Recession ups ICT rentals

By Leigh-Ann Francis for Rentworks
Johannesburg, 17 Aug 2009

As ICT budgets get cut during the recession, rental financing options have increased from 9%, prior to the downturn, to 12%.

This was a key finding in the Rentworks and ITWeb IT Financing Survey. The survey posed 22 questions to ITWeb readers focusing on IT financing and procurement trends arising from the current global economic crisis.

Out of the 263 respondents that participated in the online survey, 53% noted the negative effects of the financial crisis have been minor, while 25% reported major negative impacts on their business. The survey also found that 27% of companies have experienced a minor positive effect as a result of the recession.

Despite the negative impact of the recession, over 50% of the respondents are moderately confident the year will end positively. However, for the short term, 26% of companies are implementing contingency plans to ensure their ability to continue 'business as usual'.

One of the more obvious findings of the survey indicate the economic downturn has affected companies' IT budgets, with 63% of companies reducing procurement to allow for only the most critical assets.

The survey also revealed how companies are financing their IT assets in the harsh economic times: prior to the downturn, 49% of companies used cash as their main IT financing option, a method which decreased to 46% in the recession. Finance lease options have increased from 17% to 20%, and rent-to-own options have increased from 9% to 12%.

These financing options are derived from companies' views on IT asset life cycle management, which indicated 33% of companies have an 'own then dispose' attitude, while 19% opted for outsourcing their IT assets.

Overall, 50% of companies still believe cash is the most effective way of financing IT assets, regardless of the current market landscape. However, finance leasing and rent-to-own offer strong alternatives, with 22% and 20% respectively.