RFG believes that CIOs should include the business impacts of the disposal of personal computers (PCs) and related equipment when considering replacing older devices with new technology and making lease versus buy decisions. Companies can give older equipment new life in schools, not-for-profit organizations, and employee homes. CIOs should include disposal plans in their life cycle planning for IT assets and evaluate all aspects of PC disposal including local environmental/recycling regulations, tax consequences, and asset management.

• Proper disposal of PCs is an important yet often-overlooked component of the PC life cycle. Companies without plans for disposal often wind up using valuable storage space holding obsolete PCs and paying taxes on unused equipment. CIOs should understand their disposal options and associated costs, determine the appropriate action for their situation, and update plans and policies to enable those choices.
• Proper asset management of PCs helps companies through the disposal process. Companies that can easily locate obsolete equipment spend less time collecting and moving than those that have to do a manual physical inventory. CIOs should be sure that asset records are kept current and that networked PCs are inventoried regularly. PCs not on a network should also be tracked, albeit less frequently.
• Companies waste money paying taxes on obsolete and unused PCs because of poor asset management. CIOs should work with their accounting departments to understand current depreciation laws for their various locations to correctly write off the assets at the appropriate time.

As the old saying goes "Two things in life are certain: death and taxes." The same holds true for personal computers and related equipment (printers, monitors, etc.). Every PC reaches the end of its useful life for a company, with tens of millions disposed of by companies each year. Tax law dictates that during the useful life of the PC it is taxed as a capital asset. The value of the asset, and hence its taxes, depreciates a certain percentage each year (varying by locale). Equipment that remains "on the books" continues to be taxed, often long after discontinued use. Fortunately, CIOs have several options for disposing of PCs in ways that help remove their tax burden while assisting organizations in their communities.

Obsolete PCs, while of little value to a company, have value to many other organizations. Although some companies decide to throw away old PCs, the last place to put an old PC is in the garbage. PCs contain toxic chemicals in their components that can be released if placed in landfills. The U.S. Environmental Protection Agency (EPA) specifically targets circuit boards and monitors with disposal guidelines. Even if the PC is not operable, certain parts may have value. CIOs should immediately halt any disposal of PCs into the waste disposal system.

Companies seeking progressive disposal programs have several ways to rid themselves of obsolete PCs. One often-used option is to offer employees the right to purchase them for a nominal fee. Alternatively, companies that donate PCs can take a tax write-off and improve community relations. Companies can contact the technology coordinator of their local school district as they are often in need of computer equipment and are always accepting donations. Many schools, however, use Apple Macintosh computers and are not interested in IBM compatible donations.

Other disposal options include not-for-profit organizations and computer brokers. Organizations need computers for record-keeping, marketing, and other uses. They typically greatly appreciate donations and will pick up the equipment. Brokers purchase obsolete computers and find other uses for them. Some PCs can be refurbished or remanufactured. Companies who want the least amount of hassle disposing of PCs typically use brokers. However, CIOs should expect to pay for the convenience with lower dollar return per PC.

Regardless of the disposal option selected, CIOs must ensure all data and programs on the PCs have been completely erased lest they incur a security breach or become in non-compliance with software licenses. Also, for employee-purchased PCs, CIOs should have clear policies stating the company will provide no support nor pay for any of the software licensing costs.

CIOs should also evaluate the economics of upgrade over replacement. Computer manufacturers are now more sensitive to the rapid churning of their wares and provide upgrade paths. Some use materials that can be recycled into other products at their end-of-life. Modular designs with fewer screws make upgrades easier. For example, Apple has designed their computers to extend useful life and reduce environmental impact at the product's life-end. Compaq's Design for Environment approach takes into account reuse, upgradability, and recyclability during product development.

Companies may have the option of returning equipment to the original manufacturer. For example, IBM's Environmentally Conscious Products (ECP) program includes product takeback programs in Europe and materials recovery centers around the world where 90 percent of materials are recycled. Some vendors buy back old equipment as part of new leasing deals - Compaq Capital has such a program. Others offer services to help companies with disposal. For example, Dell Financial Services' Asset Recovery Services completely manages the logistics of PC disposal including reporting, data removal, and compliance with EPA regulations. CIOs should understand the product end of life programs from their manufacturers of choice to minimize disposal issues.

Conversely, lack of a disposal process leads to nagging problems for companies. Many unused PCs end up in warehouses, storage rooms, closets, stairwells, or offices. Because the accounting department does not know of the asset's whereabouts, it continues to carry the asset on the books, thereby unnecessarily increasing the company's capital tax burden. An ongoing online inventory of networked assets should be supplemented with a regular physical inventory, the timing of which is dependent on the company's growth rate, office moves, frequency of departmental reorganizations, and last inventory date. CIOs should be sure asset management policies and practices are current so that their companies are not wasting money storing and paying taxes on unused equipment.

Depreciation laws for computer equipment vary by state. Many states recognize the technology rapid upgrade cycle of PCs and have therefore made shorter the depreciation schedules, for example from five to three years. CIOs should work with their accounting departments to know their depreciation schedules for PCs in order to know residual values and plan for upgrades at the appropriate times.

RFG believes that companies need solid plans for disposal of personal computers and related equipment to minimize costs and trouble often associated with PC disposal. Since many of the disposal options are specific to geographic areas, CIOs need to understand the local market for PCs including brokers, schools, and charitable organizations. A strong asset management mentality helps immensely during times of upgrade and disposal so that obsolete assets can be located, moved, and taken off the accounting ledgers. With such awareness and planning, CIOs can improve their technology refresh programs.

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