Improvements in US Enterprise IT Asset Disposition (ITAD) Practices, but Concerns over ITAD Vendors remain, says Compliance Standards’ Survey
Boston/Miami – January 24, 2019: Large US organizations have made major improvements in their ITAD practices this year, according to new primary and secondary research conducted by Compliance Standards LLC (CS). But an unsettled ITAD vendor ecosystem has raised concerns among ITAD services buyers, leading to reduced commitment from users, who are taking a wait-and-see approach as the supply side stabilizes.
On the positive side, the rate of ITAD outsourcing jumped from 70% in the 2015/2016 research cycle to 87% today, highlighting companies’ interest in utilizing best practice and hiring professional service providers. There are several other indications that positive ITAD practices have gained momentum, including greater oversight of ITAD vendor activity, greater emphasis on environmental compliance, which has surpassed cost containment, greater focus on reporting and auditing, greater recognition of certification bodies, and several other factors.
Despite these improvements, there are several shortcomings that remain obstacles to sector growth and are causes of risk. Most importantly, and despite an increase in the outsourcing rate, companies continue to adopt a multi-route to recycling strategy, which means despite using third-party professionals, they also use their own IT staff to perform parallel
recycling tasks despite the high risk and greater cost. What is even more alarming is the continued use of unethical recycling routes such as disposing of electronics and IT equipment as waste, direct donation, selling and online trading, storing, etc. These practices could end-up offsetting the gains made elsewhere.
“One of the reasons behind the persistence of sub-standard practices is the unstable ITAD service provider environment,” says David Daoud, Lead Analyst at Compliance Standards LLC. “While major OEMs remain at the lead, the consolidation phase of the past years allowed the acquiring companies to grow mindshare, but it did not place them in clear leadership position. The pure ITAD firms that were acquired were instead replaced by new names, which appear performing very well in light of their customers’ ratings and quality assessments,” noted Daoud.
In short, with a few exceptions, OEMs remain natural holders of the top spots considering their direct relationships as brand-new IT equipment supplier to large US companies. This year, Dell maintains the same level of top leadership than in 2015/16 when it comes to the Broad Market Penetration (BMP)* metric. IBM holds the number spot using the Effective Market Penetration metric (EMP)**. Other major PC OEMs have shown substantial weaknesses, some moving from being top-tier players in 2015/16 period to becoming mid-tier players in this year’s research results.
Outperforming the market is a group of pure ITAD companies headed by All Green Recycling. The latter, in particular, has shown strong figures in BMP, EMP, and across all rating data. Several companies with the same scale and scope registered almost similar results, making them effective competitors, but also highlighting the unsettled nature of the ITAD space. Given the unstable grounds of the supply side, ITAD contracts that are defined as “at will,” rose from 24% in the 2015/16 research cycle to 38% today. Companies are less committed and more cautious on who they deal with. Consequently, long-term contracts dropped from 71% to 61%.
“The reduced expectations from US organizations regarding the vendor side are an indication of frustration among IT and procurement managers, but they constitute a tremendous opportunity for vendors who are capable of providing top-notch services, a stable organization and a constent marketing message. Successful companies are the ones that are able to demonstrate skillfulness and differentiation,” says Daoud. “The market is still up for grabs and savvy companies should step up to take advantage of current sentiments.”
CS “Enterprise ITAD Survey: 2018/19” focuses on a broad range of topics relevant to the IT hardware recycling market in the United States. The research is being rolled out to 18 other countries and is meant to provide both end-user companies and their ITAD vendors an understanding of current practices. CS’ research is currently available in full data series, a report series, analyst briefings and will be available in web and mobile analytics in December 2018. CS will also release a CS ITAD Tracker, which will combine all historical data, and future data into a single web and mobile analytics platforms. The data will be used for practice benchmarking and vendor scorecards. To learn more, please visit http://www.ComplianceStandards.com
On Thursday, February 7, 2019, Compliance Standard will hold a 30 minute conference call to introduce the general summary of the findings of the US ITAD market research. The briefing can be accessed via phone or through the Internet. A basic registration is required at: follow this link.
To speak to an Analyst, please call 617-407-5798
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* The Broad Market Penetration (BMP)* measure the percent of companies reporting using a vendor. In the BMP assessment, respondents say they are using multiple vendors.
** The Effective Market Penetration metric (EMP) comes from the question of “who is your lead provider?” Although participating
companies may be using multiple service providers, EMP question forces them to select the most important one.