The Benefits of Leasing Technology Hardware in Local Government

Shawn Delahanty, Director of Innovation & Technology Services at City of South Bend

Shawn Delahanty, Director of Innovation & Technology Services at City of South Bend

The City of South Bend’s workforce has come to rely heavily on technology as an essential component of day-to-day job functions — whether it be optimizing solid waste retrieval routes, monitoring public safety camera feeds at a festival through the Real Time Crime Center, or sharing budget plans on the City’s Open Data Portal. The challenge of working in a world with ever-evolving technology is determining how to balance the deployment of new hardware technologies with a limited budget. The municipal government is charged with being good stewards in spending while investing enough in technology to supplement and complement a lean workforce.

The City’s Department of Innovation & Technology took note of trends in technology hardware value and purchasing, including the likely depreciation of value over the hardware lifetime, and decided that leasing was the most viable procurement option. Leasing hardware — including workstations, tablets, printer peripherals, and network switching gear — gives the advantages of forcing a “tech refresh” on a regular schedule, allows for more predictable spending, and minimizes unpredictable issues by leveraging extended warranties.

"By leasing technology, it becomes much easier to forecast budgets, moving the costs from large upfront Capital expenditures to more level Operating expenditures."

Technology Refresh:

Because hardware is leased, it must be returned to the vendor on a set schedule, forcing the City to replace aging technology. Establishing a refresh cycle helps to prevent hardware from approaching obsolescence or limiting network resources due to functionality. Avoiding antiquated hardware in production helps to reduce failure rates, overall downtime, and wasted productivity. The I&T Department created a Technology Lifecycle Management SOP to define the refresh timelines.

Predictable Spending:

By leasing technology, it becomes much easier to forecast budgets, moving the costs from large upfront Capital expenditures to more level Operating expenditures. Spreading out payments so they are charged monthly helps to free up cash flow within City funds, and the small financing fees are outweighed by the benefits that leasing allows. South Bend is still able to leverage negotiated quantity purchasing agreements (QPA) when leasing, as well as finance the deployment services that are used to supplement internal staff when installing the new equipment.

Warranty:

Maintaining defined life cycles of hardware allows planning for warranty coverage for the entire fleet. Though avoiding obsolete hardware in production with the technology refresh, component issues or failures are inevitable. The City is able to plan for this by extending warranty agreements to cover hardware for the duration of the lease. Essentially, all hardware assets in the production environment are covered by a warranty agreement. With these repair or replacement agreements in place across the environment, downtime due to hardware is minimized.

South Bend’s Innovation & Technology department recently oversaw the end of the first cycle of tech refresh through the leasing model. While the lease agreements allow for an option to purchase the hardware, there is still great value in continuing with the refresh model in place. The combination of lifecycle warranty coverage and the purging of obsolete equipment has greatly reduced the amount of support time and unexpected spending, leading to a more productive technology work environment.

 Asset tags on hardware display the procurement year, allowing staff to easily identify where the asset falls in the City’s technology refresh lifecycle.