Reuse is Key with IBM’s Linda Demmler

February 14, 2014

JOHN SHEGERIAN: Welcome back to Green is Good, and we’re so honored to have with us today Linda Demmler. She’s the Vice President of IBM’s Global Financing and Global Asset Recovery Services Division of the great and iconic IBM brand. Welcome to Green is Good, Linda Demmler. LINDA DEMMLER: Thank you. I’m very pleased to be here today with you. JOHN SHEGERIAN: Hey, we’re honored to have you on today obviously and also for our listeners out there today that want to follow along and hear the great things that IBM is doing in asset recovery, you can go on to www.IBM.com/financing and I’m on it right now and it’s a great site and it gives a lot of the story of what you’re going to be discussing today, Linda. Before we get into you talking about all the great things that you’re doing and the great brand, IBM, is doing in this sector, first share a little bit about your journey and how you got there. Was this a dream come true? Was this a lot of serendipity? Was this a lot of planning? How did you get this position at IBM and what led up to it? LINDA DEMMLER: You know, it’s funny, John. I am a planner by nature. Anyone who knows me knows that I have the day planned, the week planned, the year planned, and the five year plan but I would say going into this business, this was not a plan. It sort of evolved and it’s been a great evolution. I grew up in the New England area. I spent a lot of time outdoors in the camps, spent time with my family in the Narragansett Bay off Rhode Island and always have been very sensitive to environmental affairs as it relates to water preservation, energy conservation, and the like and never thought I would go into a business area that would afford me the opportunity to have an impact in that area as well as be good business so it’s been a fun evolution. I’m currently Vice President of Global Asset Recovery Services of North America and in that, I’m responsible for recovering value for IT assets and so what does that mean? It really means making sure that we reuse what we produce as much as possible and not over manufacture or create new where we can extend the life of existing assets so that has a huge impact on the environment around us and it’s been very, very fun for me to be a part of that. You and I were chatting earlier about New York University. Prior to that, I was at Syracuse University and an engineer by schooling so it’s been an interesting path for me to follow to move from engineering by schooling to sales operations and asset recovery but it really has been. I’ve been active in the IBM asset recovery practices almost my entire career and I think it’s been that passion that allows us to link what we do to the benefit of the communities and honestly, the world around us that keeps it interesting and makes it fun day after day. JOHN SHEGERIAN: And, that’s a great segue to going back to what you said in terms of asset recovery and reuse. Reuse, for our listeners out there, Linda, is a very credible form of recycling. LINDA DEMMLER: Absolutely, and you’ll find that for us at IBM, reuse is the key for us. We focus much more on reuse because it reuses the asset, gives it a second purpose, hopefully gives it a third purpose and it reduces what we consume in manufacturing now or our natural resources around us so reuse is a huge enabler for our clients to extend the life of the assets they have as well as our focus on re-selling those assets after they’ve come back to us. JOHN SHEGERIAN: Linda, can you go into how you’ve put your own spin on it, the innovation that you’ve implemented at IBM with regards to global asset recovery and the advantages that you believe that you bring to the table, given that you’ve got a massive platform to deploy that innovation with? LINDA DEMMLER: Yes. It’s been a very interesting evolution. IBM has long recognized our responsibility to sustainability so back in the ’60s, we had corporate policies that insured that we were following best practices for environmental stewardship and over the years, once IBM global financing was created as an organization in the early ’80s, it was very clear that as a leasing company, you have to deal with the disposal of assets because some of those assets come back and in that disposition of assets, we really demonstrated that we had best practices in not only disposing of assets when they come back in an environmentally sound manner in a way that protects the IBM brand image, protects the data that clients have on those assets, and eliminates that so that it never goes out into the public atmosphere, but that we really help clients extend the life of the IT within their own installation and so realizing that we had best practices across IBM, in the late ’90s, IBM Global Financing was given this mission across the IBM corporation to manage the recovery of assets and be the single point of sale of used equipment across IBM worldwide and that really allowed us to invest in this singular mission of recover value and minimize waste, minimize excess production, and reuse and recover value as much as possible and we do that in very innovative ways. I would say as passionate as I am about the business, I work with a team of people across IBM that are as passionate about reuse and wake up every day thinking of new ways to reuse these assets and I’ll give you a couple examples: We actually take products back and because of our products being predominantly upgradeable, we can turn those returned assets into latest and greatest technologies. We can reuse those within IBM, within our