MCPc Blog

Focus on Leasing: Managing End of Lease Process

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There comes a time in the life of all IT assets for them to be replaced.  As the IT decision maker, you are constantly involved in the budgeting and procurement of new IT products and services for various projects.  As a part of your project planning, the displacement/repurposing of old assets becomes critical to your success.  When you choose to lease, and are conscious of lease terms and end dates, displacement and disposal of old assets becomes predictable.

There are many processes - and therefore costs - associated with a reoccurring lifecycle project.  There are different ways to approach end-of-lease costs. Below is a list of factors to consider.

• Early termination penalties
• Shipping time and costs
• Coordination of logistics
• Paperwork and lease closing
• Certificate of data destruction
• Handling accessory items
• Update asset management tool
• Potential recycling and disposal
• Month-to-month payments
• Final QA of leased hardware
• Harvest of software licenses
• Regulatory requirements

Best Practices

As you can see, there are many activities required to successfully retire IT assets, and you need to consider the time and resources required to complete all of these tasks. There may also be software licenses required, such as programs required to perform HIPPA- or DOD- compliant data destruction.  If your organization is large and frequently involved in lifecycle refresh projects, you will likely build economies of scale for these processes. However, if your organization is small or medium sized, it may be difficult to employ all the resources required to successfully complete a lifecycle refresh. In this case, you may consider outsourcing some or all end-of-lease activities, so that your team can focus on other priorities.   

Plan for the Costs

One way to reduce your end-of-lease costs is to plan for them, and build some of these expenses into the lease payments. For example, leasing a manufacturer's warranty that matches the lease term will help keep costs down. Also, your lease agreement probably has stipulations for excess wear and tear, and having a manufacturer's warranty can help cover the costs of repairs before the leasing company receives the asset. 

Plan for the end of Lease Early

Sometimes managing the end-of-lease process is as simple as planning it when you first sign your lease agreement. By planning at the beginning of your engagement, you give yourself the maximum amount of time available to pull off a successful end-of-lease project. If you choose to begin planning later, a best practice is to start at least six months before the lease end date. 

Engage Your Lease Partner

Treat the leasing company like one of your own internal resources. They are, after all, your partner.  Meet to discuss their requirements. If a particular requirement is going to be difficult, ask for a workaround or creative way to mitigate the risk. Your lease partner wants to stay engaged, especially because this gives them an opportunity to continue to earn you business. 

Consider Working with a VAR/Reseller

The VAR/reseller community is a rich resource for lifecycle management projects. End of lease services are common among VARs/resellers, and many have built tremendous scale around them. If you are a part of a small- or medium- sized business, this may be a cost effective option to pursue. 

Involve The Manufacturer

If the manufacturer was involved in any part of the leasing process, they may also offer end-of-lease services, and may be able to offer creative solutions to lower your current end-of-lease costs.

This post concludes my series on a Focus on Leasing. I hope this information has provided you with new insights, suggestions and tips on how to approach and manage your leasing environment.  Doing so can positively impact your future technology lifecycle refresh projects in the most cost-effective way possible. Thanks for your time!

Focus on Leasing Topics:

1. Leasing Vocabulary
2. Financing Decisions
3. Advantages of Leasing
4. Capital vs. Operating Leases
5. Understanding My Payment
6. Picking a Lease Partner
7. The OEM Lease
8. Interest-Free Leasing
9. Managing Lease Schedules
10. Managing the End of Lease Process

Jeffrey Goldstein is Senior Consultant at MCPc and is responsible for the delivery of hardcopy and value added services within the Lifecycle Management Group.  Jeff earned his BS in Management of Information Systems and Supply Chain Management from The University of Akron and his MBA from the Weatherhead School of Management, Case Western Reserve University.  Connect with Jeff on LinkedIn.

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