High Upfront Costs
Purchasing new technology requires a signficiant outlay of capital upfront - something that's not always in the budget. This large expenditure can strain cash flow and limit a business's ability to invest in other business requirements, digital transformation, and/or operational improvement. As a result, businesses may struggle to stay competitive and keep up with advancements in technology.
Balancing Innovation and the IT Budget
For many organisations, keeping up with technological advancements while managing the IT budget can feel like an uphill battle. IT devices, such as laptops, are essential tools that power daily operations, enable productivity, and drive customer satisfaction. The rapid pace of technological innovation means that equipment can quickly become outdated, creating a competitive disadvantage and hindering productivity.
Regularly refreshing IT hardware in line with the devices' recommended lifecycle enables businesses to keep up to date and reduce data security, productivity, and efficiency risks. However, refreshing equipment through a purchasing model can be complicated and come with a hefty price tag—particularly for large businesses with complex IT environments.
IT leasing offers a practical solution to this dilemma. By replacing large upfront costs with manageable payments, leasing allows businesses to access the latest technology without depleting their budgets. With added benefits like improved cash flow management, scalability, sustainability and streamlined lifecycle processes, leasing is not just an alternative—it’s a model that helps businesses stay ahead.
Let’s explore why leasing may be a better option for your organisation.
Why shouldn't we purchase our IT equipment?
While purchasing IT equipment might seem like a straightforwardit comes with a host of hidden challenges that can impact your company’s bottom line and operational efficiency. Let's take a look at some of the impacts of choosing a purchasing model for IT equipment.
Technology obsolescence
Managing an in-house refresh cycle demands significant planning, coordination, budget and resources. As a result, it is typical that organisations that purchase delay refreshes and continue to equipment that has surpassed its useful life. Outdated equipment incurs higher maintenance and repair costs and negatively impacts productivity as employees are subject to device failures or limitations.
Lack of Flexibility
Once a business purchases new equipment, it is locked into that asset regardless of whether the equipment continues to meet its needs. In the midst of rapid technological innovation, purchased equipment can quickly become obsolete. As a result, businesses are at risk of being stuck with outdated devices that negatively impact productivity and competitiveness.
Lack of Scalability
Purchased equipment cannot be easily scaled up or down to match changing business demands. This can be particularly challenging for companies experiencing growth, seasonal fluctuations, or shifts in market conditions. If a business grows, it may find itself needing additional equipment, which means incurring unplanned expenses. Conversely, during periods of reduced demand, businesses are left with excess equipment that still incurs maintenance and storage costs.
End of life disposal risks
When a company purchases technology outright, it takes on the full responsibility for the end of life phase. This includes ensuring the safe and compliant disposal of the technology, which can be a complex and resource-intensive process. Businesses must securely erase all personal and commercial data to protect against breaches or misuse. Failure to properly manage this can lead to negative legal, reputational, and financial impact.
Additionally, companies must navigate environmental regulations for e-waste disposal, ensuring that obsolete equipment is recycled or disposed of in an environmentally responsible manner. Non-compliance with these regulations can result in hefty fines and damage to the company’s reputation. Handling these responsibilities in-house requires time, expertise, and often additional costs, which can strain internal resources.
The Benefits of Leasing Technology
Avoid large upfront investment
Unlike purchasing, technology leasing enables companies to spread out their investment over the useful life of the equipment. Instead of incurring a large capital outlay, leasing enables businesses to repay their investment in a smaller and predictable regular repayment over an agreed term. This allows organisations to invest their cash in other business requirements to support growth or maintain a competitive edge.
More sustainable than purchasing
Leasing helps businesses manage their assets in line with the principles of a circular economy. Devices that are returned to the leasing provider undergo strict data erasure processes, refurbishment and resale. If assets are not fit for refurbishment and remarketing, they are responsibly recycled. Leasing and Device as a Service (DaaS) models also have a lower carbon footprint compared to purchasing models without reuse.
Lower total cost of ownership
Equipment leasing models typically have a lower total cost of ownership (TCO) compared to traditional purchasing models. Instead of bearing the full upfront cost of purchasing equipment and the ongoing expenses for maintenance, repairs, and eventual upgrades, leasing allows businesses to streamline these costs into predictable, manageable payments. Leasing agreements can also include maintenance and support services, reducing the burden on internal IT teams and mitigating unexpected repair costs.
Flexible and Scalable
Leasing provides businesses with the flexibility to adapt their technology needs as circumstances change. Unlike purchasing, leasing allows for easy upgrades, additions, or reductions. This scalability is particularly valuable for growing businesses or those with fluctuating demands, enabling quick adjustments without large upfront costs or the hassle of disposing of unused equipment. Lease agreements also allow businesses to choose to return, extend, buy out or upgrade their equipment at the end of term.
Avoids ownership risks
When companies purchase equipment, they bear the financial burden of depreciation and the asset often becomes outdated before its cost can be fully recouped. In contrast, leasing shifts this risk to the leasing provider, allowing businesses to focus their resources on growth and operations rather than worrying about the declining value of their technology assets.
Leasing also protects businesses from the challenges of technology obsolescence. With rapid advancements in IT, what’s cutting-edge today may become inefficient or incompatible tomorrow. Leasing agreements often include options for upgrades or replacements, ensuring that businesses always have access to the most current tools without needing to invest in new purchases continually.
Additionally, the leasing provider assumes responsibility for the safe and compliant disposal of equipment at the end of its lifecycle. This relieves businesses of the complex and resource-intensive tasks of secure data destruction and disposal.
While purchasing may seem straightforward, it often comes with hidden costs, limited flexibility, and challenges related to obsolescence, scalability, and disposal. In contrast, leasing offers a modern, cost-effective alternative that allows businesses to stay agile, manage budgets effectively, and access the latest technology without the risks of ownership.
By shifting the focus from ownership to usage, CHG-MERIDIAN help businesses unlock greater value from their technology investments, ensuring they remain competitive in an ever-changing landscape. If you’re ready to make your IT strategy smarter, leasing is the way forward.
Who are we and how can we help?
CHG-MERIDIAN is an internationally leading asset finance and management company that develops, finances, and manages tailored technology solutions for the IT, Industrial, and Healthcare sectors.
We support our customers along the entire technology lifecycle, from finance, procurement and use to data erasure, refurbishing, and remarketing of used equipment. All of this is underpinned by our complimentary asset management system, tesma, which provides customers with complete visibility and control over their equipment and costs.
Over 15,000 customers across 30 countries, including international corporations, public authorities, and hospitals, have access to the latest technologies, cost-effective financing models, and tailored services that meet individual needs.
The sustainability-based principles of the circular economy lie at the heart of CHG-MERIDIAN’s business model. The Company has been continually expanding its expertise in this area since it was founded 45 years ago in 1979.
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Todd Fortescue Vice President of Sales, ANZ
CHG-MERIDIAN Australia Pty Ltd Suite 31.02, Level 31, 1 Market Street 2000 Sydney +61 29409 8200 info_anz@chg-meridian.com
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