Businesses of All Sizes Look to Leasing As Means to Preserve Capital and Maximize IT Investment

Businesses Turn to Leasing, Alternative Financing Options in Challenging Economic ClimateBusinesses Turn to Leasing, Alternative Financing Options in Challenging Economic Climate.

• Experts Suggest IT Organizations Shift to Leasing to Gain Competitive Edge
• From Zero Percent Financing Options to List Price Reductions, Dell Helps Customers Stretch IT Dollars and Save

Many businesses looking to grow while conserving capital are finding technology leasing and financing offer strategic, operational and financial benefits compared with outright ownership, according to IDC.

National Federation of Independent Business Small Business Economic Trends1 data shows more business owners expect borrowing will be more difficult in the coming months, suggesting alternative financing and leasing options are becoming more appealing.

Why Lease?

Davis & Wilkerson, P.C., an Austin-based law firm, leases its desktops, laptops and servers from Dell. One of its largest lease agreements was approximately two years ago for more than 50 OptiPlex desktops that can be exchanged at the end of the lease for new, higher performing Optiplex systems to help stay on top of the latest technology advancements.

Many businesses do not have the necessary capital to implement the right IT strategy to stay competitive, productive and grow. Plus once purchased, technology has to last a period of time to reap its full value. Technology can also become obsolete quickly, and purchasing it outright can hinder a company’s ability to update its IT infrastructure in a cost-effective manner.

IT leasing allows companies to conserve capital for non-technology needs, operate with the latest technology and purchase in one place for added convenience and savings. Specific benefits of leasing include:

• Stretching the IT Dollar: While the cost of technology is declining, IT solutions can cost thousands of dollars if purchased outright. With leasing, businesses can obtain more technology while preserving precious capital.
• Flexible terms: The terms of the lease are usually flexible, offering fixed monthly payments across 24, 36 or 48 months, and various end-of-lease options. The lease payment may even be tax deductible.
• Options: At the end of a lease, there are a variety of ways to help companies make the best IT decisions: renew an existing lease, begin a new lease with upgraded technology, purchase the equipment according to the lease terms or return it.
• Disciplined technology rotation: With leasing, companies become disciplined about replacing their technology every few years to avoid technology obsolescence. Plus, most IT leases include a service contract for the life of the lease, helping companies avoid owning equipment that isn’t covered by a warranty.

Dell responding to Customer Needs with Expanded Financing Offers, Price Reductions

Dell announced new competitive leasing and financing options for U.S.-based small, medium and large businesses, and public entities. The company also made significant price moves on select systems and components to further help customers manage IT costs and save. Including:

• Zero percent financing for qualified large business and institutional customers. With ownership lease terms from 12-48 months, customers can get the technology they need today and benefit from fixed regular payments with rates as low as zero percent.
• Fair Market Value (FMV) lease rotation programs programs allow customers to pay for use of their technology and return or exchange it at the end of the lease term to take advantage of the latest technological advancements, lowering total cost of ownership by as much as 20.5 percent.
• Deferred payment plans can be added to these offers for qualified customers interested in implementing the smartest technology replacement strategy today, but paying in 2009.
• To help IT budgets stretch even further, Dell has reduced select business system and component list prices.
• Michael Dell outlined in his Oct. 17 Simplify & Save blog post it is crucial for businesses to focus on cost-cutting efforts while making IT investments work even harder. The initial focus of Simplify & Save is to take unnecessary expenditures out of customers’ budgets by reducing costs associated with IT. In addition to savings and financing offers announced today for U.S.-based customers, look for other country- and regional-specific financing options, as well as details on more ways to help lower IT costs and save on the blog and in upcoming announcements.

Quotes:

"I like the flexibility of leasing because I can add systems to the lease as new attorneys join the firm or as more migrate to mobile solutions to take advantage of the productivity gains," said Mary Smith, operations manager, Davis & Wilkerson. “Plus we are able to maintain a competitive edge by having the most up-to-date technology, which allows the firm to provide our clients with the most efficient and professional service possible."

According AMI-Partners surveys, almost half of U.S. small and medium businesses choose vendor leasing and financing solutions to fund some of their IT purchases.

• “In addition to freeing up cash for other expenses, leasing allows businesses to create a competitive edge by keeping up with the latest technology, becoming disciplined about asset management and planning for future IT needs, said Laurie McCabe, vice present of SMB Insights & Solutions at AMI-Partners. “IT is one area where lease-versus-buy often makes more sense because it gives them more flexibility.”