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| Business Adopts Strategic Redeployment Process to Save Millions |
Due to a corporate mandate, a large company needed to cut costs by hundreds of millions of dollars. All departments within the company were ordered to develop and execute revenue strategies and expense initiatives that would contribute significant cost efficiencies. To meet this need, one of the business units looked closely at how it could save money by reusing existing computer technology and business equipment, rather than procuring new. Redeploying idle technology assets could provide significant cash overhead improvements; however, the company lacked the capabilities to efficiently process its used equipment and maximize the potential cost savings from the reutilization program.
First, the business lacked visibility into its equipment surplus: how much was idled and where it was located. As a result, it couldn’t effectively manage its inventory and was forced to buy more new equipment than was necessary. It also didn’t have information on the condition of existing assets that could be used to drive decisions on appropriate asset lifecycles and refresh strategies.
Further complicating the situation, the company’s existing vendor could not recover, process and redeploy equipment fast enough or to sufficient quality standards. This resulted in only a small number of assets being redeployed, higher downtime, and increased end-user dissatisfaction.
Also, without any cost benefit analysis over buying new, the company could not demonstrate to executive management its actual savings, nor could it quantify potential additional savings from expanding the redeployment program across all business lines—in support of the corporate initiative to drive greater cost efficiencies.
The company needed a way for IT asset management personnel to gain immediate visibility into its redeployable inventory and repurpose assets back into the field quickly. Furthermore, it had to measure the success of the program, both in terms of cost avoidance and service quality.
Working with the company, Redemtech defined within its proprietary system value-appropriate business rules to process recovered equipment according to the customer’s business goals and strict service-level requirements. To increase efficiencies in the redeployment process, Redemtech performed inline parts harvesting, repairing and integrating parts as necessary while simultaneously reducing costs. Redemtech also gathered requirements to bypass the company’s configuration center when redeploying servers to eliminate unnecessary shipping and handling.
To effectively test and diagnose business systems prior to redeployment, Redemtech set up demonstration stations replicating the customer’s hardware configurations in its commerce locations. For equipment that wasn’t redeployable or did not have an immediate opportunity for reuse, the company found that by releasing on-hold assets sooner and turning sales faster, it could generate higher yields from its surplus and increase proceeds back to their business units.
Providing real-time, online access to all recovered equipment on hold and ready for disposition was crucial. Redemtech used a daily data feed to document recovery and disposition performance and conformance with service-level standards.
During the first nine months of outsourcing its asset recovery and disposition to Redemtech, the company successfully redeployed 2,700 assets and generated $1.5 million in savings. In addition, with Redemtech’s assistance, its IT asset management group was able to demonstrate to management an additional $4.2 million in savings that could have been realized during this time period had the company reused all of the nearly 80 percent of its on-hand inventory that met redeployment standards.
As a result of the success and demonstrable savings, the company has been able to expand its redeployment program and contribute even more to cost-cutting objectives. Redemtech has helped the company redeploy 10,400 assets during the past two years for nearly $9.2 million in cost avoidance savings. And the program is gaining steam. In 2007, the company experienced a 72-percent year-over increase in the number of assets redeployed, which resulted in a 260-percent increase in cost avoidance savings and a 14.5 savings to service cost ratio from its redeployment program. In addition, the company has realized improved end-user satisfaction and reduced downtime as a result of consistently meeting strict standards for asset recovery, processing turns and service quality.
Redemtech was also able to meet and often exceeded remarketing service-level agreements, turning sales within 30 days, increasing the company’s yield by more than 5 percent and generating over $3.3 million in proceeds.
In total, the company has realized $7.8 million in net return during the past two years from its outsourced Technology Change Management program with Redemtech. Additional financial impact of its asset recovery and disposition activity included reduced tax expenses on un-depreciated assets as well as reduced maintenance and software license fees.
These significant results have led to a growing strategic relationship. Redemtech now helps the company solve business challenges and meet objectives when it comes to optimizing the value of its company assets, creating new savings opportunities, and improving service.
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