Lease IT invstments

According to Paula Rosenblum, managing partner at Miami-based Retail Systems Research, too many companies are paying for IT initiatives with cash.

“When I was a retail CIO, I leased everything through an operating lease,” she explained. “Retailers don’t have to lay out all of that cash, and the investment is recorded on a different place on their profit and loss statement.” (More than 90% of retailers still pay for technology initiatives with cash, according to RSR.)

As to where the money will come from for the leasing, fiscally sound technology companies often have financial arms that offer leasing options. By taking advantage of competitively priced loans, retailers can receive the financing needed to pursue technology purchases, which frees up capital that can be invested in other projects.

Unless a company is awash in capital, a rarity these days, “it doesn’t make sense to me why companies pay for initiatives with cash that can be used to fund other projects and operations,” Rosenblum said.

Another strategy in the cost-saving game is to make IT and utility vendors a true business partner through gain-sharing programs, or incentive plans.

“Smart retailers are starting to ask partners that audit company phone bills, for example, to document any errors or savings,” Rosenblum explained. “If the company can demonstrate it can provide clear and concrete savings, both the retailer and company can work together to create a plan to share the savings.”

Sharing the savings also keeps retailer’s cash liquid, since the technology vendor’s fee comes directly from the savings they uncover.