Using Leasing to Support your Technology and Budget Strategies

Leasing presents an opportunity for school systems to maintain up-to-date technology equipment and build consistent upgrade and replacement cycles into their technology strategy without significant capital expenses.  
A fixed monthly payment is agreed to for a set time period for devices in a technology lease. Typical leases are 36, 48, and 60 months in duration.  In addition, the equipment company is most often responsible for repairs and replacement of equipment when there is equipment failure, and recovery/disposal of the equipment at the end of the lease term.  
 Leasing can offer significant benefits to a school system, including:

 
  • Lower initial expense - the initial cost outlay for leasing is significantly less than for a capital equipment purchase.  Instead of having to produce all the funds upfront for technologies expected to last three to five years, a lease spreads the cost of the device across the usable life of the equipment
  • Release from ownership responsibility - if the leased equipment fails or breaks, the company that owns the equipment will fix or replace it
  • Release from a long-term commitment to an item or device - with leased equipment; it is often possible to build the option to upgrade the equipment into the lease and make the upgrade when needed.  For example, if that leased firewall no longer has enough capacity to support the organization’s network traffic, upgrade it through the leasing company and move on. 
  • Becomes part of your base budget for operations - leasing requires a monthly recurring payment for the leased equipment.  These monthly costs are easier to build into operational budgets and are predictable and easier to explain than large capital purchases. 
  • Keeps your equipment up-to-date - leasing builds technology refresh cycles into an ongoing cycle and eliminates the need to run equipment past its viable lifespan.  This also increases staff efficiency and reduces the amount of support time spent troubleshooting and repairing outdated equipment. 
Getting started with leasing requires the support of procurement staff and a clear plan for transitioning from purchasing equipment to ongoing leasing.  The first steps to a successful leasing strategy are to:
  1. Have a clear inventory of equipment,
  2. Create a plan for where and how leasing would be implemented in the organization, and
  3. ain an understanding of the procurement rules that govern leasing practices.
Leasing helps support a transition from a capital expense to operational expense models.  The benefits of moving costs out of capital expenditures and into operational expenditures, where they become more predictable and manageable as recurring costs is discussed in this CoSN Blog: Moving from Capital Expense (CapEx) to Operational Expense (OpEx)

Amy McLaughlin, MS, CETL, is the Project Director for CoSN’s Smart Education Networks by Design (SEND)  Initiative.  Mark Finstrom, CETL is the Chief Technology Officer for Highline School District (WA).