Information Technology Project Investment - Using OpEx instead of CapEx...

Written by Shackleton Technologies

Information Technology

IT managed services providers like Shackleton Technologies can provide their clients with one or two different options on hardware and software procurement. This is because procurement is different for every client, depending upon what their specific requirements and available budgets might be.

Substantial IT projects are typically purchased using capital expenditure (CapEx), but increasingly, modern businesses are using operational expenditure (OpEx) instead, particularly for the benefits of cashflow.

In business we are now used to paying for services on a monthly basis, so paying for hardware, in the same way, is no different.

The dilemma

Businesses all over the world will be under increasing pressure, in 2019, to spend big on their IT infrastructure.

The reason for this is that on 14^th January 2020 Microsoft will cease all support for a variety of software products, including Windows Server 2008 R2 and Windows 7. This means there will be no more patch and security updates making business devices all over the world less secure as a result.

These have been mainstream products for Microsoft for several years now and as a result, there are millions of devices, in businesses in every country in the world that will become vulnerable after the cut-off date.

Any IT consultant or managed services provider worth their salt, should be recommending to their clients that hardware running these products should be upgraded, or replaced well before the January deadline.

Why “well before”?

Well, experience has taught us that many businesses will leave buying new servers, PCs and laptops till the last minute. Whereas the more organised businesses will have scheduled any necessary project works, with their IT provider well in advance, ensuring their businesses are protected and also guaranteeing that all works are done at a time to minimise disruption.

Because of this, the last two or three months of 2019 and early 2020 will be fully booked for most MSPs, meaning they might not have available time to accommodate the needs of those who have delayed, so the general advice has to be, “act now”!

But this leaves businesses currently using these Microsoft products with a huge dilemma. How to fund the upgrade or replacement of their entire IT hardware infrastructure or at least large parts of it before 14^th January 2020.

IT leasing model

What if sufficient budget is not available to fund such a drastic business change?

That’s a great question and quite often, the reason businesses will delay on replacing hardware and software, when such deadlines are imminent, is down to a lack of available cash.

For most businesses, however, there are other methods of purchasing new IT equipment…one of these is the leasing model.

Leasing companies are lenders who will provide funding for all the hardware, software and even installation costs for an IT project to help keep businesses up to date and more secure.

Leasing offers the opportunity for businesses to pay a set monthly charge over a given period for expensive hardware items. Therefore, companies can avoid the large one-off payment for this equipment, which aids cash flow and helps with budgeting.

Lease rental payments are also 100% tax deductible against profits.

The solution

The message here, to organisations large and small, is, “there is no reason take risks with your business”.

Delaying the purchase of essential IT hardware, when your existing hardware is no longer supported, is a serious risk. Without patch and security updates, IT equipment can very quickly put a company at risk. Don’t take a chance with your business; seek expert advice.

Speak to your MSP or IT provider today about purchasing options for IT equipment.