A seamless transition: Redemtech seeks a close relationship with its clients to ensure a smooth transition during asset disposition.

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

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.

Houghton had a background with a company that was leasing IT equipment. With the boon in new equipment being purchased, a flood of older, yet functional, equipment was available. In light of this, data security also rose in prominence.

From this scenario, Redemtech, based in Columbus, Ohio, was born. The company stepped in to act as the link between clients that were looking to upgrade their systems and recyclers and waste management firms that were asked to dispose of their outdated material.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. Based in Columbus, Micro Electronics is the parent company behind Micro Center, WinBook and International Products Sourcing Group.

Houghton says this relationship has many benefits. 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 costs of the process continue 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."

Micro Electronics' financial backing enables Redemtech to use the best systems and practices available, according to Houghton. And because the company is privately owned, it's able to concentrate on its core business and not on hitting quarterly numbers.

As a result, according to Houghton, the company has seen a compounded growth of 35 percent a year, strictly through organic development.

LOCATION AND LOGISTICS.

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, its Technology Change Management (TCM) facilities are not necessarily in high-tech cities, but the locations do provide advantages, according to Houghton.

Redemtech has located its TCM facilities in areas that are strategic relative to logistical capabilities and its customers, with facilities in Richmond, Va.; Reno, Nev.; Columbus; Calgary, Albert, Canada; Montreal; and Surrey, U.K. For Redemtech, "the emphasis is to be regionally central and be well placed, relative to customer concentrations and logistical capabilities," Houghton says.

"We want to be easy to ship to, inexpensive to be shipped to and essentially around good transportation hubs," Houghton says. Reverse logistics for asset recovery are a significant expense for clients, so establishing locations close to its different customers helps to mitigate their 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 ensuring proper security, the company focuses not only on securing the equipment, but also on ensuring that the more 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. As an incentive for the transportation companies, Redemtech gives its logistics partners a significant amount of volume. But, to do business with Redemtech requires adhering to the company's procedures. "It is worth their while to cooperate with us," Houghton says.

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 very closely with its partners to make sure that the protocols that it has incorporated into its business are used with the vendors that transport the material from the point of generation to one of Redemtech's TCMs. "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."

This best-practices approach conveys a sense of seamlessness to clients.

Redemtech also audits its partners from operations and security perspectives. The level of care Redemtech takes with its vendors 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."

ATTENTION TO DETAIL. 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 Redemtech's automated Web-based asset processing system that includes compliance, asset management and financial reporting.

"It is the secret sauce," Houghton says of Retrac.

With the system, all the TCM centers are working online, in real time. The system also executes the data sanitization process, Houghton notes.

Redemtech says its process differs from many other IT asset disposition companies. While many companies may try to land a one-time project with a company that is refreshing its IT equipment, Redemtech seeks to establish ongoing programs with its customers to manage change efficiently and to improve their returns.

"Our engagement with a client is usually based on an enterprise contract covering multiple years," Houghton says.

While the refresh is challenging in and of itself, Houghton says that customers not only have concerns about ensuring proper destruction of the data contained on the electronic equipment, but that financial issues also need to be dealt with. Adding to the situation, 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.

In fact, he continues, making sure the equipment moves through Redemtech's process quickly also helps boost the security of the data on the equipment being retired.

"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 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 have their equipment safely shipped without fear of compromising the data the devices contain, Houghton says.

From there, 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 for redeployment, remarketing or recycling. The Retrac system, which is a key to the Redemtech process, allows the company to track devices through the system and also provides assistance in determining the maximum value for the client, providing a summation of the steps taken with the equipment.

For the hard drives, Redemtech uses an overwrite method that conforms to the Department of Defense (DoD) standard. What makes Redemtech more effective than conventional security methods 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 DoD process, but how is the process managed and verified? That is where we have invested."

This seamless process, Houghton says, results in greater value to the customer. But, to be as efficient as possible, disposition needs to be considered on 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."

LOOKING AHEAD. Casting an eye on the near-term future for the asset disposition sector, Houghton says he feels that the OEMs will handle roughly half of the equipment. The half that he says he feels will be handled by the non-OEM companies will likely be the segment where concerns about protecting sensitive data rule. With the cost of a single data breach through improper handling potentially exceeding several million dollars, clients will opt to use a company that focuses on the secure handling of obsolete electronics, Houghton says.

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

As for Redemtech, one of its biggest advantages is Micro Electronics. With the backing of its parent company, Redemtech is able to invest in assets to grow its business and properly indemnify its clients against liabilities.

Looking to the future, the company expects to continue adding locations in parts of the world where the IT business is expected to show the greatest growth.

AT A GLANCE: REDEMTECH

Key Executives: President and Founder Robert Houghton; Senior Vice President of Operations Eric Vetrano; Vice President of Sales Jill Vaske, Vice President of Finance Jim Leggett and Security and Asset Protection Practice Adviser Greg Sewell

Locations: Headquartered in Columbus, Ohio, with Technology Change Management (TOM) centers in Columbus; Reno, Nev.; Richmond, Va.; Montreal; Calgary, Alberta, Canada; and Cranleigh, Surrey, U.K.

Employees: Approximately 400

Key Technologies: Retrac automated asset processing with online compliance, asset management and financial reporting, Datasure Lock-IT and Datasure Erase-IT

Services Provided: Deployment, recovery, reuse, lease return, resale and recycling of various information technology equipment

The author is senior and Internet editor of Recycling Today and can be reached at [e-mail].