Leasing offers added benefits in tough times
reprinted with permission from the HP Small Business Center

Today's economic climate of rising energy costs, uncertainty in global financial markets and relentless pressure to drive down business costs poses multiple challenges for most companies. With the economy sluggish and financial "fuel" scarce, making the financial commitments needed to enhance or even maintain an IT infrastructure can be difficult. Yet those firms that make sound decisions in tough times by strengthening their infrastructure will be best positioned when the economy recovers and demand picks up.

Spending slows but still grows
According to IDC, a leading provider of global IT research and advice, IT spending is slowing—but still growing. Year-over-year spending growth for total IT is expected to slow in 2008 and 2009 before picking up in 2010.[1] In a June 2008 customer survey by HP Financial Services, some 75 percent of respondents said that current economic conditions have detrimentally affected their budgets. Nearly three in four said their companies have delayed or canceled new projects, 59 percent said they have scaled back or delayed new hardware deployments, and 52 percent said their companies have reduced head count.

What conclusions can we draw? One likely prospect is that companies will scrutinize their IT plans and budgets more closely than in recent years. If the economy weakens further, budget pressure will intensify. If sales slow and capital sources dry up, many organizations can expect to face an increasing need to slash budgets and slow or remove programs.

Leasing offers advantages
The problem is that most companies cannot afford to scrimp on IT investment. IT is so integral to virtually every business that many companies are looking for ways to be savvier about investing in IT; leasing, for example, is emerging as a very attractive option.

Companies are choosing to lease for a variety of reasons. Preservation of capital is one. Leasing allows companies to conserve capital and expands their buying power by eliminating the need to deplete budgets or borrow for a cash purchase. At a time when lending for capital purchases may be restricted and internal capital sources may be limited by slow business conditions, leasing reduces the quest for cash.

The drive to make IT more "green" plays a role, too. Because environmentally responsible practices are now seen as a necessity, not a luxury, corporations place a premium on the expertise leasing providers can offer in asset management and the safer disposal of decommissioned PCs, notebooks, monitors and other IT equipment.

Even companies that own their equipment are taking advantage of leasing options through sale-leasebacks. With a sale-leaseback, customers sell their existing equipment to a leasing company, which in turn leases the equipment back to the end-user. Through this model, companies free up capital without losing use of the equipment on which they rely.

Choose the right provider
Now more than ever, it's important to choose the right provider—one that will be there for the long term. IDC asserts that companies with direct access to capital, such as HP Financial Services, are best positioned to weather the storm.

HP Financial Services offers a wide range of leasing and financing options designed to provide you with access to the equipment you need while minimizing the financial and technological risks that accompany ownership. And because HP Financial Services is part of HP, one of the world's leading IT companies, it understands IT. It offers financial solutions that help customers manage to the lowest total cost of ownership—from planning and acquiring technology all the way to replacing and retiring it. HP Financial Services can even help you manage the risk of dealing with older or surplus IT equipment.

For more information on how HP Financial Services can help you manage your IT infrastructure in difficult times, contact us for more information.