Recently, business development managers and IT remarketing experts from the Sipi Asset Recovery team attended the ELFA Equipment Management Conference in Carlsbad, CA, US. As an exhibitor at the conference, Sipi’s mission was to leverage decades of expertise to manage end-of-lease IT equipment. The 2019 conference was an eye-opening one; there’s changes coming that will affect leasing organizations in some big ways. Here’s the lowdown from Sipi experts.
The #1 concern for leasing organizations: remarketing and end-of-lease value
For our current leasing partners as well as among those we met at the conference, there was one concern to rule them all. The clear focus for leasing organizations now and throughout the year is recovering the maximum value of an IT asset at the termination of the lease period. Seen as a question, it could read “How are you [Vendor X] going to provide us with the best remarketing and net values for off-lease IT assets?”
Business Development Manager at Sipi, Joe Pothier, says that Sipi’s industry experience brings a superior advantage to the table over competitors. “Having an excellent hardware sales team that understands that getting every last dollar out of IT equipment is the key to our success with our leasing partners. Sipi’s expertise in remarketing off-lease equipment empowers us, too, for all our IT asset disposition clients!”
IT asset industry and leasing trends to watch in 2019
Several new concepts and changes were discussed at the ELFA conference that will reverberate throughout the equipment leasing industry -- and by extension -- the IT asset remarketing organizations that service them.
Trend #1: The market for IT asset leasing has grown and continues to grow.
Growth is projected in all sectors including cloud, on-premises, and in data centers – and worldwide device revenue hit $690 billion, according to Gartner. Sipi Business Development Manager Nina Nielsen says that this number is “…huge. Companies are investing even more in IT. This means growth for the leasing industry as well as making inventory and risk management more crucial than ever.”
Joe adds: “The economy in general is strong and robust, and this is reflected in what we are seeing growth-wise. Leasing companies are also concerned about their remarketing partners ability to meet their reporting and support needs during this period of growth.”
Trend #2: More complex hyperconverged systems are entering the leasing market.
Specifically, Hyperconverged Infrastructure was a recurring topic discussed at the conference. What is hyperconverged infrastructure? From a high level, it refers to IT platforms that combine functions (computing power, networking, storage, etc.) into a single system sold as one unit.
Addressed in a presentation by Tom Sager, President, Tech Trade Partners, Inc., these systems do have advantages for organizations, such as potentially reducing administration costs and improving a company’s ability to scale more easily. From a leasing company’s perspective, hyperconverged systems represent great opportunities as well. Nina agreed, adding: “These systems are great products for leasing companies to finance, because they can go in at a low-end, and then can be upgraded in place and are a big, expensive investment that are part of a rapidly growing market.”
However, hyperconverged systems also represent challenges for the equipment leasing industry due to complicated and potentially expensive licensing. The challenge is further amplified by the simple fact. In the end, whether you are the buyer or the lessor, you want to have a handle and understand the value of recoverable assets in the secondary market, when you are ready to upgrade.
Trend #3: “Smart software” shakes up licensing.
Cisco rolled out their Smart Software Licensing platform in 2018, and it’s very likely this will have a large and lasting effect on residual asset values in the secondary market. This occurs during a time where the portion of IT assets governed by an application license continues to grow.
“It’s likely that others in the industry will follow this model, and that remarketing companies must be ready to handle the change.” says Joe. Nina adds: “Software such as this is proprietary and introduces restrictions that are new to the industry and the secondary market, too. This has deep implications for leasing organizations and their remarketing opportunities.”
We’re ready for the challenge
Sipi Asset Recovery specializes in preparing for the future – and for leasing organizations, 2019 promises to be both a year of change and a year of prosperity. We partner with leasing organizations to create customized programs with a focus on maximum value recovery, efficient reporting, strategic logistics, and exceptional customer service.