Leasing IT equipment - worth it or not
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Points against
- More expensive over the term
- Business is "less agile" as you're tied into a deal for the gear
- If you chose poorly and have to buy out gear at "fair market value" prepare for pain
- Planning EOL for gear becomes critical (don't forget to nuke it all!)
- .... more as I think of them
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@MattSpeller said:
- More expensive over the term
Not necessarily true. Generally true, but not always.
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@scottalanmiller said:
That's not a specific leasing thing and certainly not always included. Leasing can go to a set term, have a buy out, be indefinite, etc. Lots of ways that that can go.
There are many options and you should investigate them all! I mention it as what worked exceptionally well for me in the past.
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@scottalanmiller said:
Another big component that the financial department likes predictability and leasing makes IT spending far more predictable.
This was huge for my situation. Allowed me to spend ~30% more on gear than just one huge cap-ex hit
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@MattSpeller said:
- Get full value buy outs for desktops / laptops / disposable stuff and send it back to them (saving you recycling / disposal fees)
This is one I have a hard time with. You lease equipment for 3 years. You receive equipment, if you're lucky you can deploy it all on day one.. but when the lease is up, you have to start that transition normally at least 2 months before it expires to make sure you send it back on time.
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@Dashrender said:
And if I worked for any other company - that might be the case, but here it's not. A single one time and then forget about it is the mentality I deal with.
I'm not sure if that means that we are always struggling to make ends meet, or someone just looks at things from a perspective that just isn't compatible with the reality of how our business runs (or should run).
It will really depend on your business environment.
I had the finance dept very nervous of huge cash outlays because reasons I didn't care about. They suggested leasing to me and the more research I did the better it looked. Prevented the huge cash haemorrhage that finance dreaded and everyone won.
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@Dashrender said:
This is one I have a hard time with. You lease equipment for 3 years. You receive equipment, if you're lucky you can deploy it all on day one.. but when the lease is up, you have to start that transition normally at least 2 months before it expires to make sure you send it back on time.
Ahhh you need the special sauce
You lease 1/3 of your equipment every year. Prevents epic brown pants month(s) trying to deploy a whole company's worth of stuff.
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@Dashrender said:
@MattSpeller said:
- Get full value buy outs for desktops / laptops / disposable stuff and send it back to them (saving you recycling / disposal fees)
This is one I have a hard time with. You lease equipment for 3 years. You receive equipment, if you're lucky you can deploy it all on day one.. but when the lease is up, you have to start that transition normally at least 2 months before it expires to make sure you send it back on time.
So lease for five years or ten years. Other than forcing you to improve planning it should not be too big of a hit.
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@MattSpeller said:
@Dashrender said:
This is one I have a hard time with. You lease equipment for 3 years. You receive equipment, if you're lucky you can deploy it all on day one.. but when the lease is up, you have to start that transition normally at least 2 months before it expires to make sure you send it back on time.
Ahhh you need the special sauce
You lease 1/3 of your equipment every year. Prevents epic brown pants month(s) trying to deploy a whole company's worth of stuff.
That too. Your entire shop should not be leased as a single, enormous entity all at once, most likely.
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@scottalanmiller said:
That too. Your entire shop should not be leased as a single, enormous entity all at once, most likely.
Good lord, I'd die if that was the case. Doing 1/3 usually took a month or three. No real rush as I got Dell to stagger the deliveries so I didn't have a ton of boxes (and pressure) from everyone.
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So I've been involved on the leasing end of the firm that leases out gear and there are lease types that don't have these problems. Month to month forever leases, as an example, was nearly all that we did. Customers had to commit to say three month minimums on gear and after that it was month to month. They could lease for as long as they wanted. The cost even decreased (very slowly) over time. There was never a time that they were without support and never a panic to replace the gear. Also, no $1 buy out options or anything like that.
So effectively nothing like the assumptions that are often associated with leases. Customers loved it because their costs become completely predictable and their agility went up, not down.
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A great example we've been through a single iteration with is our mopier. We purchased one in 2008, We replaced it in 2013. We only replaced it because the old machine was pretty much horrible since day one, and near replacement time administrator was just becoming fed up with the problems.
We have a tendency to run equipment into the ground here. That said - Scott seems to be of that idea as well. For example, I recently had a post here talking about replacing my now 8 year old WiFi system. Scott and many others chimed in and said - be prepared to replace but don't until it fails.
This type of thinking kind of flies in the face of leasing unless you expect the life of the equipment is roughly the same as the life of the equipment.
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What is a mopier?
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@MattSpeller said:
@Dashrender said:
And if I worked for any other company - that might be the case, but here it's not. A single one time and then forget about it is the mentality I deal with.
I'm not sure if that means that we are always struggling to make ends meet, or someone just looks at things from a perspective that just isn't compatible with the reality of how our business runs (or should run).
It will really depend on your business environment.
I had the finance dept very nervous of huge cash outlays because reasons I didn't care about. They suggested leasing to me and the more research I did the better it looked. Prevented the huge cash haemorrhage that finance dreaded and everyone won.
In a similar situation, management would rather take a loan than a lease, in my case.
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@Dashrender said:
This type of thinking kind of flies in the face of leasing unless you expect the life of the equipment is roughly the same as the life of the equipment.
Not the leasing that I have worked with. We had customers leasing ten year old gear regularly. The lease costs were very low and they had the peace of mind that the lease company was there to deal with it when it broke from old age.
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@scottalanmiller said:
What is a mopier?
Multi fuction copier - those giant things most offices have these days that copy, print, fax, scan, etc.
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@Dashrender It takes a pretty big shift in vision in a company. IT stuff needs to be seen as the lube the gets the company to run more efficiently. Then it's like an oil change for your car. You can push it out longer (than X# years) but it's not healthy for your engine (employees, partners, anyone your company depends on etc).
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@Dashrender said:
In a similar situation, management would rather take a loan than a lease, in my case.
Sure, but that is purely a financial decision. You lose lease benefits that are often included like guaranteed support. Basically the company is attempting to structure their own lease. They would rather pay interest to a third party than to the vendor. An odd financial decision since there is zero pricing leverage then on either side. The bank has to make profit, the vendor has to make profit and you've added a third party to pay out to that was unnecessary.
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@scottalanmiller said:
@Dashrender said:
This type of thinking kind of flies in the face of leasing unless you expect the life of the equipment is roughly the same as the life of the equipment.
Not the leasing that I have worked with. We had customers leasing ten year old gear regularly. The lease costs were very low and they had the peace of mind that the lease company was there to deal with it when it broke from old age.
What happened when it broke before the lease was expired?
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@Dashrender said:
@scottalanmiller said:
@Dashrender said:
This type of thinking kind of flies in the face of leasing unless you expect the life of the equipment is roughly the same as the life of the equipment.
Not the leasing that I have worked with. We had customers leasing ten year old gear regularly. The lease costs were very low and they had the peace of mind that the lease company was there to deal with it when it broke from old age.
What happened when it broke before the lease was expired?
Same as leasing a car - it gets fixed. That's part of the value of a lease, you don't have to worry about the equipment breaking as you are leasing a working product. You don't have to worry about support periods any longer.
