Shortening IT Replacement Cycles Makes Leasing More Attractive

Replacement periods for PCs, mobile devices and software are becoming shorter in Germany and the UK, according to a new study by Siemens Financial Services amongst medium-sized European and US firms. Those same firms believe that under-investment in IT leads to competitive disadvantage. The study indicated that a move towards using alternative financing methods is helping mid-sized German and British companies manage the pressures of accelerating IT investment. Siemens Financial Services research showed a continued shortening of IT investment periods over the next two years amongst mid-sized companies. The research found that many companies are turning to alternative finance for their investments, in the context of tightening lines of credit from traditional lenders. Principally, leasing has overtaken bank credit as a means of financing technology investments. Lease finance tops the table of financing solutions for companies’ technology needs. The strong growth in lease finance solutions and in particular tech-refresh contracts – the research predicts a 100 per cent increase in the use of such contracts over the next two years – is enabling companies to reinvest in technology. Tech-refresh contracts are complete leasing arrangements, in which soft costs such as maintenance and upgrades are rolled up into the total cost of the deal. Previously, companies using lease finance had only been able to cater for hardware and other such hard costs.


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