Owning Devices vs. IT Leasing

Every company should consider whether it’s more beneficial to purchase IT devices or rent them through a leasing company. In this blog, we examine both options and dive deeper into how does that affect IT asset management.

Before comparing these two different acquisition methods in detail, it’s important to note a few basic things:

• Any IT devices can be acquired by either purchasing, renting, or a combination of both.
• It’s advisable to choose a device supplier that fits the company’s needs and size. Typically, it’s best to consolidate purchases with one or two partners.
• Companies should centralize leasing with one financing company, depending on the type of devices being acquired. Switching financing companies is always an option.

Purchasing IT Devices

Pros:

When a company buys the devices it needs, it can do whatever it wants with them. Freedom creates value. The company can keep the devices in use for as long as it wants and manage them how they feel best. This is undoubtedly the biggest benefit of purchasing: as a buyer, you’re not dependent on anything, which also provides flexibility in changing situations.

Another argument for purchasing is cost-effectiveness; if the devices remain in use for a long time, their lifecycle cost will be cheaper than in the case of leasing. A long lifespan is also beneficial for the environment, as manufacturing a new device causes significant CO2 emissions. Once purchased devices are no longer of service, they can be sold for reuse at any time.

Cons:

However, purchasing also has downsides. The biggest of these is that your capital will be tied up in “hardware,” which could be used more productively elsewhere. Additionally, your own budget can set some limits for the purchases. On top of that due to the rapid development of technology, devices quickly become outdated, and the residual value risk falls on the company.

Leasing / Renting IT Devices

Pros:

With IT device leasing, the company’s capital is not tied up in unproductive “hardware,” allowing funds to be channeled towards growth. Leasing is often considered the best option by finance departments, and future costs are always known and easily budgetable.

Another significant benefit of leasing is that employees always have access to the latest technology. Computers often use a 36-month leasing period, and phones a 24-month period, respectively. At the end of the contract, the device is returned to the financing company, which handles secure deletion and the resale. 

Cons:

A clear disadvantage of leasing is that the company is always committed to using the device for the duration of the contract. In other words, if needs change, the leasing contract does not offer the possibility to return or exchange devices. The only option is to buy out the device from the financing company, after which it can be sold for reuse. This is often cumbersome and expensive.

Another downside to leasing is managing the device return process. It is often a nightmare for the company’s IT department. Without automation, it’s a very labor-intensive process. A new device must be ordered for the employee, which is put into use before collecting and coordinating the return of the leased device to the financing company.

As the importance of environmental impacts grows, the challenge with the leasing model is that leasing new devices causes a lot of emissions. Leasing solutions are not available for used IT devices, so for an environmentally conscious company, purchasing a refurbished device might be an interesting solution.

Managing Owned Devices

When a company owns its IT devices, it’s important to ensure their efficient use and ideal lifecycle length. The latter is particularly important, as the value of devices typically drops by about 5 percent per month. Therefore, devices that are phased out or unused should be recycled in a timely manner. Advanced ITAM software helps automate the monitoring of device lifecycles and ensures that devices are kept in efficient use and recycled at the right time.

With integrations updating lifecycle-related information and other maintenance can be automated, making device ownership efficient for your IT. Nowadays, ITAM solutions can also be integrated with recycling and new device ordering.

Managing Leased Devices

Almost all leasing companies offer their clients an online service where the company can view devices under contract and their contract details. This is an extremely important tool, as leased devices must be returned on time to avoid expensive lease extensions.

Separate ITAM software can manage leased devices from several financing companies in the same system and build automation for managing the return process. In addition, the same system can be used with the company’s owned devices.

Summary

Both purchasing and leasing are good options for acquiring IT devices. The best method depends on the organization’s starting point and resources. It’s also worth noting that the different acquisition methods are not mutually exclusive; sometimes leasing, sometimes buying is possible. Situations can also change over time.

With modern ITAM software, it’s possible to manage the device lifecycle with both acquisition methods and automate manual processes as much as possible.