A Seamless Transition

The high-tech transformation of the U.S. economy has created an industry that caters to the rapidly changing business environment. While many of the companies carrying flimsy business plans that chased after "dot com" dollars have most likely crashed into oblivion, Redemtech, which began in the late 1990s, took a slightly different tack. The company successfully weathered the buffeting and now is primed to expand its business.

Bob Houghton, Redemtech’s president and founder, chose not to embrace the illusionary opportunities available with Internet money, but instead chose to focus on the less glamorous route of IT asset management.

From this scenario, Columbus, Ohio-based Redemtech was born. The company acts as the link between clients that are looking to upgrade their systems and recyclers and waste management firms that are asked to dispose of the outdated material.

"During the mid-1990s, there was no IT disposition vendor," Houghton says. "We created a one-off solution for several Fortune 100 customers," he continues. "From there, I saw an opportunity to create a business."

Redemtech is wholly owned by Micro Electronics, one of the largest privately held companies in the United States. Headquartered in Columbus, Micro Electronics is also the parent company behind Micro Center, WinBook and International Products Sourcing Group.

According to Houghton, this relationship benefits Redemtech in multiple ways. For instance, with a growing number of companies attempting to carve out a business model from the disposition, securing and recycling of electronic scrap, the cost of the process continues to swell.

"With Micro Electronics, we wanted to be able to develop a business in the best way possible [for us] and the best way for our customers without being overly concerned about quarterly profits," Houghton says. "This partnership with Micro Electronics has been a great one for us and our clients."

The financial backing of Micro Electronics enables Redemtech to use the best systems and practices available, according to Houghton.

As a result, Redemtech has acheived strong growth. According to Houghton, the company has seen compounded growth of 35 percent per year, strictly through organic development.

The old saw about location being the most important aspect for many businesses is not lost on Redemtech. While the company is involved intimately with the high-tech industry through the handling and disposition of IT assets, Redemtech’s Technology Change Management (TCM) facilities are not necessarily in areas that would be considered high-tech cities, but the locations do provide advantages.

Redemtech has located its TCM facilities in areas that are strategic relative to logistical capabilities and to the company’s customers, with locations in Richmond, Va.; Reno, Nev.; Columbus; Calgary, Alberta, Canada; Montreal; and Surrey, U.K. Houghton says, "We want to be easy to ship to, inexpensive to be shipped to and essentially around good transportation hubs."

Reverse logistics for asset recovery is a significant expense for clients, so establishing locations close to the company’s customers helps to mitigate transportation costs, he adds.

Redemtech Security and Asset Protection Practice Adviser Greg Sewell says, "Logistics is one of the most challenging parts of the business. Even with offices regionally located, there continue to be challenges ensuring safe shipment of the material."

As for security, Redemtech focuses not only on physically securing the equipment, but also on ensuring that the technical aspect of data destruction is successfully carried out.

One way to successfully build the chain between generating clients and the final disposition of their IT assets is to work aggressively with a select group of partners to ensure that the material is safely and securely handled. But, doing business with Redemtech requires adhering to the company’s procedures. "It is worth their while to cooperate with us," Houghton says of the transportation companies that work with Redemtech.

Working with vendors is more than just making sure the assets get sent to the right place in a timely fashion. With security a growing issue in the business, Redemtech works closely with its transportation vendors to be certain they use the protocols the company has incorporated into its business. "We have extremely detailed policies and procedures that partners need to subscribe to, including integration within our chain of custody tracking that runs through our Retrac program," Houghton says.

This best-practices approach conveys a sense of seamlessness to the company’s client.

Redemtech also audits its partners from operations and security perspectives. This approach gives the company a demonstrably secure chain of possession without actual vertical integration. "With the control we exert over our upstream and downstream vendors, we are virtually integrated," Houghton says. "We exert similar controls over our refiners. I would say vertically integrated companies often claim advantages for security. But vertical integration usually leads to greater costs."

Houghton adds, "By working with select logistics companies and top vendors, Redemtech can deliver a seamless approach, but still provide higher value to the client."

