www.serverwatch.com/hreviews/article.php/3501961
May 2, 2005
Not Strictly a Cash-Flow Decision Snow, however, also offers several other considerations that may tip the balance in favor of leasing, even for companies with plenty of cash on hand. Those factors include built-in technology refresh options that allow for easy upgrade or expansion of systems during the term of the lease, as well as the flexibility at end of term to purchase the technology, replace it with newer technology or return it. "For companies where the eventual aim is ownership," Snow says, "flexible leasing terms, technology-refresh and end-of-term lease options allow them to make informed and controlled decisions about the levels of ownership that suit their balance sheet and cash flow requirements." Leasing might also be wise for those facing the challenge of managing fluctuating demand on IT resources. Some leasing plans can be structured on a "pay-per-use" basis, allowing them to match payment to usage, and make budgeting for IT more predictable.
Snow cautions, though, against chasing equipment at the lowest possible monthly payment. That often can come at the expense of flexibility in the terms of the lease, such as more stringent return conditions at the end of term," says Snow. "Companies need to weigh their short-term pricing requirements against their requirements two or three years down the road." Not for Everyone If you do lease, Longbottom recommends building bail-out clauses into the contracts s you can return the kit without too much penalty. Further, he highlights the importance of not being locked into a specific platform or type of equipment for too long a period. Five years can see a world of change in IT, after all. Finally, he cautions those considering leasing to watch out for equipment disposal and support. "Ensure that disposal is covered under the lease as the legislative climate is making disposal more and more expensive," says Longbottom. "In terms of support, pay particular attention to how easily you can upgrade your specifications as needs change, and how much support you really have. If you need four-hour turnout and fault fix, make sure that this is covered before you sign anything." |
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