Doing more, with less

In South Africa’s tight economic climate, the themes for 2016 are budget cuts and saving cash, especially for the public sector.

When the Minister of Finance, Pravin Gordhan, delivered his budget speech in February 2016, one theme was consistent throughout – government spend is being cut and the public sector has to find ways to do more and achieve goals, but with less cash in hand. This presents a challenge to the beleaguered sector: service delivery must be maintained, but budgets must be more tightly controlled.

For government departments, this raises one very relevant question – how? “How does the government look at purchasing IT infrastructure, for example, within these constraints?” asks Winsome Norval, Public Sector Business Manager at RentWorks. “They have to ensure operational and financial efficiency, along with delivery, and their funds have been slashed.

This is a huge task for anyone to achieve, much less government.” In the case of IT investment (and various other assets), the rental model provides a possible solution. According to an IDC whitepaper examining the value of the PC leasing and financing model, organisations can incur operating costs around 18 percent higher than necessary through the ownership model, which entails acquiring, managing and decommissioning desktop and notebook PC equipment. This is in comparison with two tightly managed three-year rental lifecycles, which are ideal.

“A lot of organisations don’t have a replacement policy in place. This can add to their expenses, and storage space – there are companies with rooms full of old kit lying around because they don’t know what to do with it,” says Candace Bronner, Direct Sales Manager at RentWorks. “Research has shown that sweating an asset – using it beyond warranty – can actually lead to a higher total cost of ownership than if the items are replaced on a regular schedule.” The IDC whitepaper showed that a further benefit to organisations of leasing IT equipment is protection from technology obsolescence.

Other benefits of the rental model include upgrade flexibility, operational flexibility, a reduced risk in equipment value, budget and payment flexibility and the conservation of capital. Through a rental model, government is assured of PFMA compliance, adherence to supply chain management policies and contractual requirements and reliable e-waste processes at the end of product lifecycles.

“For government, another challenge that leasing overcomes is that they don’t need to manage their own assets,” adds Norval. “It’s critical that every item be monitored and managed. Volumes in the public sector make this very complex and time-consuming. With a rental model, the leasing company handles it and the cost savings are immediate and apparent.” Thanks to the residual value investment model, leasing lowers the repayment and use costs. In addition, the OEM warranty remains applicable, insurance is kept up to date and, with more proactive and advanced solutions, there are inherent reporting and tracking capabilities.

“We have implemented a tracking solution that allows the relevant department to establish the exact location of an asset,” says Bronner. “Clients can log into the system, enter in a specific serial number and instantly see who the user is, where the asset is situated, what the rental model is and when its term expires. It assures complete transparency throughout the entire leasing process.”

Transparency is of no small benefit to the organisation, especially within the public sector. It assures control over cost and asset governance, which translates to accurate auditing, reporting and budgeting. Norval concludes: “If you don’t have a robust system in place, customers find it difficult to deal with transitions, administration and data authenticity issues.

If the package is created in line with client service provider agreements and to the right standards, customers then have the ideal ecosystem for their business and budget. Over 18 years of servicing the public sector, RentWorks has definitely proven that the benefits of renting are ideally suited to answering the public sector question – how can I achieve more with less?

“For government, another challenge that leasing overcomes is that they don’t need to manage their own assets.” Winsome Norval, RentWorks