When computer systems are retired, the disk drives should be zeroed out and all magnetic media should be degaussed. This involves applying a strong magnetic field to initialize the media (also referred to as "disk wiping").

Keep in mind, though, that erasing files on a computer system doesn't guarantee that the information is gone from the disk; for that, you'll want to perform a low-level format or bring in a utility to completely wipe the disk clean. The low-level format returns a disk drive or other magnetic media back to the state it was in when it was brand-new. The process physically rewrites every location on the disk back to its original state.

(NOTE: Degaussing hard drives is difficult and may render the drive unusable. It works better for floppy drives while utilities are often used for hard drives.)

If you can't be certain that the hardware doesn't contain important data, then it should be destroyed. You can't -- and shouldn't -- risk the data your company depends on falling into the wrong hands.

Though this might not be the right process for everyone (needs vary from person to person and company to company, after all), here are the steps I take to get rid of a machine.

Step 1: Delete Personal Files
The first thing I do is delete all data files. Not only do these include document files, but also the temporary files generated by the Internet browser, printers and anything else created in daily operations.

Remember that that deleting these files doesn't really make them go away, but simply removes the markers to them. Nevertheless, doing this will make it difficult for the average user to access your information.

Step 2: Run a Wipe Program
There are a number of programs you can use to wipe a disk. Two of these are KillDisk and WipeDrive. These programs are approved by the Department of Defense and work by writing the entire drive with random values multiple times, thus making restoration of the original data next to impossible.

Technically, this is the only step you need to do, but I always prefer doing Step 1 and Step 3 below just to increase my comfort level.

NOTE: Some distributions of Linux -- such as Fedora -- include shred (/usr/bin/shred), which does the same wiping function for a file(s) as the two programs I mentioned do for drives. By default, this program overwrites the specified file 25 times. Theoretically, shred can be used to wipe the drive (shred /dev/hda), but I'm not familiar enough with this solution to use it.

Step 3: Install Linux
As a final act, I always install another operating system -- typically, a small distribution of Linux -- before letting the machine go. Any identifying variables that need to be filled in (default user name, etc.) are filled in with nonsensical values and long, complex passwords.

Again, this doesn't guarantee that a particularly determined miscreant won't be able to use the system, but it does make it more difficult for the casual user who stumbles across the old machine.

And Just To Be Sure...
While I've followed these steps with production machines prior to disposal, if there was a machine that held invaluable information on it, there is one final step I would do (but never actually have): Remove the hard drive altogether and go at it with a wide array of power tools.

If you want to make absolutely certain that your data can never be recovered, then totally destroy the media that held it. As long as that's not the case, however, the solutions I've given here should be more than enough to help you rest well at night.