[ale] Compaq Reliant web server

[Bao C. Ha]

Of course, you are correct, from a bean counter's point of
view.

I am viewing it differently, however.  There was already an
installed base of computer equipment.  There is a constant
flow of equipments to be upgraded all the time.  This is
a company with 25,000 people in one location.  And, there
was also a hand-down process to reuse equipment.  Although,
computer equipment is usually written off after five years,
their useful lives are longer than that.  I can sit down
with a bean counter to show that it makes sense to manage
the computer procurement better by buying it than to lease
it.  

In business, we do use leased equipments.  It sometimes makes
sense with high-end capital equipments.  

Bao

> -----Original Message-----
> From: owner-ale at ale.org [mailto:owner-ale at ale.org]On Behalf 
> Of Dan Mount
> Sent: Thursday, July 12, 2001 11:03 AM
> To: Bao C. Ha; ale at ale.org
> Subject: RE: [ale] Compaq Reliant web server
> 
> 
> -----Original Message-----
> From: Bao C. Ha [mailto:baoha at sensoria.com]
> Sent: Thursday, July 12, 2001 1:22 PM
> To: ale at ale.org
> Subject: RE: [ale] Compaq Reliant web server
> 
> <snip>
> 
> All of the computers are replaced by leased ones.  The
> 3 year-leases cost more than just to buy the computers
> outright.
> 
> Unfortunately, your tax-payer money is paying for these
> mis-management mistakes, which actually showed up as
> progresses.  This was an IT department which rebooted
> Unix servers at least once a week to fix a memory leak
> problem.
> 
> </snip>
> 
> I'm not an accountant (bean counters feel free to 
> elaborate/correct me),
> I'm not sure of specific numbers, but here is how I 
> understand the lease
> versus purchase decision.
> 
> Would you rather come up with all of that cash out of pocket, 
> or pay for
> it over time? A company buying large amounts of equipment 
> would run out
> of cash trying to buy all of the equipment that it might need. If you
> lease, you just start making monthly payments. Also leasing gives the
> company opportunities to write off the cost of the equipment 
> in the time
> of the lease. At the end of the lease the company would 
> probably replace
> the equipment anyway. Why not finance? Well, in certain cases it might
> be attractive, but leasing generally gives the company more 
> cash in hand
> and a quicker 'depreciation' versus purchase. Go talk to your bean
> counter about capitol expenditures versus leasing and he/she can give
> you more insight to the tax/financial implications that each brings.
> 
> DM
> 
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