Dell: how to match your technology to your finances
When you think of a successful business, you often think of one of the giants like Amazon, BT, or Tesco with a huge physical footprint and the in-house technology engine needed to power that success. But success comes in all shapes and sizes, as does the equipment needed to power that success. The neighbourhood shop on the corner can be turning a steady profit and meeting the needs of its customers perfectly. While you might think that all that shop needs is a standard cash register and an accounts book, in today’s world every business regardless of size needs to up its game technologically in order to maintain its success. However, no matter your size or market share, IT budgets are always tight – so how do you match your finances to the technology you need?
With the technology industry shouting about new trends every few months, it’s hard for businesses to take a step back and understand what IT they actually need to implement now to meet their needs. One month they’re told that they need to make their business mobile-friendly and then the next month, everything needs to be software-defined. These trends are all important but budgets simply won’t stretch to accommodate all at once. It’s imperative that businesses be able to form a trusted relationship with their IT partners and work closely together to develop a tiered roll-out plan that involves all of the technology that the business needs to prepare for the demands of the future. Taking this step is increasingly important as it’s become clear that IT has become more than a support function – organisations now look to IT to generate revenue and find savings through efficiency.
Even with a tiered roll-out plan, however, some businesses may still struggle to match their finances to the technology they need. A complete IT infrastructure is necessary for most businesses but that infrastructure can come with a big price tag. Technology vendors are increasingly offering financing options that allow businesses to purchase the technology they need now, without emptying their pockets. The next question is how businesses choose the finance option for them from the long list available. Let’s look at some of the key options:
Fair Market Value Lease – This option allows businesses to contain their budget and get the most efficient technology at the same time. Under a fair market value lease, businesses can rotate equipment every three years, allowing them to save on maintenance, enhance security and support overall operational efficiencies. It allows businesses to meet immediate technology needs while preserving cash flow and with the option of purchasing the technology at the end of lease term for its current fair market value.
Finance Lease – A finance lease, sometimes known as a full payout lease purchase, offers an end-of-lease acquisition plan, enabling businesses to purchase equipment for a nominal amount at the end of their lease term. This option allows businesses to manage their cash flow and possibly qualify for a standard depreciation on owned equipment by allowing low budget payments over time, with the option to purchase the equipment at end of lease for a nominal amount.
End-of-Lease Options – When a business comes to the end of its lease, it may still be unsure of whether or not to take the plunge on buying the technology it currently has in place. With a flexible end-of-lease option, you can choose to purchase the equipment at fair market value, return the equipment and possible start a new lease of fresh kit, or renew the lease of your current equipment.
Loans – Loans are straightforward and a financing option that businesses have been engaging in since the dawn of industry. When you are acquiring equipment, a loan offers a way to spread the initial cost over the life of the project. Loans are available for set time frame and the timing of repayments can be negotiated.
Consumption-based Options – Consumption based payment options offer a more flexible route for businesses. Options that let you scale depending on your demand, get rid of lengthy procurement cycles, pay as you grow, or run evaluation periods with technology before payment are all available. These models allow businesses to simply pay for what they’re using and what they need as and when.
Buying the technology that you need for your business can be a confusing and expensive project. However, by working closely with your technology vendor you can find the technology that you need and the engage in the financing options to make it happen without working to a “one-size-fits-all” model. Every business is different so make sure that you don’t get trapped by standardised solutions. Pursue the customised structure that you need to make your business a success.
By Alan Petters, UK Director for Dell Financial Services
Read the January 2017 issue of Business Review Europe magazine.
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