Over the past few months as the economy rebounds from the recession, many businesses that I have met with regarding lifecycle management have asked about the thoughts on leasing as a service delivery strategy.
As always, the opinions expressed on this blog are mine and do not represent those of my employer.
Leasing in client computing is likely a consideration worth revisiting if you have not done so pre-recession. It may seem somewhat counter-intuitive to finance in the context of our economy, but there is a business case that may be compelling for your business. The first perception that businesses face, I believe, is that the leasing business itself is the same as it has always been. If the consideration is only rate and residual, many businesses would remark that their Treasury has internal rate of return that may outweigh financing. However, one of the first questions to ask is whether scarce capital resources are to be deployed for client computing.
I would be very interested in your thoughts on this topic. It does seem to be coming up more and more as a potential service delivery strategy.
The issue is that a bad leasing experience, even if a long time ago, lingers as a perception in the current tense. Businesses that may have not located PC's due to asset management weaknesses, or had negative end of lease experiences may find it challenging to revisit the topic. In my research "Appropriate Incumbent Bahavior" (I need to get a better title) it is suggested that if the conversations about condition of the equipment, components like mice and keyboards, and extensions/ buy outs are prevalent, it may be relationship that is an issue, not the actual strategy itself.
The leasing business has changed over the years - like for like not specific asset returns, assumptions for shrinkage, components, and so on are embedded or can be embedded. However, the real benefit of leasing may have little to do with the actual financing - leasing as a by product of the solution embraces a planned refresh discipline, and all of the information on the detailed leasing schedules (Schedule A's) can be a feed into the asset management repository. This can actually improve the practice level for PC asset management which on a good day is a challenge for those of us in IT.
With the innovation curve for refresh and improvements increasing in velocity, leasing can provide a hedge. The behavior we have all experienced in the recession is the hunkering down and extending the useful life of the devices, and the related impact on IT support. (older PC's really do cost more if the enterprise looks at cost not only acqusition price). Leasing could be a short term, interim tactic, as well as a longer term strategy.
Leasing may not be for every business, but it is worth revisiting to see if the benefits can go beyond rate and residual. What are your thoughts ?