The three main options for acquisition of computer hardware are buying, leasing, or renting it. There are advantages and disadvantages that ought to be weighed for each of the decisions, as shown in the table illustration below. Some of the more influential factors to consider in deciding which option is best for a particular installation include initial versus long-term costs, whether the business can afford to tie up capital in computer equipment, and whether the business desires full control of and responsibility for the computer equipment.
Buying implies that the business itself will own the equipment. One of the main determinants of whether to buy is the projected life of the system. If the system will be used longer than four to five years (with all other factors held constant), the decision is usually made to buy. Notice in the example in illustration below that the cost of purchase after three years is lower than that of leasing or renting. As systems become smaller, more powerful, and less expensive, and as distributed systems become more popular, more businesses are deciding to purchase equipment.
|Rental||Monthly rental = $ 170|
× 36 months
Total cost over 3 years = $6,120
|Buy||Purchase price = $6,000|
Scrap value = – 500
Total cost over 3 years = $5,500
|Lease||Monthly lease = $150|
× 36 months
Subtotal = $5,400
Initial payment = $500
Total cost over 3 years = $5,900
Leasing, rather than purchasing, computer hardware is another possibility. Leasing equipment from the vendor or a third-party leasing company is more practical when the projected life of the system is less than four years. In addition, if significant change in technology is imminent, leasing is a better choice. Leasing also allows the business to put its money elsewhere, where it can be working for the company rather than be tied up in capital equipment. Over a long period, however, leasing is not an economical way to acquire computer equipment.
Renting computer hardware is the third main option for computer acquisition. One of the main advantages of renting is that none of the company’s capital is tied up, and hence no financing is required. Also, renting computer hardware makes it easier to change system hardware. Finally, maintenance and insurance are usually included in rental agreements. Because of the high costs involved and the fact that the company will not own the rented equipment, however, renting should be contemplated only as a short-term move to handle nonrecurring or limited computer needs or technologically volatile times.
Evaluation of Vendor Support for Computer Hardware
Several key areas ought to be evaluated when weighing the support services available to businesses from vendors. Most vendors offer testing of hardware on delivery and a 90-day warranty covering any factory defects, but you must ascertain what else the vendor has to offer. Vendors of comparable quality frequently distinguish themselves from others by the range of support services they offer.
A list of key criteria that ought to be checked when evaluating vendor support is provided in the illustration below. Most of the extra vendor support services listed there are negotiated separately from hardware lease or purchase contracts.
|Vendor Services||Specifics Vendors Typically Offer|
|Installation and Training|
Support services include routine and preventive maintenance of hardware, specified response time (within six hours, next working day, etc.) in case of emergency equipment breakdowns, loan of equipment in the event that hardware must be permanently replaced or off-site repair is required, and in-house training or off-site group seminars for users. Peruse the support services documents accompanying the purchase or lease of equipment and remember to involve appropriate legal staff before signing contracts for equipment or services.
Unfortunately, evaluating computer hardware is not as straightforward as simply comparing costs and choosing the least expensive option. Some other eventualities commonly brought up by users and management include
- the possibility of adding on to the system if the need comes up later;
- the possibility of interfacing with equipment from other vendors if the system needs to grow;
- the benefits of buying more memory than is projected as necessary, with the expectation that business will eventually “grow into it”; and
- the corporate stability of the vendor.
Competition among vendors has made the idea of producing hardware that is compatible with competitors’ hardware important for vendors’ survival. Before becoming convinced that buying cheaper compatibles is the way to endow your system with add-on capability, however, do enough research to feel confident that the original vendor is a stable corporate entity.
- Project Initiation
- Defining the Problem in Project Initiation
- Selection of Projects
- Feasibility Study – Determining Whether the Project is Feasible
- Technical Feasibility – Ascertaining Hardware and Software Needs
- Acquisition of Computer Equipment – Technical Feasibility
- Software Evaluation in Technical Feasibility
- Economic Feasibility – Identifying & Forecasting Costs & Benefits
- Comparing Costs and Benefits – Economic Feasibilty
- Activity Planning and Control – Project Management
- Using PERT Diagrams in Project Planning
- Managing the Project
- Managing Analysis and Design Activities
- Creating the Project Charter & Avoiding Project Failures
- Organizing the Systems Proposal
- Using Figures for Effective Communication in System Proposal