Consider leasing equipment

* Things to consider when leasing data center equipment

Many of the IT executives I speak with lease their servers from one of the big server vendors. With a bit of careful planning they can use the lease to manage technology refreshes on a two-year basis, thereby always staying one step ahead of technology obsolescence.

Servers are not the only data center equipment that can be leased. Storage arrays, cooling systems, generators, power distribution units (PDU), racks and even raised-floor supports can also be leased.

In our data center research we found that more than 40% of the organizations we spoke to are building new data centers. In most cases they were funding new construction even while consolidating existing data centers. The primary reason for building a new data center? Their existing data centers could not support the power and cooling density they needed for blade servers and dense storage. Since building a green-field data center is a very expensive option, you can at least spread some of the capital cost over time by leasing the data center equipment.

If you are considering leasing your data center equipment, you have to do some modeling to decide if leasing is a better option that buying. Part of that decision will depend on how long you intend to keep the asset. If you intend to keep it for a while, then an outright purchase might be a better option. Alternatively, you can use leasing to make your cash go further and afford better/newer equipment.

Here are some things to consider when looking at leasing:

* What happens when the lease expires?

* Do you need to factor disposal costs for a large item?

* Do you have enough cash to make an outright purchase?

* Can you use the lease to update your technology more often?

* Conversely, will you end up getting stuck with old gear because of an inflexible lease?

* Do current interest rates make leasing affordable or expensive?

* Can you use leasing to support faster growth?

* Can you use leasing to get an instant balance-sheet write-off instead of depreciating over five years?

* Are there other tax benefits?

While many companies might consider leasing for servers and perhaps storage, there are many other types of equipment that might be good candidates for leasing. Chilled water units, PDUs, air-conditioners, UPSs and many other types of data center equipment can be readily leased.

Companies are building new data centers to accommodate the rapid growth of servers and storage as well as support higher-density platforms such as blades. Several organizations we interviewed for our research were consolidating six to eight old data centers (constructed in the 1990s) into brand-new data centers. While the old data centers supported only 1kW to 2kW of power per rack, their new data centers could average 6kW and provide up to 20kW to selected racks.

Shiny new data centers that support those kinds of requirements are expensive, but with some creative planning and (still) low interest rates you might save money and increase flexibility by leasing equipment for your new data center.

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Copyright © 2007 IDG Communications, Inc.

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