Circular Economy Disciplines are Delivering Substantial Cost Savings in Cloud Service Data Centers

The term “circular economy” has become a very familiar one over the last few years. Although not a new concept, it has been promoted as an alternative to the traditional “make-use-dispose” approach. The circular economy is keeping resources in use for as long as possible, extracting the maximum value from them whilst in use, then recovering and regenerating products and materials at the end of life.

IT hardware manufacturing brands have long enjoyed the substantial procurement savings derived from recovering valuable parts from customer returned used IT systems.  These organizations either developed reverse logistics operations internally or, more likely, outsourced their ‘recovery for reuse’ operations to specialist services providers. The result is considerable supply-chain cost savings in comparison to newer entrants without such programs. The same is now occurring in the maturing ‘Cloud Services’ industry, where well established players have already developed programs.

Most other cloud players are in the advanced stages of implementing these programs, this enables them to leverage used IT assets in order to deliver operational and financial benefits including improved return on investment (ROI). Take the industry benchmark example of Google and their data center case study, published by the Ellen MacArthur Foundation. Their ‘Circular Economy’ program has already delivered significant IT infrastructure procurement savings whilst reducing future supply chain currency and availability risk.

 

When considering the scale of Google’s global data center operations, the level of financial savings these ‘recovery for reuse’ processes produce is enormous.  However, these benchmark levels for component reuse are somewhat typical for the advanced recovery of IT infrastructure systems. Major IT manufacturers also enjoy similar reuse levels for meeting demand for spares inventories, installed systems upgrades and in remanufacturing systems, using both new and used components.

Few Cloud data center operations have the scale of Google to develop such recovery programs. This is why specialist partner organisations have expanded their operations to also support the cloud services data center industry beyond just their existing IT manufacturing customers. The expenditure savings alone from recovery for reuse processing is a sufficiently compelling reason to embrace circular economy disciplines. Moreover, there are additional key strategic reasons for adopting such a shift in the management of IT assets going forward. This is particularly true of organisations that use IT technology infrastructure as a core tenant of their corporate business model.

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December 14th, 2017|Blog|
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