own operations. We have something called an exchange offering that we work with clients on. Where clients have an existing product on their floor and they need something more, we will actually take used equipment and replicate what that client has on their floor and then put new IBM parts into it and roll that in side by side with the client to run a parallel transition over a period of time and then return that older asset back to us and then we’ll go repurpose that older asset, either within IBM or in the external marketplace and that’s a way where we really, our focus on the client is helping clients accelerate their transformation by reducing the time, cost, and risks of IT transformations and business transformations and the way we do that is things like exchange offerings, where we allow customers the parallel time, the transition time, the lower cost, the affordability of an end to end solution that really addresses what their business requirements are instead of just always selling the latest and greatest new technology and transferring out what’s on the floor and disposing of it so we really pride ourselves on being very innovative in that area. JOHN SHEGERIAN: Linda, let’s talk some wow numbers. Your company is one of the biggest companies in this space in the world in terms of the number of products you produce. What number of machines or pounds — I don’t know how you measure things at IBM — but, what is wrapping your arms around it and saying what is the progress this year? What is the total that you’re processing every year and keeping out of landfills and either reusing, repurposing, or recycling in an environmentally sound way? LINDA DEMMLER: As I mentioned, sustainability being such a key point for us, we really do focus on keeping things out of landfills and that really is a differentiation for us in that we’re in the business to reuse and re-sell and our two objects ironically don’t appear to have anything to do with asset recovery but to enable IBM sales and be a consistent proof point for IBM environmental leadership so the way we do that is we get about 30,000 units of stuff back around the globe per week and we remanufacture or demanufacture that, which means we either remanufacture it to be reusable inside of IBM. The majority of what we do with our product is reuse it within IBM, which is great all the way around, right? It reduces our own cost of operations. It keeps it out of the secondary markets, which would compete against our new IBM sales and it helps us understand exactly how to remanufacture these products so that it’s always the highest IBM quality. We’re co-located in IBM facilities for our remanufacturing operations. That means when it comes out, whether it’s manufactured new or remanufactured as a returned box, it comes out with the same IBM quality, the same IBM performance, the same IBM standards that a client would expect and we use that internally so we remanufacture and demanufacture about 70 million pounds of equipment each year and for me, that’s a hard poundage to get my head around. What we really focus on is last year, we reused or recycled 99.7% of the equipment that we processed within our operations so that 30,000 units of stuff per week, we reused or recycled 99.7% so less than half-of-a-percent actually ended up in landfill or incineration, like you referred to and of that total equipment that came back to us, 90% is actually reused or resold. JOHN SHEGERIAN: That’s an amazing number, frankly. That’s incredible. LINDA DEMMLER: It really is. IBM’s leadership in the environment is well known. IBM’s leadership in patents well known. What I don’t think is as well known is even within our Global Asset Recovery Services organization, we have eight patents alone and those patents speak to our methodologies and our processes on remanufacturing and demanufacturing to yield the highest result and we just had a recent patent in October of this year that focused on the packaging materials. It’s a great example of, Christmas time is coming, the holidays are here and lots of shipping boxes, lots of presents, lots of packaging materials building up and when we get all those products as an individual, we don’t typically keep all the packaging, right? We crush them. We put them out in the trash and that’s what happens with IBM when clients acquire technology. When they go to return that product or ship that product back to IBM, we were finding that a lot of damage was occurring because original packaging wasn’t being used so what we’ve done now is we’ve redesigned some of the machines where there’s actually physical components on the machine to attach it to the materials regardless of what those materials are to minimize the damage in transit, which makes the machine more reusable and you can see how the whole cycle of life extends and so the whole eight patents, remanufactured pounds of equipment, we do this around the globe. We were the first enterprise to open up remanufacturing operations locally in China, in Shenzhen, so that we would be on the ground there consuming all of the equipment as China goes through such explosive growth. We would consume all of the equipment that was becoming idle or returned locally in China and repurpose it there, again, locally in China and the first operation approved by the government in China. JOHN SHEGERIAN: So, now, what you’re saying to me and to our audience is that you use technology to further the mission of reuse and recycling. Talk a little bit about the de-manufacturing and the evolution of recycling that you have stewarded over at IBM because