Elarasys continues to find a niche

NOTE: This first appeared in the April 1 issue of the Daily Herald Business Ledger

More than a decade ago, Elarasys Inc. found its niche amid a bad economy and the dot-com bust, reselling and leasing IT equipment obtained from the closed dot-com companies at a large savings to its customers.
Fast forward to today, and Elgin-based Elarasys Worldwide — as it is now known — again finds itself in a changing IT world, where a recession has forced businesses to tighten their IT budgets. But the company is finding a new niche for itself, branching out from its core business of leasing refurbished IT hardware and components into providing IT products and services for what CEO Steve McCarthy calls “all ranges of the life cycle.”
Elarasys still sells refurbished equipment from IBM, Cisco, Sun Microsystems, Hewlett-Packard and Dell, among others. But it has expanded into selling new equipment through a subsidiary company, IThardwareplus. In addition, the company offers post-warranty system maintenance services and a unique asset disposal service that goes beyond simple recycling.
The company’s current evolution was a result in the foresight of McCarthy and Elarasys President Tom Hansen. They purchased the company in 2008 and soon noticed that the leasing industry was declining as a result of several factors, including the slipping prices of new equipment closing the savings gap between new and refurbished.
“We have to be flexible. The business Steve and I bought in ‘08 relied 80 percent on equipment coming in from leasing companies. That’s not happening anymore,” Hansen said.
By providing products and services from sales through disposal, Elarasys’ niche helps businesses get the most value out of their equipment.
“We now can help customers make the right choice whether they’re buying it, choosing to maintain it or choosing to get rid of it,” McCarthy said. “We’re helping them to make smart choices in the ownership process.”
The uniqueness of Elarasys’ services is in the disposal of old equipment. Hansen said the company will take away old equipment, break it down to its components, then determine if the parts can be sold as refurbished or sold to a certified electronics recycler. The proceeds then are split 50/50 between Elarasys and the customer.
“We want to maximize value,” Hansen said. “We want (customers) to get more from it than had we just said ‘here’s 10 cents on the dollar.’”
Hansen notes that many companies don’t realize the value of old equipment when they upgrade IT systems. It often sits in the corner of a room while the company’s IT professionals are focused on making the new system work properly, he said, and they don’t realize they could get some of their investment back from the old equipment.
“They tend to forget that there is an asset that could be valuable to someone else,” he said. “Unfortunately, too many companies don’t know that asset disposition companies like ours are out there.”
Hansen also notes they work only with EPA R2-certified electronics recyclers to assure no potentially hazardous materials end up in landfills or are shipped to other countries. Elarasys also wipes all data off the hard drives and memories using software certified by the U.S. Department of Defense.
All parts destined to be sold as refurbished go through a thorough testing process by staff members who specialize in specific manufacturers. All are certified by the companies they specialize in.
“They are responsible for knowing the products and knowing the pricing of the markets,” Hansen said. “We are very fair and try to re-market (products) at the maximum value we can.”
One big issue in the refurbished market is counterfeit components, but Hansen said Elarasys’ techs are especially aware of what to look for and, if they discover counterfeit parts, they are quarantined so they do not go back out into the market.
“We watch it like a hawk,” he said. “We are very diligent on assuring that everything that comes in the door gets tested and, if not authentic, is quarantined.”
While the price of new equipment has dropped over the years, McCarthy and Hansen note there could still be value in buying refurbished equipment as a way to get more out of a company’s tight budget. And, he stresses, buying refurbished does not mean you’re buying someone else’s problems.
“We want to totally diffuse any thought that used computer are like used cars,” Hansen said. “In reality, it’s more that somebody’s just outgrown it and they decided to take on something new.”
Elarasys’ evolution has proved successful as McCarthy and Hansen foresee the trend in refurbished components, post-warranty maintenance and asset disposition continue. But hey note they’ll likely be ready for any changes down the road.
“We are a solid organization because we have watched and adjusted accordingly, and we will continue to do so,” Hansen said.