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• Replacement If you’re planning on an especially long life cycle for your
computers, realize that some computers will simply fail and some you will want to
replace, just for the sake of their role in your organization. You may also need to
replace certain components, either through mechanical failure or just as part of your
organization’s needs. Plan for replacing components or even entire computers.

Whereas the preceding are costs you can expect for the physical machines, there are
other costs associated with your system that you should also add into your cost estimates.
These indirect costs include the following:

• Interest Maybe the largest indirect cost to your system is the interest you pay on
borrowing money to make the initial purchase. As such, you should figure your
interest costs into any life cycle cost considerations.
• Administrative costs These costs will vary from organization to organization,
system to system. And they’re likely to be somewhat of a moving target as well as
somewhat fuzzy. These include costs for arranging and administering service
agreements, tracking equipment with property tags, and so forth.
• Staffing Depending on your system, you may find that you need more (or in
some cases fewer) people to run it. That might mean you need to adjust the size of
your IT staff. Plan the impact of those salaries into your life cycle cost estimates. PART III
• Downtime If the system is down—either on purpose for updates or because of
unreliability—those costs manifest themselves in the form of reduced productivity.
Certainly, you can’t pre-quantify how often the system will go down, but if you plan
regular updates and maintenance, you should be able to predict how often you’ll have
to take the system down and what that impact will be on the overall organization’s
productivity.
Buy or Lease
There’s no overall “right answer” when deciding whether to buy or lease your equipment.
The decision will depend on your organization, what you’re expecting of the equipment,
and what you want of a computer purchase deal.

Leasing
There are a number of benefits to leasing your equipment. Benefits include:

• Keeping your equipment up to date Because computers become obsolete quickly,
you pass the financial burden of their obsolescence on to the leasing company. Let’s
say you’ve got a 3-year lease on your sales department’s computers. Once that lease
expires, the computers go away and you can find a new deal.
• Predictable monthly expenses You’ll always know what you’re spending on your
machines, because you’ve already hammered out a deal and you know what you’re
paying.
• Low (or no) upfront costs Most leases don’t require an upfront payment. So if
your organization has trouble with cash flow, likely you’ll be able to avoid a down
payment.