15 Reasons it Makes Sense to Lease IT

by Cal Braunstein

 

 

7. Technical currency through short refresh cycles.

Information technology is undergoing a major shift in architectural designs to support capacity, performance and workload requirements. The savings from hardware obsolescence in areas such as administrative costs, energy consumption, floor space, software fees and other factors can be as much as 30 percent over five years. Thus, the use of short refresh cycles can reduce costs significantly.

 

 

8. The ability to circumvent budget limitations.

Hardware leasing spreads the payments over the optimized useful life of the equipment, whereas purchasing requires a lump sum payment in year one or financing that increases the cost of the purchase. It is also important to note the time value of money, which exacerbates the costs of upfront payments.

 

 

9. Licensing and taxes.

Through the use of proper asset management and the elimination of the practice of keeping hardware beyond its desirable retirement date, corporations can eliminate the taxation and software licensing costs associated with systems that provide limited value.

 

 

10. Potential for added services.

Lessors are sometimes willing to provide enterprises with free or low-cost added services such as asset-management tools and/or services.

 

 

11. The end of end-of-life worries.

End-of-life costs can be expensive, especially those that relate to regulatory requirements for safe disposal. Leasing can assist with the management of end-of-life services and can protect corporations from lawsuits and fines associated with improper disposal. When storage is involved, there are data-destruction concerns, as well as current and emerging regulatory requirements for safe disposal. Disk overwrite and other data-destruction techniques can be included as part of the lease contract.

 

 

12. Cash generation.

Companies that currently own their infrastructure equipment might be able to convert these declining assets into cash through the use of a sale/leaseback program. This will enable a company to improve its cash position while positioning the firm for a leased in-place upgrade program.

 

 

13. Improved financial management.

Financing and leasing structures can affect corporate financial statements. Measurements such as debt-to-equity ratios, return on assets, EBDITA, etc., can be effectively managed through judicious use of operating leases. These ratios are important to banks, capital markets, investors and executive management when compensation could be based on how effectively these metrics are managed.