Many companies are not aware of the significant benefits related to acquisition financing in computers and technology segments. The proper term for this type of financing is ‘ Technology lifecycle management ‘. Most business owners simply consider the following question: ‘Should I buy or lease my firms new computers and software and related products and services?’
Two old adages related to leasing still ring true when it comes to the technological aspect. That is that one should finance something and depreciates, and one should buy something that appreciates in value Trizetto login . Most business owners, and consumers as well know very well that computers depreciate in value. Systems we paid thousands of dollars for years ago are now hundreds of dollars. Walk into any ‘ big box ‘ retailer and see the dramatic moves in technology.
Business owners who finance technology demonstrate a higher level of cost effectiveness. The company wants to reap the benefits of the technology over the useful life of the asset, and, importantly, more evenly match the cash outflows with the benefits. Leasing and financing your technology allows you to stay ahead of the technology curve; that is to say you are always using the latest technology as it relates to your firms needs.
Businesses that lease and finance their technology needs are often working better within their capital budgets. Simply speaking they can buy more and buy smarter. Many companies that are larger in size have balance sheet issues and ROA (return on assets) issues that are compelling. They must stay within bank credit covenants and are measure often on their ability to generate income on the total level of assets being deployed in the company.
Lease financing allows those firms to address both of those issues. Companies can choose to employ an ‘ operating lease ‘ structure for their technology financing. This is more prevalent in larger firms, but works almost equally as well in small organizations. Operating leases are ‘ off balance sheet ‘. The firm adopts the stance of using technology, not owning technology. The lessor/lender owns the equipment, and has a stake in the residual value of the technology. The main benefit for the company is that the debt associated with the technology acquisition is not directly held on the balance sheet. This optimizes debt levels and profitability ratios.
People – Processes: People understanding what they are supposed to do. For example, I have to travel today to Pune. This is a basic requirement. This is accomplished in many ways, by walking or by other productivity tools such as automobiles, etc. Similarly, in a software manufacturing unit, the business frames the requirement for people. For example, “We want a time card system automated” Without understanding processes, there can be enormous wastage of resources. For example, Just-in-Time production, saves the world from a preposterous inventory holding phase in a product life cycle. Processes are the key to understanding variations in the end product, and to studying the impact in the way affected groups such as Sales, Business Development, Engineering, Production, Production Support, etc. interact. This study can effectively provide an answer to questions such as optimum utilization of resources.
People – Technology: People create machines and other tools for enhancing productivity. The world today has changed because of innovators. Nobody could imagine in 1900 that a mail transport system carrying messages at almost the speed of light would be invented. We do not know whether in the future a human civilization would be set up in space. Nor do we know if time travel, which has been theorized until now, would become reality. NASA has already ejected probes into the universe which are time-controlled and can return to the earth in about 10,000 years time. These carry information about the current world. Without technology, Man is just another life-form controlled by forces of evolution.
Process – Technology: This interaction provides the framework for large scale manufacturing. Processes to make technology in bulk, reduce defect rates and streamline quality both in the production line and in the final product. Today the world is more livable because there are identical products which are available to everybody. A researcher can simply state that “It is possible to travel in the time dimension as the Universe is a juxtaposition of both time and space”. But a producer has to produce that technology which may enable this. Both are equally difficult. But without large scale operations, and study of processes which enable technology, it is impossible replicate a difficult activity repeatedly. Repeatability enhances reusability. Reusability in turn enhances quality and productivity.