Owning Tech Hardware Can Cost You

Michael Cassau, Founder & CEO, SKROL Capital Inc.

As any business leader knows, the capital required to fund both an adequate tech setup and IT infrastructure is unpredictable but unavoidable–access to reliable technology is, at the very least, necessary for your day-to-day operations. Yet, many businesses stick with the familiar strategy of purchasing hardware every few years, from servers and storage systems to other critical infrastructure. This creates a never-ending cycle of high costs, as companies must rush to upgrade hardware and scramble for financing when devices fail. Worse still, sluggish and outdated devices can frustrate employees and drag down productivity.

For businesses looking to stay agile and competitive, flexible access to technology, rather than ownership, may be the way forward—and the circular economy can provide a solution.

My interest in the circular economy, especially for IT hardware, came about from a year-long experience of founding and leading a tech rental startup. I was fortunate to gain firsthand experience in circulating hundreds of thousands of assets repeatedly in the consumer electronic space to consumers and businesses in Europe and the United States. This circularity aspect became especially important when we noticed that we were refurbishing and maintaining and, therefore, expanding the lifetime of the assets on rent substantially. In total, we saved over 160,000 tons of CO2 and multiple tons of electric consumer waste. Sustainable access to IT hardware is therefore critically important for a more circular and, therefore, more sustainable economy in the world.

Why Not Ownership?

Investing in hardware can tie up capital in assets that depreciate quickly and eventually become obsolete or, worse, lock businesses into legacy systems. This model creates challenges that often go unnoticed until they show up on the balance sheet.

• There are obvious high capital costs. Purchasing servers, computers and networking equipment requires significant upfront investment, tying up capital that could be better allocated. As your company grows, these expenses only increase, often locking you into proprietary ecosystems that make scaling more costly, with “official support timelines” setting the cadence.

• Rapid obsolescence has become the norm. With technology evolving as rapidly as it does, hardware becomes outdated within just a few years. The constant need to upgrade to stay competitive forces businesses into costly replacement cycles.

• Management overhead can sneak up on you. Owning hardware means managing every part of the lifecycle—from maintenance and upgrades to eventual disposal. This can become a costly distraction from core business functions, with inefficiencies and waste that often go unnoticed.

The Alternatives: Cloud And Product-As-A-Service

Many businesses today have turned to cloud computing as an alternative to owning physical hardware. Renting virtual resources can offer benefits such as on-demand scalability and reduced infrastructure management. However, cloud solutions aren’t always ideal, especially for companies with data sovereignty, security or latency concerns. Additionally, 27% of cloud spend is often wasted due to poor alignment with actual needs.

Product as a service (PaaS) provides another alternative, allowing businesses to buy pre-owned hardware at lower prices. While this supports circular economy principles by extending product lifecycles, businesses still bear the full responsibility for repairs, upgrades and disposal.

The Strategic Advantage Of The Circular Economy

Adopting circular economy practices can allow businesses to access the latest IT infrastructure more sustainably and cost-effectively. This model focuses on reuse, refurbishment and repair, keeping hardware in circulation longer.

• First, consider cost efficiency. Instead of making large, upfront purchases based on projections, businesses can subscribe to hardware on a need basis. This reduces capital expenditures and avoids the depreciation associated with ownership while providing flexibility in managing device failures.

• Businesses can increase their resilience. Circular models reduce dependency on specific providers and raw materials, making businesses more adaptable during supply chain disruptions or component shortages. With hardware components like semiconductors becoming more expensive due to global demand, circular strategies help mitigate these risks.

• Sustainability can be a differentiator. Thirty-three percent of executives expect disruptions from circularity startups as environmental, social and governance (ESG) interest surges. Circular economy practices, like extending hardware lifecycles through refurbishment, reduce carbon footprints and demonstrate leadership in sustainability.

Joining the Enterprise Circular Economy

Transitioning to circular economy practices for IT infrastructure should be seen as an ongoing opportunity to improve profitability, efficiency and competitiveness, not just a one-off sustainability initiative. Here are a few ways to start engaging in the enterprise circular economy:

• Subscribe to hardware services. Instead of purchasing servers, laptops or networking equipment, consider leasing or subscribing through a PaaS model. This ensures access to up-to-date technology without the risks of ownership and obsolescence.

• Encourage hardware repair and refurbishment. Before replacing aging technology, explore repairing or refurbishing existing hardware. Thankfully, many companies now offer extended repair services to keep devices operational longer, reducing both waste and costs. As right-to-repair legislation becomes more widespread, consider training employees to handle basic maintenance in-house.

• Adopt circular procurement practices. When sourcing technology, prioritize vendors that emphasize refurbishment, recycling and durability. Partner with suppliers that follow circular economy principles to align your procurement strategy with long-term sustainability goals.

The Future Of Business Hardware And IT Infrastructure

The shift to a circular economy is gaining traction in the consumer space, but businesses have an even greater opportunity to adopt this model. The World Green Building Council estimates a $4.5 trillion opportunity in economic benefits by 2030, and the International Labour Organization predicts that 6 million jobs could be created through circular economy adoption alone.

By embracing subscription-based access and circular practices, companies can stay on the cutting edge of technology while reducing costs, increasing resilience and positioning themselves as leaders in sustainability. In this future, businesses won’t need to choose between innovation, profitability and environmental responsibility—they can achieve all three.

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