This seamless transfer of IT assets from the clients’ locations to a Redemtech facility requires a detailed approach, which is where the company’s Retrac program comes into play. The Retrac program is an automated Web-based asset processing system that includes compliance, asset management and financial reporting. "It is the secret sauce," Houghton says.

With the Retrac system, all of the company’s TCM centers are working online, in real time. The system also executes the data sanitization process.

Redemtech says its process differs from many other IT asset disposition companies. While many companies may look to land a one-time project when a company is disposing of significant IT assets, Redemtech seeks to set up an ongoing program with its customers to manage change efficiently and to improve the return on its customers’ technology investments.

"Our engagement with a client is usually based on an enterprise contract covering multiple years," Houghton says. The company works with its customers and downstream vendors to make sure all the parties understand the product refresh process.

While the technology refresh is challenging in and of itself, Houghton says that customers not only have concerns about ensuring proper destruction of the data contained on their electronics, but also about the financial issues that need to be addressed.

With the fast pace of the technology environment, the value of a company’s obsolete equipment depreciates quickly. "Speed is of the essence," Houghton says.

Quickly moving equipment through Redemtech’s process also helps to boost data security.

"What happens is that when a company stages the products to be disposed of, losses often occur before Redemtech takes possession of the equipment. The company may not have great inventory control, which would lead to a greater chance of material being stolen," Houghton says. "By eliminating the stockpiles and reducing the time with the stockpiles, we increase the security by eliminating the opportunity."

Speeding up the process, however, isn’t the only way Redemtech works to ensure a safe, secure method of asset disposition. The company also uses added technology, including either the Datasure Lock-IT, for on-site data locking, or Datasure Erase-IT, for on-site data erasure. By locking down hard drives prior to moving the devices, clients can safely ship their equipment without fear of compromising data.

Using the Retrac automated asset processing system, Redemtech can track the equipment until it reaches the nearest TCM center where the equipment is then processed, either for redeployment, remarketing or recycling. The Retrac system also provides assistance in determining the maximum value for the client, providing a summation of the steps taken with the equipment.

To safeguard data, Redemtech uses an overwrite method on the hard drives that conforms to the Department of Defense (DoD) standard. What makes Redemtech more effective than conventional security methods, according to Houghton, is that the company uses automation and verification algorithms. "We have developed a system that removes the human element using automation," Houghton says. "Anyone can wipe a drive with the DoD process, but how is the process managed and verified? That is where we have invested."

To be as efficient as possible, the disposition process needs to be considered at the front end. "We can help clients evaluate the system," he says. "We can help with redeployment strategy."

He continues, "We spend a lot of time helping customers do more with less by using our knowledge. We know how to squeeze the most out of the equipment so they aren’t leaving money on the table," he adds.

While this process helps Redemtech’s clients, it can sometimes put Redemtech at odds with original equipment manufacturers.

Casting an eye on the near-term future for the asset disposition sector, Houghton predicts that OEMs will handle roughly half of the equipment. This material will be subcontracted out to other companies that could be asset disposition companies or recyclers.

The half that he forecasts will be handled by non-OEM companies will likely be the segment where protecting sensitive data will rule.

While the interest in asset disposition and/or recycling of electronic scrap is exploding and bringing more companies into the market, Houghton says he sees the inevitability of consolidation. He says many of the smaller operations without best practices in place will disappear.

With the increased concerns about ID theft, only the companies that can provide significant insurance backing will be successful, Houghton says. "I think it is a fragmented market. Right now there are people operating with low standards; there are only a few strong companies," he adds.

As for Redemtech, one of its biggest advantages is it is a subsidiary of Micro Electronics, one of the 500 largest privately held companies in the United States. With the backing of its parent company, Redemtech is able to invest in assets to grow its business and to indemnify its clients against regulatory liabilities.

Looking into the future, Houghton says that Redemtech expects to continue adding TCM plants in parts of the world where the IT business is expected to show the greatest growth.