Buying vs. Leasing and Outsourcing Technology
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Buying vs. Leasing and Outsourcing Technology January 19, 2007 Downers Grove, IL
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Buying vs. Leasing and Outsourcing Technology. January 19, 2007 Downers Grove, IL. Leasing vs. Buying. Service Associate Member of Illinois ASBO. Introduction Leasing Basics Leasing Benefits Leasing Programs Leasing Partners Leasing Process Success Stories - PowerPoint PPT Presentation
Transcript of Buying vs. Leasing and Outsourcing Technology
Buying vs. Leasing and
Outsourcing TechnologyJanuary 19, 2007
Downers Grove, IL
Leasing vs. Buying
Service Associate Member of Illinois ASBO
Overview
Introduction
Leasing Basics
Leasing Benefits
Leasing Programs
Leasing Partners
Leasing Process
Success Stories
When to Lease & When to Buy
Introduction of Leasing Presenters
Jason Marquardt
Director of Sales
American Capital
(630) 512 - 0066 x118
John Vonder
V.P. of Business Development
MMF Leasing
(630) 389-9921
What is a lease?
• By definition, a lease is a contract by which one acquires equipment for a specified period of time for a specified rent paid to the lessor.
• For Schools, a lease is a way to acquire and/or finance equipment without voter approval.
• Leasing does not constitute public debt.
What can be leased?
• Computer Hardware
• Software
• Network Equipment
• Printers & Copiers
• Telephone Systems
• And Much More!
What are the benefits?• Conservation of Capital (100% Financing)• Consistent Budget• Avoid Technology Obsolescence
– Minimizes break/fix time– Reduces user/teacher frustration
• Lowest Cost of Funds• Disposal issues eliminated• Asset Management/Tracking
What type of leaseprograms are available?
Fair Market Value
•Lowest Cost of Funds
•Flexible end of lease options
•Ideal in setting up an equipment replacement program
$1 Purchase Option
•Often a tax-exempt lease
•Fixed ownership at the end of the lease
•Ideal for infrastructure or software projects.
Lease Partners - Banks
• Strengths– Competitive pricing for a tax-exempt lease– Often a local trusted partner
• Weaknesses– Limited leasing expertise– Rarely participate in FMV/Refresh leases
Lease Partners – Vendor Financing
• Strengths– Simplified process– Occasional vendor discounts to offer below
market rates
• Weaknesses– Rates are often higher– Limit a district’s flexibility on brands to lease
Lease Partners – Independent Lessor• Strengths
– Niche expertise– Diversity in structures available to district– Flexibility to combine multiple brands– Competitive pricing
• Weaknesses– Reliance on funding partners– Unknown brokers often use unfavorable
contracts
Leasing Process
• Obtain planning costs (equipment & lease)
• Select equipment supplier & lessor (bid?)
• Board approval
• Documentation
• Equipment ordering & delivery
• Acceptance and Lease Commencement
Success Stories
• Local K-12 School District– Challenge: Technology obsolescence and
increasing technology staff costs– Solution: 3 year refresh program– Benefits: Less staff time spent on break-fix
work. Students and Teachers no longer dealing with obsolete equipment.
Success Stories
• Local K-12 School District– Challenge: Large technology acquisition
needed on a limited budget– Solution: 5 year tax-exempt lease– Benefits: Low payments spread out over 5
years and structured to keep the technology budget level
When to Lease & When to Buy
• When to Lease– Desire consistent budget
– Desire to conserve capital
– Desire to maintain current technology
• When to Buy– Desire to self manage technology refreshment cycle
– Excess capital available to spend now and in the future
