Friday, 10 April 2015

Scrap/Value



Value, like beauty, is in the eye of the beholder. We look at something and think ‘that cost me £400 that did’ and refuse to believe that four years later its worth is around a tenner. We forget that it cost £400 but that is different from what it was worth. You paid about £250 for the little Apple logo for a start or the swoosh, or the Microsoft thing.

I will always remember being on the M25 driving home one evening when my heavily pregnant wife rang me to say that she had been out with her parents and that they had very kindly bought us a pram cum pushchair cum car seat affair. With almost gay abandon she told me that it had cost them almost £700 (in 1999!) just as a beaten up old BMW overtook me doing about 90mph with a sign in the side window saying ‘for sale £695ono’. Worth and value, two very different things.

However, the price of such second hand cars is actually quite a good comparison to second hand IT equipment. You buy your car for say £10,000 and then drive it like a bat out of hell for five years until the clock reaches maybe 70,000 miles and then you get it valued. You know whether you think that price is fair or not. You know if the car is falling apart, or if the clutch is about to go. You expect it to be worth very little. And if it wasn’t working it would not be worth much at all, just scrap, even if you have no idea what scrap value is. It’s just something people say.

But with your old desktop the reverse is true. You know that it is too slow to run the programs you want to use reliably. You know it has started crashing on a regular basis. You know it gets awfully hot if you use it all day. You know it is five years old and was not exactly high spec back then. So having bought a shiny new one which cost you £499 you are naturally not best pleased when some fool like me suggests it will cost you to remove, sanitise and recycle.

Let’s ignore the game changing effect of volume for a minute and look at your average five year old PC in isolation. Yes it did cost you £499 sixty months ago. That is irrelevant to its value now. Has it been well used? Yes, it flipping well has. Was it top of the range when you bought it? No, it was the PC equivalent of the family saloon car. Why are you getting rid of it? Because it is on its last legs and will not do what you want a PC to do now. Ok so now who is the fool?

What people forget is that we have legal responsibilities here. Every business has to recycle WEEE responsibly and prove that they have done so, if necessary. The latter bit is less likely to happen of course but it does not change the regulations or the risk. And every business has to comply with the Data Protection Act. So, you really need some paperwork and you really need to make sure this is going to someone you can trust. But you still don’t want to pay, do you?

You pay for your bins to be emptied. Not the same though is it? I mean paying to get rid of rubbish is accepted, because it’s your rubbish and it is...well...rubbish. You created it and unfortunately you have to dispose of it and so you pay for those bins round the back of the building just like you pay your council tax at home, to have the bins cleared.

This PC isn’t rubbish, it cost £499 remember. Yes it doesn’t work very well and it cannot cope with the latest software you use, but it’s not rubbish. Not in your mind at any rate.

Ok then, you sell it. I really have had customers say this to me. ‘I’ll put it on eBay’. This is the PC that gets quite hot, you’ll recall? The one that crashes? The one that can’t cope with the latest software and you expect to sell it on eBay? And what are you going to do about software, because that stuff on the PC is licensed to you, and although it is transferable, do you want to transfer it? What are you going to put on your new machine? And most importantly of all, what are you going to do about your data on that old machine?

You could, like many people do, just shrug and say you’ll risk it. You could, like many people do, get away with it. Or it could all go a little pear shaped and Genghis Khan and his hordes (the information commissioner to you) could ride over the horizon and fine you up to £500k. In a few months he might even throw you in the chokey too. Given half a chance he will put you on the rack as well, or burn you at the stake.

Sensible people would not sell that PC on eBay. Too complicated, too many potential comebacks. A few would sneak it down the local tip and pretend they were a consumer, but of course the data is still there. The risk is still there. So in the end most people recognise that they have to use someone like eReco. And they still baulk at the cost. Any cost.

Volume becomes crucial here. If you are a big company you dispose regularly and have some sort of routine. Once or twice a year maybe, a nice full van load. eReco charge £900 for a van load, which can weigh up to about 1500kg but we still charge extra for data wiping on top. With these sorts of quantities, we have more scope for getting some value back for you. If your 5 year old PC’s (75 is a about a van load so let’s take that as our hypothetical quantity) pass the PAT safety test we can find a market for even some fairly low spec machines at around £20 each. So we might sell them for £1,500. Our standard agreement is a 50:50 revenue share, so you are due £750 less our sales costs, which might include loading new software for instance. But let’s say for the sake of argument that we don’t have to load any software and you get back your £750.

So now getting rid of a whole van load of waste has cost you £150 + data wiping at £5 which is another £375 on 75 PC’s, so that is £525 or £7 a machine. That is £7 to load it on a van, transport it and log it, wipe it, provide waste transfer notes, asset lists and certificates of destruction, PAT test it and store it until we sell it.

In reality of course, a number of the PC’s would fail the test. A number of hard drives would fail the erasure process and thus would have to be destroyed, so the costs could rise. But as an example it all sort of stacks up. £7 per PC seems like a fair price.

My point being if you have volumes to recycle, cost effectiveness and value for money are relatively easy to achieve. Saving the Earth does not cost the Earth.

But our one PC could end up costing £50 or even a bit more to recycle. And we can only get that low if you are easy to get too on the way back from somewhere else. And that can make the whole process seem unfairly expensive. Which I understand, appreciate and consider. But...

Unfortunately, the same rules apply to all businesses and organisations, regardless of size. You have to do this stuff or risk the consequences (you remember, Genghis; stakes, racks and burning). Which is why these people who offer free collections suck in so many people.

On the volume side, if you are collecting 75 PC’s a free collection is possible. If they do not offer you any cash back (and they won’t) they get £1500 worth of kit. On our cost base, you could do that and still make a profit. Not a huge profit but a profit nevertheless. But if ten of the PC’s failed the PAT test that profit would disappear, and you do not know what state the kit is in before you collect it so this is all done sight unseen as it were.

So, if you were that free service, what would you do? Well the major cost is the data wiping. We charge £5 per drive because besides the labour involved we pay a license fee per drive. But if we did not use the Infosec 5 software, but downgraded to one of the others on the market, which do not charge a few quid per drive wiped, we could save a fair amount. Sure, the data is technically recoverable but you are now into a situation where your risk revolves around your PC falling into the hands of someone with a fair amount of skill and criminal intent. Genghis would not be best pleased if it happened but as long as you had the paperwork, you might survive the experience.

Another cost is recycling within WEEE regulations. You are not allowed to sell stuff to people who intend to whisk it out of the country. Because it may end up in landfill or be used for nefarious purposes. Which is a shame financially because you can sell these guys anything, working or not, for cash. Annoying this sustainability lark sometimes!

So my message for today is that it isn’t about your valuation of the items worth. It isn’t even about the price I quote you. It is about the value of what we do. If you buy into that...if you believe that sustainability is important and that you would much rather your sensitive data was not shared with all and sundry...then the price will be just right.

Small businesses recycling small amounts will pay more, but isn’t that the same with everything?