Customer Solutions Guide

Transcription

1 Customer Solutions Guide Exploring the reasons why financing is used to acquire new IT solutions; and how Dell Financial Services offers an IT management tool that adds value throughout the technology life cycle.

2 Evaluating Lease vs. Buy 4 Table of contents Managing a refresh strategy 6 The impact of client equipment life cycle choices 8 Evaluating lease vs. Buy x86 servers 10 A comprehensive approach to funding complete solutions 12 A practical approach to deliver the value you expect 14 Simplifying IT Financing Financing: an IT management tool 16 2 Customer Solutions Guide

3 Evaluating Lease vs. Buy Continual improvements in technology offer performance and efficiency gains and create the incentive to refresh & replace technologies. There are sound financial and operational reasons to use leasing as a tool to help manage the transitions: IT organisations and the business units they support are leasing and financing important segments of their IT infrastructure to achieve both additional financial flexibility and improved operational effectiveness. 1 Manage budget constraints by funding solutions over several budget cycles. An IT organisation acquiring equipment using an established line of credit can close the gap between what s needed and what s in the budget. Preserve cash for core business needs: pay for equipment as it s used, rather than paying an initial capital lump sum. Simplify budgeting with total solution financing that offers one predictable, manageable payment to acquire Dell and other hardware, software and services. Transfer technology risks to DFS: at the end of a lease you can make a just-in-time decision to return, replace or upgrade equipment. Avoid disposal worries and costs: simply return leased equipment to DFS when it s due for replacement. Reduce the Total Cost of Ownership and protect against obsolescence with leases that underpin a refresh schedule that avoids the escalating costs of running aging technology. 1 Source: IDC white paper commissioned by Dell: PC Leasing and Financing: Strategic, Operational and Financial Factors to Consider, (IDC #224920) December Customer Solutions Guide

4 Managing a refresh strategy Any attempt to develop an optimal policy to manage the lifetime costs of a PC (or any IT technology) has to consider escalating maintenance & upgrade costs, decommissioning and disposal, as well as the impact of failures on the user. Usually a lease-versus-buy spread sheet analysis only compares purchase costs with a lease payment stream and the cost of borrowing. For PCs and laptops a well-planned and managed refresh program offers the promise of 18% lower IT costs, as well as a more productive and happier user community. Once decided, leasing can underpin a replacement policy: if the organization has decided on a three year refresh cycle, a continual 3 year lease will provide the cash for replacements. It will also reduce the temptation to save money by delaying a refresh. Rather than saving, the delay incurs escalating maintenance & support costs which are never recovered, and only postpones a hardware purchase. Managed Change Models Basic Standardized Rationalized Dynamic Description Ad hoc, decentralized Some standard practices, centralization Standard practices, centralized, integrated, some automation Highly automated Average Deployment Cost ($) Average Decommissioning Cost ($) IT organisations may be incurring operating costs as much as 18% higher than necessary to acquire, manage & decommission their desktop & notebook PC equipment 6 Customer Solutions Guide Source: IDC white paper commissioned by Dell: PC Leasing and Financing: Strategic, Operational and Financial Factors to Consider, (IDC #224920) December 2012.

5 The impact of client equipment life cycle choices We consistently see the cost of doing something contrasted with the cost of doing nothing The incidence of failure increases as a function of age accurately factoring in rising future costs will help leaders make better decisions about technology renewal cycles. A recent IDC analysis of 150 IT organizations PC support and maintenance costs shows how they escalate as the device ages. Clearly the growing need for support or maintenance interventions will have an escalating impact on users of those aging devices. A 3 year refresh cycle potentially offers 18% lower Total Cost of Ownership (TCO). Life Cycle 6-Year Deployment $5,162 total or $860 annually $1,800 $1,500 $1,200 Average Annual Cost ($) $1,000 $800 $600 $400 $200 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Life Cycle Two 3-Year Deployments $4,251 total or $709 annually $1,800 $1,500 $1,200 $900 $900 $600 $600 $300 $300 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Retire Upgrade Maintain Deploy Acquire Retire Upgrade Maintain Deploy Lease pmt Source: IDC white paper commissioned by Dell: PC Leasing and Financing: Strategic, Operational 8 and Customer Financial Solutions Factors to Guide Consider, (IDC #224920) December Customer Solutions Guide

6 Evaluating lease vs. Buy x86 servers Similarly for servers: a recent IDC analysis of IT organizations x86 server operating experiences shows that support costs increase proportionately with a server s age. 1 Again these escalating costs outweigh reducing annual equipment costs as the server life is extended, so TCO rises; and with ageing hardware, service levels fall as well with consequential costs being incurred and imposed on the user. Annual Support Costs per Two-Processor x86 Industry Standard Server $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Comparison of standard x86 server models Buy Once-Fix Forever 6-Year Deployment $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 Acquire (Purchase) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Install and Maintenance Fees Support Costs De-install Acquire - Run - Renew Two 3-Year Deployments $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 Acquire (Lease) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Install and Maintenance Fees Support Costs De-install A x86 server managed on a 3 year systematic replacement cycle costs only 70% when compared with servers on a Buy Once-Fix Forever model Customer Solutions Guide 1 Source for both pages: IDC white paper, commissioned by Dell, Managing IT Infrastructure Renewal December 2012.

