Changes to IT Leasing - Questions and Answers

If your question is not answered here, or for any assistance in relation to these changes, please contact Kylie McDonald, Strategic Procurement Group (x56056).

Q:        How will this impact the way I budget for 2010?

 Faculties and divisions will need to allow for the replacement of equipment coming out of lease during 2010 on the basis of its full replacement value. A spreadsheet, being sent to Faculty and Divisional Finance Managers shortly, will help you identify the equipment coming out of lease and the estimated $ impact, including lease exposure. Once the impact has been identified:  

• If your area already purchases all its IT equipment outright, then there will be no change to your budget.
• If you lease IT equipment, then you will need to makes allowance in your budget to meet the cost of buying this equipment outright, instead of allowing for the lease cost. More specific information will be provided shortly on how you'll need to do this.

Q:        What happens to the equipment currently on lease?

 Items currently on lease will be allowed to run their full term. Only new equipment needs from 1 January 2010 will need to be purchased outright.

Q:        Will there be any changes to the way I dispose of the leased equipment?

Leased equipment is subject to the University’s current procedures for the return of leased equipment upon expiry of lease, which should be followed.

Q:        Why are we doing this?

Detailed analysis has shown that the University is not obtaining best value from leasing, owing to the fees and charges applied, as well as the challenges associated with asset management under a leasing arrangement - as such, it has been found to be more economical for the University to purchase the equipment outright

Q:        Who approved the change?

The decision was taken after consultation with key faculties and divisions, and approved at a meeting of the Vice Chancellors Group in March 2009.

Q:        When will this be effective?

No new leases will be written, effective 1 January 2010.

Q:        How was the decision arrived at?

A preliminary review was conducted internally in July 2008. Following this, detailed reviews were conducted by specialist leasing advisers. In addition, the current lease provider, Macquarie, provided a report. These activities culminated in the recommendations that the current arrangements were not economical, and that Monash had three options – the decision to cancel the lease arrangement was taken as it represented the most significant valuefor the University.

Q:        Will this change who we buy IT equipment from?

No, the equipment suppliers are not impacted by this decision; this decision just alters the method of acquisition. .As you may be aware, a review of Monash preferred IT suppliers is currently underway, and a decision on these is likely to be made in August / September 2009 – this will be communicated when the information is available.

Q:        Will there be any exceptions to this decision?

No, it is intended that all equipment will be purchased. Exceptional circumstances may be considered on a once-off basis, e.g. for major $ million capital commitments.  

Q:        Will this decision be reviewed in the future?

It is anticipated that following the expected deployment of IT Shared Services Asset Management systems, that there may be an opportunity to review the viability of leasing - this is not expected to occur before 2015.

Q:        Is this is keeping with higher education sector best practice?

Institutions with highly-developed and centralised asset management systems find that leasing provides some benefits: institutions with a decentralised, non-mandated asset management system tend not to lease given the high cost in associated fees and charges. Monash currently falls into this second category.

Q:        What about equipment leased direct from the manufacturer? (eg. MFDs leased direct from Toshiba) How are these impacted?

The decision made to close the lease facility at Macquarie Leasing extends to all IT (and associated items) leases, including those made directly with suppliers. As previously mentioned, no new leases will be available as of 1 January 2010.