Happy Returns

BEST USE. Baum says he has no doubt that a great deal of the office equipment (computers, telephone systems and even accompanying office furniture) considered unwanted by its owners will almost certainly be needed and wanted by a potential buyer somewhere else.

Putting the two together has become the specialty of Baum and PlanITROI, who work through several channels to sell these inventories to other large and growing companies that need them. Some 25 percent of the equipment refurbished and resold by PlanITROI is sold to another corporate user in the United States.

"The best use is reuse, according to the EPA and to our clients, because we can actually sell their equipment rather than paying someone to handle just the disposal option," Baum says.

PlanITROI has also specialized in directing computers toward Americans previously considered to be on the laggard side of the "digital divide." Baum says, "We pioneered crossing the digital divide here in the U.S. in the mid-1990s by offering a complete PC for $299 and now in 2005 for $99—basically for folks who need an affordable option to help educate their children in K-12 or a notebook for $299 for their child going to college. We do a very good job of reaching across the digital divide in extremely large volumes," he says.

The company will form joint marketing programs with community groups, religious groups or other government or grant-sponsored groups attempting to bring computers and computer knowledge to those seeking self-improvement.

Baum says such programs provide an alternative to rent-to-own stores, too many of which may offer unfavorable financial terms to their customers, Baum says.

Reaching that audience for reuse makes up another 25 percent of PlanITROI’s end market. Another 25 percent of assets are sold through the company’s consumer Web site (www.empc2.com) to individual buyers, and the remaining 25 percent is exported.

Baum is aware that the export market can carry negative connotations for some customers, but says his company offers full reports on shipping and destinations.

MAXIMUM RETURN. Baum’s experience as an IT asset recovery specialist goes back before PlanITROI’s founding in 1991. Previously, Baum was CEO of Rumarson Technologies, a company that operated a 150,000-square-foot plant that processed trade-in and return programs specifically for OEMs and leasing companies. These companies targeted end-of-life unwanted IT assets from Fortune 500 companies.

PlanITROI was started as an internal division of Rumarson in 1994 servicing direct contracts with industry-leading companies with the same end-of-life services it was already performing for OEMs and leasing companies. Rumarson created these programs for several manufacturers that helped them discount the sale of new computer hardware, improving the return on investment (ROI) on their old computer hardware.

Noteworthy programs that Baum helped establish include the "Cash-In & Trade-Up" programs for Panasonic, IBM, Texas Instruments, Lexmark and the former Compaq Computer Co.

An enormous undertaking for PlanITROI occurred shortly after it was founded, when it became responsible for the surplus assets of AT&T, which at that time was in the midst of a massive downsizing.

Those assets had a book value of more than $500 million, according to Baum, and the task involved coordinating the sale of equipment located in seven warehouses and 29 different offices located in four different nations.

The eventual disposition of these assets confirmed Baum’s finding that the company could market some 95 percent of used computers and related hardware for re-sale.

Doing this effectively requires qualified personnel to provide an assessment of equipment, data erasure and often refurbishment. For the remaining 5 percent of equipment, disassembly and component resale is usually the next best option, with this stage also requiring a labor cost.

Whether to employ workers to carry out these steps or to sub-contract the work out to other firms is a critical question for Baum. Currently, PlanITROI is using a combination of in-house labor, partnerships and sub-contractors, although Baum has to weigh all sides of the equation.

"We choose our labor based on what is best for our clients’ requirements and ROI. For quality, refurbished high-value products, we choose to do it ourselves. For logistics, transportation and demanufac-turing, we use outsourcing," Baum says.

Most of the company’s functions are performed within the United States. "We like to emphasize that we use U.S.-based labor and that we keep our jobs here in the U.S. It might be easier for us to ship this work to Mexico and Asia and get it done for one-quarter of the price, but I’m concerned about our economy and jobs going overseas. I’d rather contribute to the economy here in the U.S."

FEELING SECURE. Increasingly, companies and institutions wishing to dispose of old IT assets are concerned about the protection of data potentially recovered from hard drives. "It doesn’t take much for fear, uncertainty and doubt to set in—just one incident," notes Baum.

The fears are justified, says Baum, adding that the proper steps to be taken are well established. "We’ve been addressing it for 15 years—it’s always been a part of our strategic process. Today, data security is an enormously talked about subject, so we have further increased our communication and commitment level to educate our clients on best business practices for Department of Defense-standard data erasure," he says.

In addition to making sure the proper data destruction steps are taken (for some clients, this can mean drilling through the hard drive and taking a digital photo that shows the drilled hole and the hard drive’s serial number), Baum says keeping records of what has been done is critical.

"The important thing is not only to destroy the information, but adhering to reporting requirements afterward," he notes, referring to such federal regulations as HIPAA (Health Insurance Portability and Accountability Act), the Gramm-Leach-Bliley Act for financial institutions and the Sarbanes-Oxley Act for corporate accounting.

Adhering to such requirements helped Baum form PlanITROI as a separate entity. He previously worked as an in-house investment recovery officer for a major electronics manufacturer.

He says many such in-house programs had as their goal to sell more overall units, "but this only gets to 10 percent of the core issue." His observation has been that such programs work hard to set up a handful of profitable transactions, but don’t set up systems to "run on an enterprise basis."

Additionally, resources are not always available to handle the important ancillary responsibilities, such as data destruction. "They don’t want to handle things like data erasure and liability. That can be the core difference between PlanITROI and an OEM program," Baum says.

PlanITROI separates itself from many electronics recyclers by stressing that the transaction can be profitable for the company or institution selling the equipment.

PROPER AND PROFITABLE. Baum says that some electronics recyclers have devalued their own industry sector by charging corporate customers to accept their unwanted equipment. "A lot of companies in this industry have only made money by charging tons of money for recycling services not performed," he says. "You can’t do that when you’re selling things that have value. We’re hurting this industry by doing that."