What are the benefits of government using financial services to support their missions?
The government has many options when it comes to acquiring technologies and services that it requires to satisfy mission goals, while making the most of their budgets. We are familiar with the current terms like, infrastructure as a service and software as a service. These new terms describe the basis of financing of various offerings, which provide organizations a way of avoiding costly upfront purchase costs by spreading convenient payments over time.
In addition to making the most of their budgets, financing offers organizations a predictable payment structure for the duration of the agreement. Unlike the XAAS offerings, which is simply utilizing the specific service over a period-of-time, financial services offer greater flexibility in deciding which budget funds are allocated and what specifically happens at end of the finance term.
Governments generall recognize financing in one of two ways:
- Capital expenditure (CAPEX), which is an asset on an agency's balance sheet or
- Operating expense (OPEX), including operating & maintenance budgets (O&M), which remains off the books
Once the government organization determines the budget they will use, they will need to decide which financing option makes the most sense for them.
Government agencies have three main options:
1. Lease to own plan (LTOP)
The most basic level of financing technology assets, a LTOP enables customers to retain the title to equipment upon final payment. The LTOP provides a way for customers to obtain and utilize best-of-breed tools, paid in full over the typical finance term of three years, with the government agency taking full ownership of assets at the end of the term.
2. Lease with option to own (LWOO)
Due to budget constraints, customers lean toward the use of operating funds. With that in mind, many opt for LWOOs – providing customers with the maximum equipment commitment flexibility. Under the LWOO, the title to equipment belongs to the finance company – upon final payment, customers have the option to return, buy, or extend the lease.
3. Technology lifecycle management (TLM)
The TLM is identical to a LWOO but with added capabilities. The TLM is designed to provide a cycle within the LWOO – at the end of the lease term, the customer returns equipment, UNICOM Government sends back refreshed equipment, and the cycle restarts. The TLM methodology is a multi-phased approach that encompasses the planning, design, acquisition, implementation, and management of all parts that make up an agency’s IT infrastructure.
Financing the future
In a performance-based environment, a pay-for-use option aligned with service level requirements provides the groundwork for a high scoring business case. UNICOM government financial services can help government agencies construct a compelling and logical argument that hightlight the advantages of leveraging operating and maintenance (O&M) budgets (OPEX) instead of using capital funds (CAPEX). This helps agencies accelerate the acquisition of products and services and eliminate prohibitive peaks in capital expenditures.
Each financing option is specifically structured to maximize budgets and best fit for the customer’s needs. Providing services under one contract, UNICOM simplifies the buying process, and serves as a “One-Stop Shop” for government infrastructure. By managing IT maintenance, UNICOM also helps accelerate deployment of technology and mission success. Agencies can spend less time on vendor logistics, and more time focused on mission goals.
UNICOM financial services leverage strong relationships with leading financial institutions to provide government with the best possible payment options and terms. Dedicated finance professionals develop procurement strategies that accelerate the deployment of technology and enable agencies to pay for IT infrastructure solutions over time. This shields agency IT programs and projects from funding cuts and eliminates peaks in capital expenditures. In addition, pay-for-use and leasing options enable agencies to align predictable payments with business objectives and show proof of performance throughout the lifecycle of the solution.