7 As Dell s financing arm, Dell Financial Services exists to enhance your technology experience. A comprehensive approach to funding complete solutions Dell Financial Services exists to make it easier for customers to make IT investments. Our financing helps to reduce the total cost of ownership, and turn attractive projects into affordable investments. We re here to help your organisation to get the technology it needs, when it needs it, and to get the most out of what is always a stressed and constrained IT budget With value for Dell s customers as our focus it follows that we offer one-stop shopping for your technology financing needs: hardware, software and services, from Dell and third parties; and we offer the same financing terms however you choose to buy. You ll find a wide range of flexible programs all aimed at making technology investments easy & affordable. Our financing can be tuned to support a regular rotation of client devices to keep the technology fresh; to help make an investment now with flexibility to adapt to emerging longer term needs; to offer affordable ways to spread the cost of a major IT investment. With new technology projects, we can use our flexible approach to defer payments and align them to planned returns. This approach reduces the initial cash demand and accelerates the project break even time: depending on the way returns are realised, a project can become self-funding. We provide training for Dell and Dell Channel Partner sales people, so however you choose to buy you should find sales people who can introduce financing. They will work with DFS financing specialists to select the right financing program for you, or plan a tailored financing schedule for larger projects. 13 Customer Solutions Guide

8 A practical approach to deliver the value you expect Integrated with fulfilment We integrate financing into Dell s fulfilment process to allow timely and efficient order release, transfer of key order data and a single point of contact. This integration applies whether you order direct or via a Dell Business Partner. Simplified administration Use a Master Lease Agreement* (MLA) to establish financing policies for all technology types throughout your organisation. Once agreed, your MLA will support your chosen form of financing whenever you install new equipment. So you avoid new negotiation and fresh contracts on each occasion and if you choose you can consolidate billing and invoicing as well. End of lease ease. The DFS end of lease process begins 6 months before your lease ends when we write to ask for your instructions. If you want to delay a decision, practical automatic renewal periods preserve your freedom to act. We accept returns regardless of condition: stopping lease charges, and then assessing damage charges, if any. During refurbishment we can provide secure data wipe & over-write for a reasonable fee and our independently audited asset recovery processes go beyond minimum standards. International capabilities. With a network of partners DFS offers financing in over 50 countries. So international customers can exploit our experience to develop an international leasing strategy, and put it into practice with a consistent approach (to the extent that local laws, and accounting practices allow). DFS uses customer feedback to develop its approach and enhance financing value throughout the IT lifecycle 14 Customer Solutions Guide * A Master Lease Agreement is usually negotiated to cover technology acquisitions over 200,000 or 250,000 per year

9 The majority of IT organisations lease or finance IT equipment because they want to protect their company from technology obsolescence. For several years, this has been the number 1 reason to lease or finance. 1 Financing: an IT management tool While we started this booklet looking at the limitations of a lease vs. purchase spreadsheet analysis to reveal total costs involved, the following discussion shows the decision to finance involves more than a choice of cost alternatives. For the enterprise as a whole, financing helps conserve cash, or provides access to cash which may not be available from other sources. For the IT department, financing can add value throughout the IT life cycle: From the start, financing offers greater flexibility when planning IT investments with a constrained budget. During the life of an IT system, a customer can finance upgrades when they are needed, rather than when the IT budget allows IT transitions can be planned in the most robust way, rather than installed piecemeal as funds allow Aligning the funding term to a planned refresh cycle can help carry out the refresh plan, protect against obsolescence and realise TCO savings At the end of its life, the risk that the realised value of leased equipment will be less than its book value lies with DFS As assets are recovered, the customer can be assured that the DFS process will comply with electronic waste regulations and exceed minimum standards. Working with DFS we can help you to use financing as an IT management tool. From planning for new systems, to retirement at the end of their life, the DFS financing service can help you get more out of your IT budget, deliver more reliable IT transitions, and meet your service level targets. Reasons IT organisations finance IT equipment, software & services 1 Protect against obsolence Upgrade flexibility Operational flexibility Capital conservation Reduce equipment value risk Budget or payment flexibility Mean rating is on a scale of 1 to 5, where: 1 = do not agree and 5 = strongly agree. 16 Customer Solutions Guide 1 Source: IDC survey IT Buyer Perceptions, Strategies, and Requirements: Results of IDC s 2012 IT Leasing and Financing Survey (IDC #235277) June Customer Solutions Guide

10 Leasing and financing provided to qualified customers by Dell Bank International Limited, trading as Dell Financial Services (DFS) and regulated by the Central Bank of Ireland. Offers made to qualified customers may not be available or may vary in certain countries. Where available, offers may be changed without notice and are subject to product availability, credit approval, execution of documentation provided by and acceptable to DFS, and may be subject to minimum transaction size. Offers are not available for personal, family or household use. Dell and the DELL logo are trademarks of Dell Inc.