it used to be about demanufacturing and protecting the environment but now you have the concurrent issue of also protecting the data that’s contained therein. Can you explain to our listeners all the care that you put into that, in making sure that the one two punch of environment and data protection are taken care of while you create this tremendous success story at IBM where you’re basically recycling everything you produce? LINDA DEMMLER: Absolutely, so being IBM, we’re a large seller of IT, of course, but we’re also a large consumer of IT so whatever problem a client has, we have for our own operations as well so we’ve spent a lot of timing on looking at the asset recovery process from many different facets. There’s the financial aspect of it, which is, I only want to pay for what I’m using, and that’s where our leasing operations become very valuable to clients. We can write leases on technology to allow customers to acquire technology, pay for what they use, and then return it to us. It’s our core competency, typically not clients’ core competency, to dispose or reuse or remanufacture or otherwise re-deploy that asset. Second is the typical side, the practices we have on reusing and recycling, and then what you’re getting at is the intellectual side. How do I keep the soft stuff and not only reusing and building a client strategy for acquiring and disposing that’s minimizing costs, minimizing risks, making it very affordable, but also ensuring that we protect the soft stuff, the data, so I mentioned we have co-locations and all our high end gets returned to our facilities so I aim facilities on the high end and remanufactured under the same scrutiny in security that we go under for our new manufacturing processes as well as for anything we’re doing across IBM. We also have sold off some of our logistics operations that used to be IBM and they are still following the same IBM processes based on the IBM intellectual capital, using our proprietary system, following our high standards consistently worldwide and I think that’s one of the differentiators for us is that at a point in time, we did operate as islands around the globe. We now are one global asset recovery footprint. We have 10 remanufacturing centers around the world. We have 20-plus operation centers around the world and we adhere to the same consistent standard in each one of those centers so regardless of what country we’re operating in and what the laws and regulations are there or what’s enforced, we still operate to every single one of our standards. JOHN SHEGERIAN: If I’m getting this right, Linda, whereas other OEMs sell their equipment and all the neat things that they make and they basically walk in the other direction, you don’t do that. As part of your sales cycle, IBM sells their new equipment but then there is a sustainability life cycle that you’re involved with the equipment from beginning to end and beginning again so it goes in one big circle and you maintain that and you touch the client in every element. You just don’t walk after you sell. LINDA DEMMLER: Absolutely. We do pride ourselves on focusing on the cradle to cradle as opposed to the cradle to grave because we hope it goes through a couple cradles before it actually has to hit the grave and as I mentioned earlier, it’s become very personal for all of us. I have a nine-year-old daughter and we recently had to do an ecological footprint study for every child in the elementary school and it was eye-opening to me because I think I’m so passionate about this. I try and reuse and conserve and repurpose personally and professionally on a daily basis and yet our family’s results were not where I would have liked them to be and so I think it really emphasizes that as good as you think you are, you can always be better and we really do challenge ourselves to be maniacal about extending this life of IT and reusing it and it’s the attitude across our entire team and what we’ve found with clients is it’s very easy to acquire and it’s very hard to get rid of it so when we focus on this end to end of you’re acquiring that today, how are you going to dispose of that in the future? Can we take out all the surprises and put that on a lease where when you’re done with it, you just return it to us and then beyond that, can we help ensure that there’s a robust certified secondary market for products that we actively participate in so that we know that clients, when they’re acquiring IBM certified products or manufacturer certified products, that they are products that they can trust to have the same reliable consistency that they would get if they were purchasing the equipment new? And that does become this holistic life cycle of focusing on the clients’ needs because if you walk in with one arrow in your quiver, the client will always seek other alternatives but the fact that IBM is so focused on listening to the customer and understanding what their business transformation challenges are and focused on how we can pull from the breadth of the IBM portfolio, reducing their risk, time, and cost of that transformation, it brings us into that position of where we’re trying to be viewed as the trusted advisor in all cases. JOHN SHEGERIAN: Well, you’re doing it at IBM. You’re doing good and doing well at the same time. Linda Demmler, thank you for your time today. For our listeners out there that want to learn more about all the great things IBM is doing in global asset recovery, it’s www.IBM.com/financing. Linda Demmler, you’re an inspiring sustainability leader and truly living proof that green is good.