Leasing Computer Equipment and System - Essay Example

? Lease or Buy Computer Equipment Today Table of contents Page Summary 3 Introduction 3 Present value 3 IT acquisition 4 Management issues 4 Leasing computer equipments 5 Why leasing computer system 5 Advantages of leasing a computer system 5 Disadvantages of leasing a computer system 5 Buying computer system 6 Why buy computer system 6 Advantages of buying a computer system 6 Disadvantages of buying a computer a system 6 Conclusion 7 References 8 LEASE OR BUY COMPUTER EQUIPMENT TODAY Summary A research has been taken, and it is seen that the rate at which technology is changing with, is emphasizing on a technology based on a client and a server, development of faster systems and shorter life sequences. This drastic change has resulted in the amendment of the budget of information technology, leading to the evaluation of its management. To adapt this technological change, institutions, must work hard and find new strategies to accommodate this change. In purchasing equipments like laptops and desktops, it is feasible and good to pick leasing, as it is cost effective. It is good to examine the management of information and technology process of an agency, determine the business needs of the institution concerning information technology and acquit an analysis based on the benefit of cost choice of leasing and purchasing, in the decision whether to purchase or lease equipments. If the decision is made in the correct way and for a good reason, it is effective in terms of cost and efficient to lease than purchasing equipments. It can be harder to manage and expensive to lease than an instant purchase of equipments, if the decisions are handled in the wrong way. Introduction Present value It is hard to compare the same amount of cost between the option of purchasing and leasing in the concept of present value. The cost of the future currency in today’s value of the currency is what referred to as the present value. Money available for future worth less at this time than the money you can use at that particular time. The future money one should use in leasing or purchasing is be converted to the current price to equate the actual cost of each one, when equating the alternative of leasing and purchasing. Information Technology Acquisition The first option of getting information technology in companies and institutions is by the outright purchase, which is gotten through the fund or revenue of any agency. This can only happen if restrictions are applied on the funds. Capital leasing is the second option, which is an accord that spreads the payment terms of equipments. After payment, the person who has bought the equipment, obtains a title to the equipment, but still he has been able to get access of the equipments. The buyer is able to spread the payment of the equipments in a given time to reduce the financial burden due to its acquisition. In an operating lease, one does not get ownership of the equipments. The seller retains ownership of the equipments and the person who has leased the equipments uses the technology for a given period (Taylor, 2003). Management issues The budget of information and technology has changed in all sectors, due to the fast development of information systems. This drastic change has led to the evaluation of the management issues of information technology. To control and understand the environment based on computers, full ownership cost and asset management, is required. Asset management binds the whole information technology ownership. It provides the environment control of computers to allow the director to purchase information technology equipments and price for the maximum cost efficiency. Lease terms should not be over 75 percent of the equipment. If the institution wishes to buy an item after a leasing period, the organization must pay the required price. The value at the starting point of the lease is not equal or greater than 90 percent. At the end of the lease, the lease cannot give the buyer the ownership of the equipment (Boobyer, 2003). Leasing computer system Why lease computer system A computer system is leased if an industry needs an improvement by the replacement of the old equipments, a business need has come up to change the technology, institutions and organizations are under downsizing, and a business need have risen up to acquire new technology equipments. Advantages of leasing a computer system Systematic replacement of the technology systems in institutions can establish the life cycle of the equipments and stick to them. New information technology systems are found where they can be returned afterwards after the lease contract is over. The time used to repair and maintain different machines and systems can be reduced. It reduces the expenses of information technology systems. Leasing is an operating expense that spread the cost over a period, than requiring high expenditures for hardware and software for fiscal years. Standardization is another advantage used to lease contracts, which help institutions to standardize particular programs, which result in saving the maintenance and work of the staff. Maintenance cost is lower due to the usage of new equipment. It is easier to dispose equipments as the vendor assumes the responsibility to cast away equipments. A new technology view is shifted to business tool than an asset or private orientation of the worker (Nathan, 2005). Disadvantages of leasing a computer system There is an administrative burden used to look for equipments and address with sellers. Institutions and organizations must be aware of where all the equipments are, and the return requirement since all leased equipments are the property of the seller. Leasing equipments is considered costly if the management of assets is not handled well. There is a great risk of signing a contract more than one year to one technology or one seller. This can reduce the power of the authority to use information technology effectively. Concentrating to a specific vendor makes it hard for the bureau to respond to unexpected demands due to lawful mandates or changes of the business (Nathan, 2005). Modifications of leased tools should be reduced since they will add more burdens on contracts, adding to the lease price. It is hard to stick to the changes of the industry so that you may get the least lease possible. Buying computer a system Why buy computer system Purchasing a computer may be preferred, since the equipment is used for a long period, which is more than three years. Leasing is highly discouraged if the life of laptops and personal computers is five years (Rankine, 2004). Companies and institutions do not have a faculty to chase assets and handle the lease. The full condition of the lease is not encountered, since funding is unsettled. Advantages of buying a computer system There is a wide familiarity and credence with buying techniques and essentials. The obligation and management systems for bought systems exist in the organizations. Purchasing systems avoids the problems affected with managing the leasing accord (Gilbert, 2003). Disadvantages of buying a computer a system Buying computers may prevent your agency’s power to take vantage of information technology advances when it is available. It binds your bureau to costly advanced equipments that may become quickly, making one unable to meet the agency needs. The usage of different level of equipments and programs may need a lot of time to repair than needed on projects. This also requires greater understanding among the information technology employees, which may decrease the chance for employees to communicate. The disposal of equipments can at times be costly and time-consuming. Buying a computer system is capital intensive with decreasing metamorphosis (Daniel, 2008). Conclusion A conclusion can be made to support leasing than buying since the advantages of leasing are more than those of purchasing. On looking to the number of years, a computer can serve; purchasing, a computer system, is considered the best decision. Considering the rising of technology in this modern world leasing is the best option, an institution can pick. References Boobyer C. (2003). Leasing and Asset Finance: The Comprehensive Guide for Practitioners. London: Euromoney Books. Daniel T. (2008). Determing prices on computer. New York: Chicago press. Gilbert. (2003). Cost-Effective Management Practices. Boca Raton: CRC Press. Nathan J. (2005). Leasind Information Technology. NewYork: Oxford University Press. Rankine O. (2004). Should users lease or purchase omputers. Michigan: Cengage Learning. Taylor J. (2003). Selling Leasing In A Tough Economy. New York: Jeffrey Taylor. Read More