Let me outline some of today’s challenges for IT Administrators. First, after three years (the depreciable life), servers have almost no economic value and can easily go unnoticed or forgotten, causing a stranded assets problem. Second, the industry life of a server is often only 24 months, yet the depreciable life is three years for servers. In other words, accountants want to keep equipment around for a full year longer than the servers are actually providing competitive industry value. Third, refreshing technology at the right time is difficult to plan and even harder to implement smoothly. So IT Administrators are trying to manage risks of stranded IT assets, technology obsolescence, and business disruption all at once. This is nothing to say of complying with new green laws for the responsible disposition of servers and other IT assets --- another formidable management risk.

VFS leasing protects against the risks of stranded IT assets, technology obsolescence, and business disruption via our technology refresh program. The refresh program is usually offered on a 36-month term due to today’s shortened server life cycles. Since the industry life of a server can be only 24 months, during which it is providing some sort of technological advantage, ideally the customer is better off replacing it at month 24. Fortunately, the fair market value of a retired server also can be captured best at about the same time of its useful industry life --- at month 24. The challenge for IT Administrators is to establish a structured plan for technology refreshes that minimizes stranded assets, avoids costly accounting write-offs, and provides non-disruptive migrations to new technology. And don’t forget the need to dispose of servers in a compliant fashion. There is some good news: VFS lease financing solutions can help manage and minimize all these risks.

The four risks of stranded assets, the negative accounting impact of non-depreciated servers, refresh disruptions, and compliance with green laws for proper equipment disposition --- all can be minimized in a VFS lease using our technology refresh program. This is because VFS understands how to structure technology refreshes within 36-month leases so that the customer receives excellent fair market values for the technology being replaced and receives migration services for the new technology. Risks of technology obsolescence and business disruption are minimized. VFS’ remarketing services arm ensures that customer will benefit from the highest fair market values available for older servers. Verari Professional Services will plan and assist the customer with refresh and green disposition services that meet scheduling requirements.

Here’s an example of how VFS has successfully structured leases with refreshes in the past. On a 36-month lease, we have found it advantageous to refresh technology during month 24 of the lease. VFS offers flexible windows for this to occur, but six-month refresh windows are typical. Also at month 24, a new 36-month lease is begun that includes the new servers. From the start, customers are quoted a monthly payment for both the original servers and the new servers. So I’m convinced that VFS is able to give customers a solid financial plan that reduces financial, technological, and business risks. What’s more, the new servers do not increase monthly payments by more than 20%! Not many leasing companies are providing such a valuable service that takes into account longer term IT asset life cycle management.

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Ed Lucente posted on June 10, 2008 14:58

I’m very excited to introduce Verari Financial Services (VFS) --- the new lease financing arm of Verari Systems, Inc. I hope that by offering flexible lease financing alternatives to our customers that VFS will help them to more easily cost-justify and begin the data centers and IT projects of the future! Since this is my first blog, I would like to summarize the VFS program offerings.

 

VFS is providing one-stop, flexible lease financing solutions for all asset classes. VFS leases, for example, can include hardware, software, and professional services, as well as other kinds of property such as data centers and buildings. VFS provides personalized asset management and asset recovery services, including technology refresh and trade-in credit programs, to help customers manage shortening technology cycles. So I want our customers to take advantage of all the integrated benefits of leasing --- everything from predictable, level monthly payments, to cash conservation, to scheduled technology refreshes, to trade-in credits for older IT assets, to the elimination of obsolescence and disposal risks.

 

We want to help customers meet their changing business demands by allowing for flexible terms and payment options in our leases. If customers need to keep their equipment longer than first expected, for example, VFS leases can be renewed easily with low cost extensions or purchase. Finally, VFS will dispose of equipment in an environmentally responsible and secure manner, complying with local and federal laws.

 Summary Highlights of VFS program offerings

         Very competitive lease rates

         High residual values built into each lease for lower monthly payments

         Technology refresh program for smoother shifts to new, more powerful and energy-efficient technology and easier disposition of old technology

        Easy disposition of old technology

        New technology uses less power & space and is more reliable & faster

        Saves $ over IT life cycle; improves staff productivity

        Greenest way to acquire and retire IT assets

         Trade-in program that helps reduce stranded IT assets

        Trade-in credit offered on all vendors’ equipment

        Excellent trade-in values due to strong remarketing arm

         Lease financing solutions for all kinds of IT projects, such as data center consolidation

         Disciplined planning for the entire IT asset life cycle, including safe/secure equipment disposal services

         Personalized IT asset life cycle management services for a long-term partnership

        Equipment tracking/reporting

        Secure/safe equipment disposal in accordance with laws


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