We hope you’re finding this series on how to control your IT costs useful and engaging. This is Part 3, and you can find Part 1 here, and Part 2 here. Come back soon so you don’t miss out on our final tip!
Here’s one potential savings opportunity based on your capital and your existing infrastructure that you may find surprising: IT leasing.
Hardware leasing is essentially renting IT equipment instead of buying it outright. It’s similar to standard leasing and provides you with budgeting certainty because monthly expenses are fixed. You can also more easily plan the cost of expansion if you rely on leased equipment. It generally has a small up-front cost, and its ROI is easy to calculate because the provider will handle many maintenance elements.
Managing your needs and budget
For growing businesses or those expanding with new equipment needs — such as shifting to remote and needing to get everyone a laptop — leasing can be a fantastic way to test devices without buying them at scale. You get to outfit everyone but still have the capital to spend in other areas.
Specifically for IT, leasing can be beneficial for smaller teams because it reduces the workload they have. Leasing allows you to switch equipment whenever appropriate, so there’s no need to worry about obsolescence or keeping equipment up-to-date. That offers two significant benefits:
- You’re not working to secure older equipment and use IT time to create custom workarounds
- Because you don’t own the outdated equipment, you don’t have to focus on selling it when you pick up something new — or pay for it to be professionally recycled
Leasing IT equipment isn’t limited to computers. You can lease firewalls, switches, wireless access points, and many other systems that come with large initial price tags.
You may also be able to deduct leasing costs from your taxes! Learn more about the terms and qualified leasing here.
We want to note that leasing isn’t right for every business. If you plan on owning equipment for a long time — generally more than 3 to 5 years — buying it outright will come with a lower price tag. If you need to customize equipment or if it is mission-critical, ownership can be safer for your business.
Some leases may also come with time/duration requirements, so even if you outgrow the system, you have to pay for it through the end of the initial contract. Like other standard service agreements, leasing contracts will likely come with charges if you’re late or miss a payment. You may also not be able to get a hardship deferral on these payments, which is something many businesses sought during the COVID-19 pandemic.
3 IT leasing considerations
Leasing equipment can be beneficial when it fits your business and budget, but work with your accounting team or a qualified consultant to understand what’s best for you. Here’s your 3-step plan to understanding if it might be right and how to judge your need:
- Revisit your current IT hardware replacement plan and budget to understand the needs that may be coming down the pike. Cover the equipment you have and what you’re expecting to need. Remember that this might change in the era of remote work.
- Ask your current Managed IT provider if they work with a hardware leasing provider and reach out for proposals. If they don’t, ask businesses you trust and use industry forums to gather basic information.
- Get help when you need it. There’s nothing wrong with asking. Envision has experience helping organizations create hardware replacement plans and budgets, and partner with hardware leasing providers to find the best option for clients. If that’s not right for you, we’ll also point you to what might be a better fit.
Equipment can be expensive. Protect your bottom line and today’s margins by looking at all of your options. And, while you’re thinking about these types of cost reductions, why don’t you jump back to the first post in this series to tackle that Internet service costs.