What to know about the circular economy and sustainability

Know the sustainability metrics 

To develop a circular economy strategy, CIOs and IT leaders must understand the sustainability metrics across the entire lifecycle of devices and systems within the organization, according to Abhijit Sunil, senior analyst at Forrester. 

These metrics come from the embodied carbon in the devices and their operational emissions. Embodied carbon includes all the energy and resources involved in device manufacturing, distribution and disposal, while operational emissions are the total amount of resources a device consumes in its lifespan. 

CIOs must understand these metrics to determine optimal strategies, such as refresh cycles, Sunil said. 

"Thinking about these different circular economy concepts gives the CIO power to understand if deciding to invest more today versus later not only impacts their budgeting, but also their sustainability goals," he said. "This is the whole lifecycle, and the CIO should think about where sustainability metrics come from to make sure they can make the right decisions." 

One way CIOs can implement a more effective IT circular economy strategy is to develop closed-loop relationships with device OEMs, Sunil said. For example, organizations can contract with suppliers like Cisco, Lenovo, HP or Dell to both provide IT equipment and handle it at the end of life. 

"These vendors will provide them with the security they need in wiping off their devices and also taking these devices back in the right manner," he said. "The advantage to CIOs is that this simplifies their supply chain, as they don't have to have multiple contracts and they already know where devices are going back to and how they will deal with them."

Opportunities for a device's second life  

Circularity has long been built into IT asset procurement strategies, even if it has not always been considered a sustainability initiative, according to Lara Greden, senior director for market services at IDC. 

This is because there has always been a second life and fair market value for IT assets like PCs, servers and storage networking gear, Greden said. 

There are two main things that CIOs need to consider with the second life for IT assets, she said. They are the following: 

• The security risk of organizations keeping old equipment. 

• The missed opportunity to feed budgets by selling that gear or buying used or renewed equipment. 

"From a CIO perspective, there is an opportunity in many organizations to move IT up to a more strategic focus area because of that risk and because of that value opportunity," Greden said. "You don't want to look at the value part just from a perspective of selling just to get more money, but from an asset lifecycle management perspective." 

From a CIO perspective, there is an opportunity in many organizations to move IT up to a more strategic focus area because of that risk and because of that value opportunity.

Sustainability concerns are a part of circular economy IT strategies, although that is not always front and center, she said. CIOs with a circular strategy -- primarily through buying renewed or refurbished equipment -- usually have cost as the main factor. 

"If you're cost-conscious, you know that if you buy refurbished equipment that can meet your specs and has a like-new warranty, you're automatically getting a 20% plus or minus cost break," Greden said. "So it's a procurement strategy, number one." 

Nonetheless, CIOs can be a partner on sustainability goals for the wider business, she said. One reason is that many organizations, especially those in the Fortune 2000, require vendors and customers to include environmental and sustainability performance metrics in requests for proposal. 

IT vendors increasingly see the opportunity in offering asset recovery services and helping customers address their needs around security and the proper recycling or disposal of devices, Greden said. 

"They don't want to get caught with their name on something where it shouldn't be, piled in a dump somewhere," she said. "We're going to continue to see the OEMs do more business in that area, because [there's huge market opportunity]." 

Circularity makes business sense 

Being more circular is a sensible business strategy, according to Cameron Daniel, CTO at Megaport, a network-as-a-service (NaaS)  based in Brisbane, Australia. 

Megaport offers automated network provisioning and cloud connectivity services to help its customers operate more efficiently and help meet sustainability goals, Daniel said. NaaS lets organizations bundle complexity into a consumption-based product, rather than needing to acquire and run their own routers, switches and firewalls. 

Many organizations virtualize their network infrastructure primarily for business costs and technical transformation reasons, but they are also tracking the sustainability aspects that can be factored into carbon reports, he said.

Megaport is also adopting circular IT strategies internally, which Daniel said is helping the business grow.

"We always try and make sure we get the most out of the routers, switches and servers that we deploy," he said. "As we move into new markets -- particularly in some large markets -- [we might install new devices] to upgrade capacity, but instead of throwing out the old devices, we can then shift those down into smaller market areas." 

Megaport also works with one of its largest vendors, Cisco, which has a recycling program for its equipment, Daniel said. 

"We haven't had to throw out much old equipment so far, but one of our big vendors is Cisco, who has a recycle program," he said. "We're aware of that and when the time comes, that's a path that we're going to be looking at." 

Circular economy is also part of the IT strategy both from a business and environmental perspective for Extreme Networks, a hardware and software networking services provider based in Morrisville, N.C., according to Anisha Vaswani, CIO at Extreme Networks. 

The company is investing in AI to improve the operational efficiency of its network management software platform, Vaswani said. 

Although Extreme Networks doesn't track what its customers do for circular economy initiatives, it helps them run their networks more efficiently, which can meet their sustainability goals, Vaswani said.

"We have different mechanisms in place when it comes to helping our customers be more energy efficient," she said. "There are different ways that our customers can find reused hardware."

CIOs should consider having a closed-loop relationship with IT vendors because it lets them move IT operations to an Opex spending model, which offers flexibility to scale up and down as needed, Greden said.

This is similar to the arguments around organizations moving to the cloud versus running their own data centers, she said, but the direction is clear.

"You still have to work with the CFO to look at your rules around capitalization, and different industries have different things," Greden said. "That's why none of this happens overnight. It will never be a fully cloud or fully as-a-service world for hardware, but it will continue to go in that direction because once CIOs do start down that path with something, they usually don't stop, because they are happy."

Jim O'Donnell is a news director for Informa TechTarget who covers ERP and other enterprise applications.