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Buy, Lease, DaaS, or BYOD?: Which Option is Right for Your Business

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Leasing vs Buying Business EquipmentAs we noted in our last blog post, Moving Cloud Gets Real, small and midsize businesses like yours are reaching the tipping point where cloud solutions outweigh those running on-site. When this happens, you need to decide if/when you move your remaining on-premise systems to cloud infrastructure. As you do, you face the question about what to do with your end user devices, and more specifically, if leasing vs buying business equipment makes more sense.

Leasing vs Buying Business Equipment

Not Just a Desktop Computer Anymore

End user devices are no longer limited to the desktop/laptop purchased by the company. Most of your employees are regularly using personal smartphones, tablets, and other devices to conduct business — your business.

Four Options for Devices

When deciding on leasing vs buying business equipment and what devices your team will use, you have four options:

2. Buy

Purchase devices and provide them to employees, creating a company asset. Buy also includes finance leasing with the “$1 buyout” that gives you ownership of the device at the end of the lease.

2. Lease

Use a lease to pay for only the fair market value of the devices, returning and refreshing them with new models at the end of the lease.

3. BYOD

Allow users to buy and use the device they choose.  They own the device, but use it for work, exclusively or non-exclusively.

4. Device-as-a-Service (DaaS)

Device-as-a-Service, or DaaS, is similar to a lease in that you pay monthly per device. DaaS differs from a lease in that you can, within guidelines, adjust the number of devices up or down, swap out devices for newer models, and replace damaged devices without penalties during the term of the contract. Many DaaS services include malware protection, support, and other services in the monthly fee.

Unless you are buying your staff all of the devices, they use, you already have some mix of “buy” and “bring your own device” (“BYOD”). For many businesses past the cloud tipping point, DaaS and BYOD become the best solutions. DaaS and BYOD let you equip your team with the tools that empower their productivity while maintaining cost controls.

Regardless of Weather You’re Buying or Leasing Business Equipment, You Own the Data

Whether you own your users’ devices or not, you own the data and are responsible for security and privacy.  You need to ensure you have policies and systems in place to secure, manage, and protect your company’s data. This means installing mobile device management and data protection and security tools on devices used for business, even if they are owned by an employee. Failure to do so leaves your exposed to data loss and breaches, and the civil and criminal penalties that can result.

Fortunately, policies need to be complex or difficult to enact. Providing data protection to mobile devices (smartphones, tablets, and — yes — laptops) has benefits for your employees as well. The key is to ensure that your policies and the support technologies are aligned.

Reach Out for a Consultation About Leasing vs Buying Business Equipment

Now is the time to discuss your device strategy and how you are, or will, protect user devices and the company data on those devices. Contact us for a free Cloud Advisor session to discuss options, opportunities, and managed cloud services.

 

Moving Cloud Gets Real

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SMB Cloud Tipping PointCloud Computing is reaching a tipping point for small and midsize enterprises (SMEs) as the number and value of cloud-based applications and systems surpasses those running on site. Beyond email, SMBs use Software-as-a-Service solutions for customer relationship management, operations, finance, customer service, and vendor/supply chain management. SMBs want better integration between SaaS solutions and custom-built solutions to further enhance operations, marketing, sales, and the bottom line. Over the next few years, bots, machine learning/AI, and business intelligence will become the norm for SMBs as well as larger enterprises.

SMBs are moving core systems, infrastructure, and services to the cloud.

If all you have left on premise are your Active Directory services, some of your file and print servers/services, and a few business applications, moving your remaining IT services to the cloud makes sense. You can provide the same applications, data, and services without maintaining the physical infrastructure while enabling better integration of systems, processes, and information.

