Deciding whether and where to lease or buy IT hardware can be a difficult choice to make. You must choose the most cost-efficient option that allows you to scale up while maintaining security standards and controlling all parts of IT asset management.
This article looks at the cost of leasing IT hardware, the advantages of buying IT hardware, how IT asset management helps with the decision, and the best IT logistics practices for managing IT assets. We’ll end with some insights from our expert team on remote work.
So, leasing IT hardware may seem tempting, because of its low initial cost. But is that true?
Pros of Leasing Hardware
- Lower Initial Costs: The upfront cost of leasing is much lower than that of buying hardware. For example, the hardware may cost $500 per month, whereas buying that same hardware may cost $12,000.
- Predictable Monthly Expenses: Leasing hardware typically involves a flat monthly fee, making it easier for companies to budget.
- Easier to Upgrade Technology: Leasing agreements often include the possibility of upgrading to newer models.
Now, leasing may sound great, but it does have some costs.
The True Cost of Leasing IT Hardware
Determining the cost of leasing hardware requires a bit of thought, and it extends beyond financial costs. But firstly, looking at the purely economic side of things, it’s worth noting that the rental and leasing industry, which includes IT equipment leasing, reports an average gross profit margin of 37.2%
1. Higher Long-Term Costs
Businesses typically spend more on equipment than it is worth over its lifetime. For example, leasing a laptop for $50 a month on a 3-year contract will cost $1,800, already over the price of the device. However, if the lease is for two additional years, the total rises to $3,000, far exceeding the laptop’s price of $1,500.
2. Less Control
The restrictions placed on leased devices reduce business control over software installation, hardware upgrades, and device configurations, making it harder to integrate with existing systems.
3. Risks to Data Security
Companies must return their leased equipment after the contract ends, but sometimes, it contains unreleased personal data. Failure to properly dispose of data can lead to a potential security incident.
A 2023 Verizon Data Breach Investigations Report found that over 20% of all data breaches are due to lost or improperly disposed devices.
It is tempting to choose leasing for its lower upfront cost; however, less control, data security risks, and escalating expenses make leasing an undesirable solution for IT hardware.
The Advantages of Buying IT Hardware
Buying hardware is often better than leasing hardware equipment for these reasons.
1. Full Ownership and Lower Costs in the Long-Term
Buying IT equipment grants absolute ownership without regular payments or hidden costs, which leases can have. These accumulated savings allow companies to execute more projects, particularly those related to developing IT infrastructure.
2. Control and ITAM Integration
Owning IT equipment allows a business to operate custom software and receive system updates without additional costs. Additionally, integrating with IT asset management systems becomes much easier because the company has complete control over tracking, monitoring, and maintaining devices.
3. More Secure Data and End-of-Life Management
Organizations with IT assets entirely control data deletion and handling methods with full control from deployment until end-of-life management. This complete control makes it easier for companies to delete and securely handle data.
Disadvantages of Buying IT Hardware
- Higher Initial Costs: Buying hardware means you pay the full price from day one. However, over a longer time horizon, it’s cheaper than leasing.
- Depreciation: Technology innovates rapidly, so purchased hardware can become outdated after a few years.
- Maintenance and repairs: Device owners are responsible for this. Hence, without proper IT asset management processes, businesses may experience delays and higher repair costs.
IT asset management is non-negotiable within IT logistics systems, regardless of whether you lease or purchase hardware.
How ITAM Helps with the Decision
A properly developed ITAM strategy enables businesses to track, maintain, and optimize their hardware confidently.
Asset Lifecycle Management
An ITAM software helps organizations monitor asset usage, maintenance, and retirement schedules. Effective ITAM lets organizations determine the correct times to update, replace, or retire their hardware equipment to maximize asset lifespans and reduce unnecessary costs.
Lower Cost and Budget Planning
ITAM tools analyze and generate usage data about IT hardware to help businesses choose between leasing and purchasing assets. More specifically, they provide data on lifecycle costs, depreciation, and maintenance expenses to help companies extend the lifespan of their IT equipment and reduce unnecessary costs.
Compliance and Risk Mitigation
When leasing hardware, organizations must safely wipe data before returning it, or there could be a catastrophic data breach.
For example, Forbes notes that 60% of data breaches result from unpatched vulnerabilities. Organizations may struggle to identify and address these vulnerabilities without effective IT asset management, increasing their risk exposure.
This issue disappears completely when a business owns the hardware; it can dispose of and destroy data more efficiently. Using the best IT logistics practices also helps manage buying hardware.
Best IT Logistics Practices for Managing IT Assets
Companies that apply proven IT logistics and asset management processes get maximum return from their IT expenditure.
Centralized IT Procurement
Implementing a system that integrates multiple IT vendors and purchases in one place can help businesses get better prices, ensure perfect hardware compatibility, and save time.
Secure and Scalable IT Deployment
According to Hiring Thing, 42% of companies don’t have dedicated remote onboarding technology. An IT logistics structure allows businesses to simplify employee onboarding by delivering ready-to-work devices without any headaches.
Efficient Offboarding and IT Asset Disposal
Ideally, an automated IT offboarding solution collects devices from a remotely offboarded employee while providing complete security protection.
Organizations using the proper IT logistics practices improve their IT asset lifecycle management process, quickly onboard workers, and, most importantly, minimize costs.
Conclusion
Many companies choose to lease IT equipment because it may be tempting due to lower initial costs.
However, in the long term, leasing is more expensive, has less control over assets, creates potential security risks, and integrating the hardware with IT asset management systems can be a pain in the backside due to its software restrictions.
Conversely, purchasing hardware can save a fortune, provide complete ownership, and allow for much better integration of IT asset management systems.
If you’re looking for a more innovative, efficient way to procure, manage, and optimize your IT assets, sign up to Dots for free to see how easy IT logistics can be.
