IT Asset Management (Part 5 – Diposal/Disposition)

In our previous IT Asset Management series, we looked at the various stages like:

1. Account for
2. Deployed
3. Maintained
4. Upgrade
5. Disposal

Today we look at the final stage – Disposal itself.   Let’s look at a quick definition of What is Disposal all about.  IT Asset Disposal basically means we get rid of an asset that has reached its “useful” life and we are moving it from our ecosystem.  In our IT Asset Management series – Part #4, we spoke briefly about the IT life cycle of Asset Management where organizations need to define the so called “useful life” of each of its assets in accordance with the needs, usefulness, and supportability.

So let’s get started on the thought process of disposal/disposition of IT Asset Management itself.

This first step is critical to come up with a list of IT Assets that match physically and documentation alike to ensure we know what those assets are and where are they located. More importantly, the reasons why they are included as part of the disposal listing here.

Typically, selection criteria include:

This typically requires one to check the listing in Item #1 with the Procurement team to validate the previous purchase records. The next one will need to check with the Finance team on the payment records made previously as well. Should the asset fall under the Finance books (i.e., a fixed asset that has been paid via CAPEX previously), we need to ensure full depreciation has been done before allowed to do disposal.

Note: In general, for Fixed Assets, Finance will have a fixed formula of depreciation like 20% each year until the initial purchase value is fully depreciated and left with $1 in the books. If the Fixed Assets have not reached their fully depreciated values and have more than $1 in the books then the Finance team will need to seek further approval from Management in writing off the value down to $1 prior to being able to continue with the disposal process. Please check with your company’s Finance team on your company’s internal process to align and follow the relevant governance process itself.

In preparing to present to the Asset Disposal Committee in Step #4, you may require sourcing for three quotations from local reputable disposal vendors to compare prices, disposal services and others.

Disposal Vendors selection criteria should include the following:

1. Disposal Vendors meeting local and international certification and compliance requirements. Examples of International certification include:
   • ISO/IEC 14001:2015 (Environmental Management),
   • OHSAS 18001 (Occupational Health and Safety).
   • Waste Electrical and Electronics Equipment (WEEE) directive in European Union.
   • Restriction of Hazardous Substance (RoHS)
2. Guarantee Destruction of Residual Data on Asset. Options should be included:
   • Erasure of Data with certificate and insurance coverage.
   • Degaussing
   • Physical Destruction / Shredding
3. Individual Asset Disposal documentation and Clear method of Disposal.
4. Reputable Reference Customers.

In every organization there should be an Asset Disposal Committee as part of good governance to ensure that proper due diligence is carried out in compliance with their respective Asset Disposal process. At the Asset Disposal Committee, they will review the Asset Disposal listing with supporting documentation done on previous steps and deliberate to either approve or reject the submission.

Please ensure the governance process is adhered to here and auditability is applied for each asset that is disposed of. Make those records available for audit purposes as required.

Some organizations write off the amount of money collected here and put it into an Employee Event/Sports Club fund which benefits the employees’ events/sports club. Others will contribute to the local community and charity organizations which is part of the Corporate Social Responsibility program as well. Either way, proper documentation and oversight on governance is a must.

Alternatively, instead of disposal of assets some organizations opt to carry out disposition.  Typically, organizations offer these assets to internal stakeholders at a minimal price.  It is important to note that the disposal governance process still applies here, so instead of sourcing for disposal vendors, the organization needs to establish a process that is “fair” for all internal stakeholders who are interested in getting their hands on those disposition assets properly.

This would typically involve sharing the list of assets that are made available for disposition.  Next internal stakeholders would need to register their interest on those assets itself.  Following with a first come, first serve basis or other “fair” and transparent allocation method must be employed.  After a process of collecting and accounting for the nominal price of the item paid and addressed in the Finance books for disposition of the said assets.  Do note that since all those disposition assets are without any warranty, support, and end of life; internal stakeholders will have to accept the assets as it is and cannot expect anything from the organization nor the principal vendors once taken custody of the assets.

Whether your organization chooses to do asset disposal or asset disposition would depend on your company’s governance policy and what is right for you only.

Interested to know more about how you can better handle the disposal/disposition of your Assets?  Do visit our consulting page here or reach out to Cybiant’s consultants by dropping a quick e-mail at info@cybiant.com to us.