Leasing vs Purchasing

Topics: IBM, Efficient energy use, Finance lease Pages: 16 (5534 words) Published: August 18, 2012
Report on Leasing vs. Purchasing

The benefits of leasing Computer equipment vs. purchasing

The company needs to upgrade its computer equipment. There are two upgrade paths to consider. In this proposal, we demonstrate how equipment leases take advantage of the benefits of reduced depreciation and taxation, easy scalability, reduction of IT staff usage, reduced energy costs, and reduction of capital spending. The company can free up money overall and maintain better control of the IT budget by leasing. The cost of equipment is spread out over a 3-year period by leasing. There are no disposal fees because the leasing company will be responsible for the equipment leased. By replacing the current sever setup ( the company has over a dozen machines running 24 hours every day), with new leased IBM compact server, we will cut power costs by up to 50%.

Requirements Scope and Background4
requirements to be achieved:4
several leasing and finance companies with the best solutions for the company4
Salary Expense Before Leasing fig 15
Salary Expense After Leasing fig 25
Leasing and Financing Programs7
Leasing and Financing fig37
benefits of hiring a leasing company:8
Appendix A11

This report explores the methods other companies use to conserve working capital. The recommendation is to lease to keep the company at the forefront of the technology curve, and keep working capital free. The company will also have the option to upgrade equipment when the next advancement occurs at a fraction of the purchase price of the same equipment. Leasing computer equipment and technology protects the company from equipment obsolescence. In the past, we have purchased all of our IT equipment. This strategy has periodically put a drain on working capital. This type of bulk spending leaves the company in a weak financial position. The company saves a huge amount of money releasing these expenditures. We propose a way to manage this process with ease and greater forecast accuracy. Discussion

Recently equipment disposal has become a problem. Last year the company cycled out 35 laptops due to obsolescence. The company had to pay an independent company a removal fee because of the chemicals in the LCD screens of our machines. The servers were experiencing terrible latency times. Downtime for maintaining the databases have caused confusion and inefficiency with the management staff and sales team. The company’s IT staff has almost tripled in the past 5 years as it struggles to maintain databases, software, and equipment. Leasing equipment with “Coupled IT Services” reduce salary expenses by 33%. We have interviewed several good leasing companies who finance, as well as service the equipment leased (see Attachment 1 for the IBM breakdown on lease partnerships).

Requirements Scope and Background
requirements to be achieved:
* 25% Working capital output reduction for IT equipment
* Comply with new company wide “Green Initiative”
* Simplify computer upgrades
* Increase IT efficiency
several leasing and finance companies with the best solutions for the company * PC Mall (online)
* HP
* Cisco
The new mandates initiated by the company we investigated found that leasing IT equipment fits well into the new direction. By testing the energy output of the old equipment and newly leased machines, studies show that the newer equipment outperformed the old equipment. The leasing of computer equipment saves the company money and resources and the environment. By utilizing one of the leasing and financing companies, we will outsource 33% of internal IT staffing. Releasing five to seven IT specialists, the company will reduce salary expenses. “A holiday group has calculated that it has cut its IT costs by almost half by leasing its PC’s and...
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