Is Leasing Really Worth It? 378
llamaluvr asks: "As I understand it, there are some financial benefits for businesses leasing hardware equipment. Does anybody know what exactly those are, and how much they really help? Do they really outweigh the additional costs of replacing, repackaging, and returning old hardware? How do the size of the business and the computing environment affect these benefits? Additionally, what is the best balance between leasing and purchasing equipment -- would leasing desktops and laptops, but purchasing monitors be best, or should one just lease everything?"
"A little bit of background: I work in the IT Operations department for a BU of a Fortune 100 company, and we lease practically everything right now. We have 4 full-time employees for about 800 workstations, and, while we seem to have enough manpower for managing projects and tickets, we have a tough time getting to returning the equipment, so a lot of it is already late. Complicating this is that many of these PCs are in a harsh industrial environment, and often have at least one failing part, which then costs us a fraction of the entire workstation (for example: a busted floppy might cost us $150 or more, unless we test the PC and replace the part, of course). Corporate has been more attentive to this drain on our time and money lately, and they have talked of outsourcing this process, but in the meantime, we're stuck with it. BTW, we lease IBM equipment through ePlus."
Leasing servers (Score:5, Interesting)
Personally, no. (Score:3, Interesting)
That being said, it does have certain political advantages. Having your equipment on lease ensures that the company *must* allow you to upgrade the equipment or go without.
Assets and Lawsuits (Score:4, Interesting)
In a smaller company if you lease your office, the furniture, the computer hardware, basically no real assets, when you get sued (which seems to be a when not if thing, in the US market) and if you lose, you have nothing to give up.
But if you want to own the stuff you lease, that's easy too. Just need a second company, company B. Company A leases the stuff from Company B. You own and run company C, which owns and runs companys A and B. This is only a small part of a giant company chain that can exist for several reasons.
Terminal Server Setup (Score:2, Interesting)
You can also lease the terminal clents.
They are simple devices, very little to go wrong and drop-in replacement is another advantage.
I'm working on a combo grid/shared memory/terminal server system atm to try and create a distributed destop TS system for our particular setup here.
Terminal servers would be a good option to check out.
Re:It's all about taxes (Score:2, Interesting)
unless it's changed... (Score:3, Interesting)
5 years is a long time for computer equipment. the only thing that i've had that still has high usefullness after 5 years is an HP laserjet 4000 printer and a viewsonic 20inch monitor. a fair amount is around because it still has *some* usefullness. but there's been an amazing amount of stuff that was junk before 5 years was up.
so, i can see the tax benefit for leasing (computer equipment).
eric
Re:tax writeoff (Score:2, Interesting)
Re:Leasing servers (Score:2, Interesting)
If I were to lease (rent) something and it broke I (here in Denmark) would just return it and ask for it to be replaced. And I'd call bs on the amount of time, we got a couple of servers on lease for 4 years now, it would have been cheaper to buy them if you just look at the cost and divide that by the rent, but thats not how you do those calculations - you need to look at the value of investing the money vs. buying the hardware, which leads us to point C - you would do the exact opposite in my opinion - if you got high devaluation on an item and you can lease it go for it.
Re:Leasing servers (Score:3, Interesting)
What are the tax implications of leasing and then purchasing at the end of the lease, as the parent suggested?
One would assume they'd be more complex (glad I'm not an accountant)
Re:Terminal Server Setup (Score:2, Interesting)
To a degree (Score:5, Interesting)
The second constraint is that those doing the maintenance have no ties to you, which mean that they don't have to do anything effective. I've been in companies where "guaranteed support" from contracts really didn't exist. The contracts had too many get-out clauses and fine-print, exempting them from any kind of quality of service, even though we were paying through the nose for those extra guarantees.
The third problem is that you're likely to get refurbished equiptment with an unknown history and minimal to no quality control. Even if there were checks, though, reliability is an unknown. From electron migration to thermal damage on chips to hairline cracks in the motherboard - there are many faults that are hard to identify in any simple laboratory test, but which are exceedingly likely for older equiptment.
Security is a big issue, these days. You think a refurbished server or router is going to be running fully-patched, fully-tested environments? Chances are, even those who own the equiptment will have no idea of what is actually running. It is unlikely, but possible, that "logic bombs", root-kits and other hard-to-spot malware may be running on the device when you get it.
Buying a commercial off-the-shelf solution is not perfect and won't PROPERLY fix any of the above, but it's a better bet for anything that is mission-critical.
The "ideal" is to buy the component cards from the manufacturers, assemble & burn-in test in-house, and then deploy. Then, you have 100% control over the steps and actually can provide a higher level of assurance. True, it won't have any fancy warranties, but as downtime is the most expensive part of any IT operation, fancy warranties that companies rarely honor anyway are of little value.
The gratest fallacy in IT is to rely on stickers, labels and other scraps of paper. (a-la the certification issue discussed on Slashdot recently.) These things add nothing and frequently cost lots. What adds value is whether the hardware works and works well.
If you want the job done right, do it yourself. That has been true for hundreds of years, and if modern practices have changed things at all, they have made it all the more important to remember.
If you run a scam ... (Score:1, Interesting)
What Leasing companies love about it. (Score:2, Interesting)
If your business is proactive and arranges to replace the equipment as is comes due you do OK, but most get fleeced for 3 or 4 months, some over a year until they can make a decision and implement it.