GOVERNMENT TECHNOLOGY/Financing tech assets
For many years, local governments have struggled to determine where technology fits into their budgets. Most officials understand that a sound technology infrastructure is a critical component of a healthy organization, but they also know it is one of the most financially demanding. As a result, when it is time to plan yearly budgets, cities and counties often decide that the expense and complexity of information technology (IT) management outweighs the benefit. As a result, technology invariably gets pushed to the “back burner” while other programs competing for the same funding are allowed to move forward. While paying for and implementing IT processes are indeed challenges, they are issues that must be addressed to ensure long-term organizational health.
Some local governments work with consultants to implement a purchase/leaseback and asset management strategy for financing and maintaining IT infrastructure. The consulting firm negotiates an agreement with the government to purchase all of its technology assets, providing the government with a fast cash infusion. Instead of having to depend on unreliable or often nonexistent financing sources, the government gets money that can be used to address budget issues and fund programs in other parts of the organization.
Once the government has its money, the consultant leases the same technology back to the organization. The lease agreement offers the government a long-term plan with consistent yearly IT costs. Because all future costs are known for a period of years, there are no surprises when it is time to upgrade existing systems. That is critical when dealing with technology assets, for which costs frequently vary greatly from year to year, and upgrades to newer technology are often prohibitively expensive.
In addition to providing a cash infusion, the agreement can include asset management services. In governments where IT management is not a core competency, a lack of consistent maintenance can cause infrastructure to deteriorate over time. Hardware and software may be purchased and installed by different departments without ever being properly integrated with existing assets; staff members routinely may have the wrong equipment; and outdated or broken technology may not be properly disposed of or otherwise removed. Those problems can end up costing the government and its taxpayers millions of dollars in wasted money and time.
The IT asset management services offered by a purchase/leaseback program can be designed to align new and existing technology investments with organizational process improvements. The services may include equipment refurbishing, IT maintenance services and overall IT asset management to help the organization save money and operate more efficiently.
Complete IT asset management in governments and other public-sector organizations is becoming more prevalent in the U.S. The governments gain the benefit of long-term IT management and the latest technology, while putting money onto, not taking it off of, their books. At the same time, the method frees up money that the organizations can use to fund other programs, secure in the knowledge that their technology spending will be consistent for the duration of the lease agreements.
The author is senior partner for Palos Park, Ill.-based Renovance.