IT Hardware Leasing vs. Buying Equipment
Weighing the pros and cons
Operating your own data center is, without a doubt, a costly effort, and prices can vary greatly depending on the equipment you’re using as well as the location of the facility itself. You’re not just covering the costs to run the data center but, possibly, the costs of building the facility in the first place. Another important consideration is equipment maintenance and repair fees.
In fact, a 2016 study from the Ponemon Institute carried out in conjunction with Emerson Power Network (since acquired by Vertiv Co.) found that unplanned center outages have the potential to cost up to $9,000 per minute. Ouch! That being said, cost considerations are a very, very important factor for any prospective data center operator. With that in mind, one of the more important questions is “Should I lease or buy the hardware?” As with many things, there are advantages and disadvantages to both options, so let’s dig a little deeper.
Paying monthly rather than paying everything upfront is a money-saver in the short term, which makes leasing data center equipment sound like the most viable option in this regard. Never mind that the IT landscape is constantly evolving and IT equipment considered the most efficient today could be considered obsolete just two years down the line. Therefore, leasing is a good way to keep your data center operating with the latest IT infrastructure equipment.
Leasing does not lock data center operators into a fixed amount or a certain type of equipment. Storage needs can often fluctuate depending on the situation — and if you’re a data center operator where fluctuation is a serious consideration, the ability to scale up and down is one of the most valuable benefits of leasing equipment.
Depending on the terms of the lease, maintenance may be covered. Maintenance costs can vary greatly depending on many factors, but according to Forrester, annual facility maintenance can cost anywhere between 3% to 5% of initial construction costs for facilities in which the equipment is owned.
If you’re leasing data center equipment in the U.S., it is possible to write off the equipment lease as a Section 179 tax deduction. Also, leasing often covers other costs that would have to be paid out of pocket for purchased equipment. These include permits, taxes, fire suppression systems, security, etc.
You’ll often hear that buying your data center hardware upfront instead of leasing can save you money in the long term. If you’d rather make a long-term investment and feel confident in the infrastructure you’re thinking of purchasing, buying might be the right route for you, but there are some considerations.
A top reason you might want to consider buying your own data hardware over leasing is that it places you in direct control of your IT infrastructure. Ownership allows you to build a perfectly customizable infrastructure that meets your data-specific needs. After all, who knows your enterprise’s data better than you?
Some data centers, especially those that store financial and health care records, might need to meet stringent compliance requirements through government oversight. To meet these compliance requirements (which undoubtedly evolve), a customized build using purchased equipment may make more sense.
In health care, for example, IT infrastructure solutions are regulated by the HITECH Act, which was signed into law in 2009 and requires enterprises regulated by HIPAA to notify people affected by data breaches within a certain time frame. In these instances, it gives enterprises who run their own hardware more confidence when it comes to compliance issues. This, of course, requires you to be more knowledgeable regarding compliance standards to begin with.
Weighing the Options
At the end of the day, which route you decide to take really depends on your situation — taking into account both your data requirements and the budget you’re working with. Leasing the equipment may be more economical in the short term, but in the long term, building out your data center with your own equipment could cut down on costs and is especially useful in instances where you want more control over sensitive data.
A compromise between the two options is possible, and you can operate your IT infrastructure through a combination setup. For example, while you may want to outsource less-sensitive data, such as online orders, you may want to store primary data (credit card and medical records, for example) in-house with your own IT equipment.
Leasing equipment and/or outsourcing storage might also make sense for having a backup plan in the event of an emergency. You can also build out a space with your own equipment and then lease should you decide you require additional capacity down the line.
Before you make the ultimate decision, write down the pros and cons of each option and consider a combination setup as a third route. That way, you’ll be sure to end up with something that is not only efficient for storing your data, but cost-effective as well.