Food + Beverage News

Stabilizing IT Expenditures While Maximizing Productivity

Stabilizing IT Expenditures While Maximizing Productivity

5/17/2016

The Limitations of Equipment Ownership

Traditionally, purchasing IT equipment implies a long-term commitment to a particular technology. Due to the rapid evolution of technology, projecting the useful lifespan of IT assets is difficult at the time of acquisition. Companies often find themselves saddled with aging or obsolete equipment as maintenance, OS upgrades and internal support costs continue to escalate. While IT struggles to keep systems running with patches and workarounds, downtime and user complaints increase.
 
Replacing obsolete IT equipment by direct purchase is also a significant expense that typically requires detailed capital expenditure documentation and financial rationales. Preferring to avoid a large cash outlay, management may delay approval and implementation of the project.
 
Such delays exacerbate the challenges of maintaining the old equipment. Lost opportunity costs also begin to rise as the IT department becomes burdened with maintaining existing systems and cannot implement forward-looking projects.

 

A Better Way to Acquire IT Equipment

Leasing enables companies to acquire equipment without large cash outlays. Equipment can be rented from the leasing company with a consistent, fixed-rate monthly payment for an appropriate term (often 36-60 months for technology equipment). Most organizations choose a lease structure that allows them to account for the monthly payments as operating expenses.
 
When the lease reaches maturity, the organization has several disposal options. They can return the equipment to the leasing company, continue to rent the equipment, or purchase the equipment. If the company elects to return the equipment, they can often acquire new technology without affecting the monthly operating expense. 
 
The disciplined refresh strategy of leasing can also improve interdepartmental interactions and corporate culture. Because equipment acquisitions have predetermined timelines, IT managers can reliably schedule system upgrades and new application rollouts. The organization no longer perceives IT as unreliable and chronically behind schedule and instead begins to view the IT department as a leader in improving productivity.

 

The Bottom Line

Leasing enables food and beverage companies to maximize both their IT operations and their budget, which allows them to keep up with the rapid pace of change this industry faces.
 
Learn more about how we are helping organizations like yours stabilize IT expenditures here: http://www.fafoodandbeverage.com/infrastructureandtechnology

Follow Us

First American Commercial Bancorp, Inc. is a wholly-owned subsidiary of City National Bank. Deposit products and services are offered by City National Bank Member FDIC. City National Bank is a subsidiary of Royal Bank of Canada. “First American Equipment Finance” is the trade name for certain equipment leasing and finance businesses of First American Commercial Bancorp, Inc. and its subsidiaries. Equipment financing transactions are provided in Canada by FA Equipment Finance, Inc. For California clients: Loans made or arranged pursuant to a California Finance Lenders Law license. All transactions are subject to credit approval. Some restrictions may apply. All trademarks are the property of their respective owners.

© 2021 First American Equipment Finance. All rights reserved.

Top