By Zhang Jiao & Jermaine Ng

CASH-STRAPPED small and medium enterprises can now lease their IT equipment rather than buy it, under a programme devised by personal computer maker Lenovo and IBM Global Financing.

With the onset of the economic downturn in the third quarter of last year, Lenovo decided to shift its focus to SMEs, and this led to the creation of PC Lifecycle Management.

The programme offers two alternatives - an 18+18 plan, under which companies can refresh their IT every 18 months, and 24+12 plan, where refreshment is after 24 months.

The plans provide flexibility to upgrade operating systems and software.

The process is simple and there are four main stages:

• Preparation, when a client's needs are assessed.

• Acquisition, when details of the contract between Lenovo and the client are worked out.

• Management, when the plan is executed.

• Disposal, when the equipment is disposed of in an environmentally friendly manner.

Leasing may appeal to SMEs with tight cash flow and limited funds. Depending on their preference, they can choose monthly or quarterly lease payments.

Depending on the individual customer's financial strength and credit rating, the cost of leasing varies. It is possible that firms that choose to lease IT equipment, rather than buy it, can pay less.

Low-risk companies can expect to pay slightly below cost price. And while high-risk companies may have to pay slightly more, these costs are spread over a longer period of time.

Computers do not necessarily have to be fully corporate-based. SMEs have the option of leasing hybrid PCs that aim to marry corporate and domestic functions.

'While maintaining a suitable level of security, these computers can double for use at home,' says Ronnie Lee, general manager of Lenovo, Singapore. 'For example, they provide a decent level of home entertainment.'

However, there is never a one size that fits all. Although the potential benefits of leasing are many, including term and payment flexibility, some issues could negate these benefits.

For example, SMEs that prefer to have their IT assets reported on their balance sheet should consider other options, as leased PCs are not counted as part of their assets.

Also, there are limitations for companies that may want or need to upgrade their IT equipment promptly, if such a scenario unfolds within an 18 or 24-month lease period.

This article was first published in The Business Times.