With the introduction of our new Sustainable Hardware as a Service offering, we thought we’d breakdown the different types of IT ownership models that are available. Our quick overview should give you a basic understanding of each of the models. But for more information, please get in touch with a member of the team. 

Outright Ownership

The one that most IT teams are familiar with. You buy your kit directly from a vendor such as Cisco or through a partner. And take ownership for the maintenance, upgrades and decommissioning yourself.  

From a finance perspective, owning the asset means that it is classed as a capital expenditure. Overtime the value of hardware will depreciate and will become more expensive to maintain. 

This model is great for businesses that want complete control of their hardware and have teams in place to run updates and maintenance. However, the upfront costs associated with purchasing hardware, as well as those associated with ongoing maintenance can lead to businesses looking at alternative models of ownership. 

Hardware Leasing

In this instance there is a financial agreement in place with another company to supply you with the hardware. Think of it as renting your routers and switches, as opposed to owning them outright. At the end of the agreement, the equipment typically goes back to the leasing company, although some lenders will offer you the option of purchasing the equipment via a balloon payment. 

Leasing often comes with options to wrap support and maintenance into the contract, if this isn’t the case then you will need the resource in place to do this yourself. 

This model allows businesses to access hardware without the need for a large upfront cost as payments are spread. However, as a there is a financial transaction taking place on a physical asset, this can still have capital expenditure implications.  

Hardware as a Service

The Hardware as a Service (HaaS) model differs from leasing in that you are consuming the hardware as part of a service. In a similar model to how businesses consume software (SaaS) or cloud (IaaS), you are paying for access to the hardware, meaning the ownership of the product remains with the business you are taking it from. 

Like leasing, obtaining the networking hardware you need for your business becomes easier as there are no upfront costs. At the end of the services, the hardware then goes back to the supplier. 

As this is a service, the supplier is responsible for the upgrading, maintenance and support of the hardware. If something breaks, they will be on the hook to replace it for you. Because they are taking hardware back out of other businesses, this could mean that the kit you receive isn’t always brand new and has been through a remanufacturing process instead.  

From a finance perspective, this is now an operational cost as you don’t own the hardware and no financial transaction takes place for the asset directly. This makes this model of ownership great for customers who offer consumable services to their customers and are looking to mirror this operational model themselves, or who are looking to reduce the number of fixed assets that they own. 

Sustainable Hardware as a Service

https://player.vimeo.com/video/879727399?share=copy

Building on the HaaS model, we developed our Sustainable Hardware as a Service. We own the asset and provide fully managed shipping and “white glove” product recovery services.  This is backed with Cisco’s full manufacturer warranty and Smartnet support. Covered throughout the period of the service.  However, we’ve designed the solution in a way that embeds both sustainability and customer value at its core.

We take a customer’s Cisco requirements and analyse the solution to identify opportunities. Then blend in Cisco Refresh, Cisco’s fully certified remanufactured equipment. This approach gives you access to the latest and great new equipment with the traditional value achieved from remanufacturing. This means you are reducing your Carbon impact via a cost-efficient solution that doesn’t come with any technical trade off.

We then provide a financial wrapper using Cisco Capital’s Green Pay solution. Cisco Green Pay is an award winning financial solution that ensures Cisco products are sent back to Cisco as part of the service lifecycle. And supporting Cisco’s world leading sustainability objectives for 100% product takeback.

Finally, through our detailed product research, you gain access to comprehensive ESG and carbon impact metrics throughout the product lifecycle. From day one you have visibility on the role that remanufactured IT is having in helping your business achieve it’s ESG commitments. 

Cistor has been working with Colt since 2015. In this Q&A CEO Keri Gilder takes us through the Sustainable IT approach they are taking.

Cistor: At Colt you place a real focus on sustainability through your CSR policies, particularly in areas such as energy consumption and emissions. How important for you as a business is remanufactured IT within that?

Keri Gilder: Sustainability matters across all levels of the organisation and is central to how Colt operates. As a global network provider, IT infrastructure is integral to what we do and it’s extremely important that we’re environ­mentally mindful of how we procure it.

I think there are two reasons why remanufactured IT is important to our strategy. Firstly, it helps us reduce the carbon emissions of our supply chain, which contributes to lowering our Scope 3 GHG footprint. Secondly, it plays a key role in our Zero Waste to Landfill aim. We want to ensure sustainability by design and remanufactured IT is an integral part of that. We have to think about circularity and designing out waste, and that includes considering upgradeability, repair, second use and spares. A circular economy is much more environmentally sound than the traditional linear model, so we aim to use resources for longer and pur­chase remanufactured IT to minimise virgin materials where possible. This leads to an indirect reduction in CO2 emissions and, importantly, prevents toxic materials from entering waste streams.

C: Colt is a global leader in networking and com­munications, and as such, your success goes hand-in-hand with the technical resilience and performance of the solutions you provide to your clients. The misperception though is that remanufactured equipment is less reli­able – what has been your experience?

KG: Technical resilience and high performance are a priority for Colt and we won’t put these at risk. We’ve never experienced any problems with the remanu­factured equipment we have from Cistor (part of the Circularity First Group). In fact, we’ve created a proactive, resilient supply chain which allows for savings both in terms of cost and carbon. The equipment also comes with a warranty, so we know that we’re receiving reliable items.

C: What benefits do you see from working with a company like Cistor?

KG: Our businesses have been working together since 2015. And in that time, we’ve purchased more than 33,000 units. And prevented more than 40,000kg of eWaste using Refresh technology in place of new.

Working with Cistor ensures we receive an authorised remanufactured product whilst preventing the need for virgin materi­als and reducing the carbon impact. The remanufactured IT market can be challenging and as an authorised reseller, the quality guarantee from Cistor gives us welcome peace of mind. Cistor has helped us create a resilient supply chain through its proactive approach to sourcing items we need, planning for the future and keeping stock for us. This means we never run out of supplies, helping us provide a seamless service to our customers.

C: In your opinion, what needs to happen for the wider tech industry to adopt similar main­stream sustainable IT practices?

KG: We need to grow awareness of how ethically important sustainable IT practices are, of the economic benefits they can bring and the next steps we can take as an industry. Education is key. If technology leaders know more about the circular economy and the solutions available, such as remanufactured IT, they can make more informed, sustainable decisions around supply chains and equipment usage.

Collaboration and communication are also important. We need to work together to drive real change and become a sustainable industry. Remembering the aim of benefitting our planet however best we can. Sharing best practice, ideas and recommendations are great ways we can work across our sector to have a positive environmental impact.

The sector needs to work together with manufacturers to bring further control and transparency of the second-hand market. We need to educate – new doesn’t necessarily mean better – and we need to change behaviours to build a holistic view of how products are designed and operated. Only then can we understand how we’re impacting the planet today and mitigate our impact in the future.

Extending the lifespan of equipment and how we deal with items at the end of their life is very important. We have to remove all precious metals and usea­ble components and recirculate them back into the manufacturing process. A streamlined and consistent framework for governance, reporting and measure­ment would also help. Alongside exploring alternative ways such as blockchain as a tool for monitoring serial numbers, chain of custody, inventory, track and trace, verification of products, triggers and controls.

Sustainable IT is more than simply the reuse and recycling of equipment. We need to be looking at the deployment of more energy efficient products, green cloud solutions, virtualisation, IoT and AI technol­ogies to reduce the carbon footprint of our whole operation. It’s imperative that we look at the full value chain and begin to decarbonise through smarter pur­chasing choices. We also need to improve employee and industry awareness on sustainable IT practices. That’s good for the planet, good for our business and good for our customers carbon reduction plans.