably sending it to landfill.”

There is also then the cost of securely and thoroughly wiping any data from devices and disks, a service that’s all part of the SCC model.

Out with the old, in with the new

In an age where more firms will be expected to report on things such as environmental, social and governance (ESG) policies and their carbon footprint, these policies can also have a material impact.

“We have a zero-waste policy,” says Matt. “Nothing goes to landfill. Even if we can’t resell a piece of kit, we can see something like 60g of CO2 benefit back to the client. If we catch it earlier and it goes into our remarketing centre and can be resold, then it can return five times the amount of carbon benefit for clients, up to as much as 320g of CO2.”

This is before you consider that passing machines onto the secondary market means someone else isn’t buying a new machine. Secondary buyers are typically domestic users or educational establishments that find the power and speed of the recycled machines more than enough for their needs. “As well as reducing their own carbon footprint by buying a used machine, they get a great deal. This kit is often still more powerful and up-to-date than they need.” 

Matt says IT is not yet playing enough of a part in the net zero debate. “The focus for companies looking to reduce their impact tends to be on switching to electric vehicles or LED lights. The IT department rarely gets considered.” 

He cites the example of the 2021 Ministry of Defence Annual Report, in which it reported it had switched all staff from Windows 7 desktops to Windows 10 laptops. “It saved the department lots of money, but also alongside the financial saving it also saved an estimated 3,400 tonnes of CO2 a year.”

In response to the criticism that his firm’s approach is merely encouraging more consumption, he highlights that as well as the benefits of recycling and remarketing, new machines are often more eco-friendly than the models they replace. “We are starting to see manufacturers make new machines with more recycled materials, things like laptops from 30% recycled ocean plastics,” he says. “And that’s on top of them being more energy efficient.”

There are also other advantages for companies behind more regularly replacing their IT estate, not least that hidden cost of IT teams working harder to maintain old kit. “Old equipment that may not be able to support the latest software updates and releases will be less secure,” he points out.  

And it is also often good for staff morale, who will get to use faster computers with less downtime that may even add up to being more productive and even enjoying a better work-life balance. 

In summary, Matt points to another popular culture icon to make his point about the false economy of hanging on too long to IT equipment. 

“It’s like the myth of Trigger’s Broom,” he says, referring to a scene from Only Fools and Horses in which council road sweeper Trigger gets a medal for saving the council money by having the best-maintained broom. “He claims to have it for 20 years and in that time, he proudly boasts, ‘it’s had 17 new heads and 14 new handles’. It’s the same when you’re spending so much to keep old kit and systems going. Replacing IT on a regular and systematic basis is better for the company and better for the environment.”

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