3 Strategies

You have three basic strategies to choose from when moving apps and systems to the cloud:

  • Beautify
    • Also referred to as “lift and load”, this strategy works best when you have (1) a custom-built application; (2) a customized system that cannot migrate to the vendor’s SaaS offering; and/or (3) a solution you do not want to further modify or rebuild as a cloud app.
    • In this scenario, we create cloud-based networks and servers to host and run your existing systems “as-is” with remote, secure access.
    • This option is an effective interim step to a more complete cloud solution.
  • Buy
    • In this scenario, you “buy” a SaaS solution from your current software vendor or move from your existing system to a new SaaS solution.
    • Your ability to “buy” depends on the capabilities of the SaaS solution(s) versus your current system usage and needs. For example, many businesses find that the SaaS version of Quickbooks lacks features and reports that they need an use.
  • Build
    • As the name implies, build means you are replacing an app or system with a new, cloud-based solution.
    • With the current evolution in bots, machine learning, artificial intelligence, and tools, many of your existing processes can be automated by cloud-native services with little or no traditional programming.
    • No-code and low-code solutions are the wave of the future.

Next Steps

Which strategy, or combination of strategies, is best for your business depends on several factors, starting with business goals, objectives, and priorities. Current capabilities, needed features/functions, competitive positioning, internal culture, cost, and value all come into play. When you properly plan and execute your cloud migration, you should see tangible and intangible benefits.

Contact us to discuss the possibilities and opportunities for your business.

 

Lease vs Buy: Time to Rethink Your Options

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Key for buy and lease
Historically, the “lease versus buy” decision for IT purchases focused on a business’ cash flow and the impact major projects would have on company financial statements.  CFOs would look at leasing options when cash flow was an issue, and to see if the capital expenditures or operating costs would best benefit ROI and other key metrics.

Three factors drive the need to take a fresh look at leasing versus buying:

  1. Trends in End User Devices
  2. Moves to Cloud Computing
  3. Interest Rates & Economy

End User Devices: With organizations moving away from traditional desktops and laptops to Chromebooks, tablets, hybrids, ultra-portables, and smartphones, the life cycle of end-user devices is changing.  These devices are not designed to last as long and compatibility with advancing systems and services is lost more quickly.  The original iPad, for example, was release in early 2010 and became obsolete with the release of iOS 6 in September 2012.

The impact on businesses is that, even though they are much less expensive, refresh and upgrade cycles will need to happen more frequently if devices are to remain connected to applications and systems.

Moves to Cloud Computing: As companies move to cloud computing the need to maintain hardware platforms to support legacy applications is dwindling.  And, the impact of IT as an operating expense versus capital expenditure is advantageous to the vast majority of small and mid-size enterprises.  The concept of monthly recurring fees is generally accepted, although many vendors charge a small premium for monthly versus annual prepaid fees.

The impact on businesses is that the flexibility in licensing and costs, and cash flow benefits come, at a higher price than one-time purchases and annual payments.  Leasing can mitigate these costs.

Interest Rates and the Economy: With a long, slow recovery and continued low interest rates, the finance costs for leasing have rarely been as low as they are currently. Even as the Federal Reserve tapers and ends its bond-buying stimulus, interest rates are expected to remain low as job growth struggles.

The impact for businesses is that the finance costs for most leasing opportunities are probably less than expected.

The Big Opportunity: Fair Market Value Leasing

Fair Market Value, or FMV, leases offer a unique, big opportunity for small and mid-size businesses today.

Win #1: FMV leases assume that you will return the equipment to the finance company and upgrade at the end of the lease.  As such, they match well with planned refresh cycles needed with today’s end user devices.

Win #2: The leasing company assigns a residual value to the assets.  Financing is based on the purchase price less the residual value, lowering the overall cost of the asset.

Win #3: At current interest rates, the interest cost of a 3-year lease may be less than the residual value of the asset, effectively creating a 0% or “Near 0%” financing option.

Win #4: Bundling annual prepaid cloud services lets you get the prepaid savings and still make payments monthly.  At current rates, the you will likely still pay less than monthly plans.

Win #5: You can combine hardware, cloud licenses, and services in your lease, giving you one payment for all services.  Leasing companies are flexible, with monthly, quarterly, semi-annual, and annual payment plans in order to best meet your business’ financial needs.

Granted, leasing is not for every business.  But, it is probably worth some exploration before your next purchase.  Feel free to contact us to discuss your needs and available options.