It can be quite challenging to tackle an IT asset valuation yourself. You not only need to determine the price of each and every single piece of IT equipment, but also each component inside every piece of equipment to get a true picture of it’s value. We’ve put together this handy little guide to hopefully give you some organizational framework to get you started on the right foot.
Step 1? Determine What IT Assets You Have
An Exhaustive Inventory Makes the Job A WHOLE LOT Easier
Hopefully your company has an exhaustive inventory to begin with. If they do, there may be a few holes in the data that you will need to fill by tracking down the missing equipment and recording the relevant information. For the most part, the data will be right there. This inventory should contain serial numbers and model numbers, preferably in image form. Serial and model numbers are typically alphanumeric characters and can easily be copied incorrectly through misreading or transposition of the characters– in other words, human error.
Building, location, physical address, including rack numbers are some of the additional information you will want to have to make finding the equipment easier. 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.
Having to Physically Find Your Equipment
A thorough inventory with detailed information can make identifying your hardware a breeze without having to physically track each piece down. Unfortunately, it’s not always the case that an organization has this type of hyper-detailed information recorded. Multiple data centers and tightly packed racks with multiple shelves can present a “spaghetti code” of equipment to track down and identify. In such a case, you’ll have to find the equipment on your own. Sometimes this is easier said than done as messy inventory and incomplete or inaccurate data can create the perfect storm to make finding and recording your equipment a real hassle.
If you find your inventory information inaccurate or out-of-date, it would be better just to start over fresh and do it right. Then you will have a complete inventory of all your IT assets that you can use not only for the disposition of your aging hardware, but your latest production systems as well. 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 considering that information about used hardware may not be something that is widely sold anymore. There are a few places on the internet that can provide you with a rough estimate of the going price for your equipment. Looking up each item on Ebay or Craigslist is an easy way to find prices that similar hardware has sold for.
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
Straight-line price depreciation is one commonly used way to estimate the value of used hardware. An 18-month double declining balance method is sometimes preferred for electronics and technology equipment as it more accurately reflects Moore’s Law, which states that the number of transistors in an integrated circuit doubles every 18 months (also quoted by some as 2 years).
Moore’s Law has slowed down as CPUs have gotten smaller and smaller, so much so that the rate of doubling is more like 3 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. While most hardware is fully depreciated after 4 or 5 years, the parts and components inside 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 not only the price of each and every piece of equipment, but also each component inside every piece of equipment… and making sure you’re getting the highest ROI. 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 quickest and simplest way to ensure that all the proper steps are taken is to hire a service 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) and who will handle your hardware with care to maximize its current value, will handle your storage devices with absolute discretion and securely destroy any sensitive data held thereon… and will scrap the unusable parts of your systems and dispose of them in an environmentally responsible manner. Give us a call or contact us for an ITAD service quote!
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