This week I had the pleasure of sitting down to lunch with Ken Richards of Interlease to talk through the advantages of leasing a fleet of IT equipment and doing a clean sweep to a schedule.
The problem most small businesses face is that they grow organically and buy IT equipment as they grow. As a result they finish up with a range of computers from new to many years old with a range of operating systems and a range of software versions – probably a range of brands as well.
Ken was in this very situation four years ago when he decided to change his model.
Support costs were blowing out due to the range of problems and the range of suppliers involved. Each PC was purchased at full price and the finance options were close to credit card rates because of the small deal value. Buying the PCs outright would have too much of an impact on cash flow and with no standard operating environment, it was too hard to move people between machines to cover outages.
The advantages of moving to a level playing field
For Ken, buying close to 30 PCs and a server in one deal with new peripherals and software made it a big deal to vendors so it was possible to get bid pricing and have vendors compete for the business. This reduced the purchase price of each machine – possibly by 15 to 20%.
Finance could now be put in place at rates closer to home loan rates, rather than credit card rates, saving another 5%.
Build costs per machine shifted by at least 30% due to the installation of a standard environment, which allowed mass deployment methods to be used. This also improved consistency and reduced faults and support calls later.
After sales service was bundled into the sale so all the PCs remained functional for the whole life cycle. This meant no more piles of PCs waiting for someone to have time to figure out who to call to get a part swapped out and staff could easily grab a spare device when there was a critical problem with any one computer.
The leasing arrangement was tax effective as computer equipment depreciates quickly. This further eased cash flow.
The monthly payments were fixed and could easily be scheduled and worked into cash flow; no lump sum costs when anything failed.
Overall IT network services costs were reduced offering additional savings on a monthly basis. We certainly reduce our complexity factors leading to lower monthly prices for this sort of structured environment.
At the end of a four-year cycle, these machines are likely to have some small value to PC recyclers who will buy a set of matching equipment and remove it from site further reducing cost of removal.
Having had this experience, Ken is keen to ensure he keeps doing this across as many businesses as he can.
So if you have a business that has let IT equipment become aged and mismatched, you may have a great opportunity to replace the whole fleet or a significant proportion of a larger fleet to take advantage of these significant savings.
Combined these savings add up to more than 25%, which effectively gives you the fourth year free.
David Markus is the founder of Combo– the IT services company that is known for business IT that makes sense. How can we help?