When it comes to benefiting from efficiencies gained from developments in technology, housing providers are no strangers to the concept of investing in new equipment to deliver cost savings. Many organisations in this sector have already recognised the need to optimise investment in IT, and this goes hand-in-hand with a growing awareness that the method of procurement is fundamental to this process.
In a market that is seeing increasing consolidation, procurement of services such as technology is firmly in the spotlight. One solution is asset finance which, for those that have not previously considered this form of funding, offers significant operational, strategic and financial benefits.
Asset finance enables companies to lease IT equipment purely for the duration of its useful life rather than to purchase it at full cost, with the future resale value reflected in lower rentals and supporting regular upgrade cycles which in turn can reduce maintenance costs, and includes compliant disposal by the lessor.
Benefits of asset finance
The benefits of using this form of technology funding include:
- Flexibility: equipment can be leased for a specific period of time that suits your business;
- Frees up capital: cash can be used elsewhere in the business, or to align with the company’s financial strategy;
- Budgeting: costs are known at the start of the agreement and fixed for the contract term so that income streams are clearer and allowing the business to plan better;
- Cost savings: the future resale value can be reflected in reduced rentals;
- Lower cost of ownership: leasing encourages an optimum replacement cycle and therefore avoids the rise in maintenance, support and software expenditure;
- Disposal: the lessor is responsible for disposing of the equipment in accordance with the Waste Electrical & Electronic Equipment (WEEE) Directive.
Funding is only one aspect of the wider packages available from providers of technology asset management services. The broader range of services available on the market enables businesses to manage their IT systems more efficiently and cost effectively, and are evolving to play a more significant role in today’s business environment.
Within the technology asset management market we have noted that there has been a shift in focus to more inclusive funding packages that address software costs and also finance for installation in order to provide greater flexibility for businesses that want a more integrated approach to the funding and management of their IT estates. Funders have extended this to recapitalisation of customer-developed software.
For example, we have sought to identify sector-specific IT funding requirements for housing providers and have developed end-user covenants that provide tailor-made funding for managed service companies so that they can provide their customers with a total business solution.
In addition, ConvergeOne offers lease finance through Lombard Technology Solutions, aligning technical and finance support. Alliances like these enable both parties to widen the range of services to customers in this sector and provide a more structured approach to business needs.
As IT asset management services expand, it is important that housing providers are aware of what suppliers can provide.
Where multiple locations are involved, managing technology assets becomes fundamental. Asset management systems, such as our own online system, enable tighter budget management, advanced end-of-lease management and extensive support capacity so that a customer understands where each asset is located and is able to integrate it into the broader IT estate.
Another service that is particularly relevant to the social housing sector is an invoice management facility which means that organisations link IT investment to work cycles through a pre-lease facility. This is agreed for a specific period of time, for example three months, and acts as an overdraft, with suppliers invoicing the asset management provider directly. At the end of each period, the amount invoiced is rolled into the lease.
Finally, at the end of the IT asset’s life, disposal is a specialised process that not only has considerations for individual environment policies and responsibilities, but which also needs to be managed to meet the WEEE Directive. This was introduced to the UK in 2007 to promote the recycling of materials used in technology production and to minimise landfill and its harmful effects. It is the responsibility of the business to ensure that their equipment is disposed of correctly.
Safe disposal of IT assets
More and more businesses are starting to realise the high costs of ‘safe disposal’ and are turning to a technology rental or lease agreement where disposal is included as part of the service. At the same time, it is important that housing providers can continue with their day-to-day business and remain confident that they have complied with legislation through their finance partnership.
Using a specialist asset management provider therefore not only improves cash flow but provides a plethora of functions and benefits for housing providers operating in today’s economy. By exploring what can be provided, your organisation will have more time to focus on core business functions and not only optimise IT efficiency but also deliver a higher quality service to your tenants.
Mark Kelly is the relationship director at Lombard Technology Services and Tony Beddows is the commercial Director at ConvergeOne.