It can be quite challenging to tackle an IT asset valuation yourself.
Not only do you need to valuate each IT system as a whole, but also the component level as well.
We’ve put together this guide to give you a framework to start on the right foot.
Step 1? Determine What IT Assets You Have
An Exhaustive Inventory List Makes the Job A WHOLE LOT Easier
Hopefully your company has an accurate inventory list to begin with.
If they do, there may be a few holes in the data that you will need to fill.
We realize you may not want to waste your time doing inventory if the hardware may not have value.
A quick and dirty price check online for a few similar systems on google should give you an idea.
If you are holding value, tracking down a complete hardware list will be worth it, we promise.
This inventory should contain serial numbers and model numbers of all the hardware in addition to condition.
Serial and model numbers are typically alphanumeric characters.
These are commonly copied incorrectly, so be sure to triple check your inputs.
Physical address, including rack numbers, is helpful extraneous information to have on hand.
Some smaller organizations can get by with storing this information in an Access database or even in an Excel spreadsheet.
Larger organizations usually rely on third party software to record their IT asset inventory.
Physical Equipment Audits
A thorough inventory with detailed information can make identifying your hardware a breeze. In many cases it can preclude a physical inventory check.
Unfortunately, it’s not often that an organization has a very detailed log, much less an accurate one.
In these cases, you’ll have to do a physical audit yourself.
Multiple data centers and tightly packed racks with multiple shelves can present a nightmare for locating equipment.
If you find much of the inventory to be inaccurate along the way, it may be better to just start over from scratch.
Afterward, you’ll have a complete inventory of all your IT assets. This will be a boon not only for the disposition of aging hardware, but your production systems too.
Including digital photos of the serial number, model number and the equipment itself will make the hardware much easier to find and identify for the process of establishing its value.
Determining the Value of Your Assets
Using Websites to Estimate Fair Market Value
Assessing a fair market value (FMV) for your used IT hardware can be quite a challenge. Information about used hardware isn’t always widely available as a point of comparison.
However,tThere are a few sites that can provide you with a rough estimate for your equipment.
Looking up each item on Ebay or Craigslist is an easy way to find prices that similar hardware has sold for, though these aren’t usually the best place to sell equipment like servers, they can be a good starting point.
Be sure that the prices you look at are the actual sale prices and not just the prices that buyers attempted to sell the items at.
If you only find one or two instances of similar hardware being sold, it’s not really a large enough sample to use for establishing the value of the hardware.
The price that people are willing to pay for something can vary according to time and the number of interested parties.
So, be sure to also take into account when the sale was made.
Using Accounting Methods Like Depreciation to Estimate Value
Use straight line depreciation for a quick and easy way to estimate the value of used hardware.
For the most accurate valuation, use an 18-month double declining balance method. It more accurately reflects Moore’s Law of electronics.
This law states that the number of transistors in an integrated circuit doubles every 18 months (also quoted by some as 2 years).
One caveat is that Moore’s Law has slowed down as CPUs have gotten smaller and smaller. This means that the rate of doubling is more like 3-4 years.
If you have an accountant or an accounting or finance department, they may be able to help you determine how to estimate the value and they may even do the calculations for you.
Try Finding Cost of Replacement
If you are not able to find similar equipment on eBay, Craigslist or similar sites, you can ask your vendor how much it would cost to replace the equipment if it stopped working.
This will likely be quite a large figure, but it will give you some idea of the top price level for your hardware, especially if you do not have any idea of the price at which the hardware was initially purchased.
You could then use this figure to depreciate the item as described above.
How Much Can Your IT Assets’ Parts Be Sold For?
Obviously, just because you can reasonably value your hardware at a particular price does not mean that you will be able to sell that equipment at that price.
Hardware depreciates fully after roughly 4 or 5 years. However, the parts and components inside often can still have significant value.
In addition, the company buying your equipment will be a third party who will turn around and sell the equipment for a profit.
This makes getting fair market value very challenging.
So, while the figures you get from the prices will not likely be what you get from someone buying the hardware, it does give you a rough estimate to know if you are getting a bad deal.
How Much is Your Time Worth?
Like we said in the beginning, it can be quite challenging to determine pricing. This includes price of each system equipment, but also each component inside every piece of equipment. We understand it can be a real hassle.
To that end, we hope this guide helped steer you in the right direction to tackle a DIY valuation of your IT assets!
However, as the cliche goes: time is money, and experience is priceless.
The simplest way to ensure success in disposition is to hire an expert that can handle everything. That can take your entire inventory and perform the valuation process for you.
An ideal scenario is to hire someone skilled and specialized in ITAD (IT Asset Disposition).
These companies will handle your hardware with care to maximize its current value.
Further, they’ll handle your storage devices with absolute discretion and securely destroy any sensitive data held thereon.
They can also responsibly recycle the unusable parts of your systems in an environmentally safe manner.
Give us a call or contact us for an ITAD service quote!
Have something to add? Let us know your thoughts in the comments below!