Total Cost Of Ownership: The Role Of The IT Department

With modern usage concepts and innovative financing, the IT department is simultaneously becoming the driver of the digital transformation of companies and the driving force behind measurable sustainability results. But for this to happen, all those responsible must pull together.

The pressure on the IT department is enormous. Companies have a consensus that digital transformation does not work without technology and, therefore, not without the IT department. Mobile end devices, innovative apps, and fast networks play an essential role here, and the dynamics in terms of device replacement and further developments are high. However, how this can be financed often remains completely open. What role does the total cost of ownership play in this?

The Total Cost Of Ownership And Other Issues

But that’s not all. In addition to the question of financing, which arises in digitization, the pressure on the IT departments is increasing from another aspect. Because companies not only have to become more digital but also more sustainable. And here, too, it is the task of IT to participate in sustainable transformation actively and to make a measurable contribution to achieving sustainability and climate goals. After all, green IT must also be financed.

So are digitization and sustainability in contradiction? No, not at all. Especially not when both aspects are considered together. When the CIO, CFO, and those responsible for sustainability in the company forge a joint plan.

Using Instead Of Owning

The IT department is faced with a dilemma. Digital transformation and hybrid work models with switching between office presence and mobile work require expanding the IT infrastructure. But more devices mean more pollution—a classic conflict of objectives.

In addition, there are high investments because the more flexible and decentralised the working world becomes, the more IT equipment is required. However, with modern usage concepts and financing models, a lot of pressure can be taken off the IT departments. “Using instead of owning” is the more innovative alternative to buying for the cash flow alone. In addition, there are more efficient processes and sustainable use of resources.

This realisation is becoming more and more common, and there is already a clear trend toward leasing or renting IT and hardware equipment. This also has to do with the fact that device innovation cycles are becoming significantly shorter. Anyone who decides in favour of using instead of owning is always technically up to date, thanks to the latest hardware. This is crucial in implementing technology and digitization projects quickly and successfully.

The Total Cost Of Ownership Makes Savings Possible

Last but not least, it is also about the total cost of ownership. While procurement costs for the hardware are examined in detail, internal processes or services such as maintenance, disposal of the devices, or secure data deletion are less focused. Enormous costs and resources can be saved here in particular. Modern usage and financing concepts, which take the entire lifecycle management of the IT devices into account, come into play right there and lead to savings of up to 35 percent with a corresponding total cost of ownership analysis.

The example of PISCES, which finances all of its digital jobs through us as CHG-MERIDIAN, illustrates this development very well. PISCES is a division of Panasonic Business Support Europe GmbH responsible for the IT infrastructure; we currently provide more than 8,000 notebooks, monitors and smartphones, servers, and large printers. PISCES can externally finance the entire IT infrastructure and has a clear basis for calculation thanks to our flexible usage model. At the same time, at the end of their useful life, we guarantee that we will reprocess the devices in our tech centres, delete their data with ISO certification, resell the devices on the secondary market and thus give them a second life cycle.

Sustainability Booster Circular Economy

As a company, we have relied on this principle of the circular economy for over 40 years. In 2020 alone, we made around one million IT devices fit for a second product life – from mobile phones to printers. This currently corresponds to 96 percent of all returned devices that we finance and manage for our customers. Recent studies also show that the circular economy can reduce greenhouse gas emissions by up to 44 percent by 2050.

The more technical devices are used, the more positive their ecological balance is. After all, computers, tablets, or smartphones cause carbon dioxide and other greenhouse gases over their entire life cycle. The largest share arises in the beginning during the extraction of raw materials and production, plus transport routes due to the very complex global production chains. About a third of the emissions are generated during use by the energy consumption of the devices and the infrastructure that transmits data. We, therefore, offer climate-neutral financing for IT equipment and infrastructure that offsets the emissions generated throughout the life cycle.

In our view, IT departments must also be empowered to reduce emissions themselves. This means that they can also use hardware smartly and efficiently, for example, by tracking the use of IT devices centrally and in real-time. This means that the devices are available to the right users at the right time and place because nothing unnecessarily pollutes the environment more than unused equipment.

It is these megatrends, such as using instead of owning and the circular economy, that the IT department can use to drive digitization forward and the sustainability transition. The prerequisite for this is that we overcome the outdated silo mentality and that the IT department does not primarily revolve around itself but integrates other areas collaboratively. Digitization and sustainability are typical projects that are implemented jointly and on an equal footing by purchasing, controlling, sustainability officers, and the IT department; in case of doubt in a kind of task force. It is important to design all processes – from the acquisition of the devices to end-of-life management – to be economical and environmentally friendly at the same time. Because only the combination of economy and ecology creates that added value.