Leasing vs. buying of IT equipment

[shaunlfletcher]

I am new to systems and my first project is to analyze leasing vs. purchasing in relation to IT hardware.

Does any one have any case studies or experiences they could relate that would shed some light beyond the numbers on the page?

[XYXOXY]

I am new to systems and my first project is to analyze leasing vs. purchasing in relation to IT hardware.

Does any one have any case studies or experiences they could relate that would shed some light beyond the numbers on the page?

I don't have any case studies but I can offer you my experiences. I was the IT manager for the regional office of a fortune 500 company for the past 5 years and a LAN Admin for 5 years prior to that.
My company used to purchase but has been leasing for several years now. While it has it's share of problems and requires good management skills, Leasing is the better way to go.

We lease PC's for 3 years and laptops for 2 years. Servers vary.
The great thing about leasing is that your company budgets and pays a monthly cost. When the lease is up the old PC's go back and are replaced with shiny new ones, and you continue to pay roughly the same monthly cost... sometimes less. The bean counters love this.:)

Rough example : You need 20 PC's for your Client Service staff at roughly $3K each. Spread out over 3 years your company budgets approx $1700/month +/-. Compare that to convincing your management to come up with a lump sum of $60,000. In most cases you will be using your old, outdated PC's for an additional 1 - 2 years.

Another benefit for medium to larger organizations... your platforms stay more or less in synch. Since the old machines go back in 3 years or less you do not end up having some staff with speedy new systems and other jealous staff using the old dinosaurs that were handed down to them. The Tech-envy factor should not be taken too lightly. You also tend to get new machines in large groups instead of ending up with 2 or 3 each of whatever 15 different models were available at the time. Similarly, if you have ever managed training rooms you will know it is important to have one hardware and software platform to support rather than a hodge podge of systems. If your clients use your training machines this is even more important to convey a good impression.

Laptops ? People are HARD on laptops... especially if the company owns them and they don't. So you're lucky to get 2 good years out of them. Leasing makes it much easier to keep your mobile sales and support staff current with reliable and up to date technology. And since they are often the ones your clients see... don't you want them to look good ?

Finally, The lease periods I quoted above tend to match the manufacturers warranties. This is not an accident. So this means that except in unusual cases... all of your hardware repairs and parts replacement is covered.

So these are just some random thoughts based on 10 years of experience. If you were asking about leasing cars I'd have a much different answer. But it only makes sense with IT equipment.

The downsides (if you can call them that).

1. You need someone really talented and organized to manage the leases and to be sure machines are replaced in a timely manner. It's not as easy as it sounds... at least not for some people:rolleyes: .
2. Occasionally Machines go AWOL and you will need to be prepared to buy out the lease. My experience is that the cost is minimal once the lease is up. If a laptop is stolen early in the lease you can expect to pay full price PLUS have to budget for a replacement lease. But I think that falls under the cost of doing business.
3. If you downsize you need to make decisions. Do you buy out the unused machines' leases or continue to pay monthly until the lease expires ?

But if you are an IT person you can leave these issues to the bean counters where they belong.

I hope this helps !