In these trying times, companies that wish to stay technologically advanced must strike a fine balance between acquiring latest technologies and simultaneously safeguarding their capital expenditure budgets. Financing wisely seems to be the key to stay in the competition and succeed

In contemporary business environment, success demands that companies recognize the need to be diligent in utilizing their resources. Regardless of size, businesses are now trying to preserve money, both cash and credit. This places scrutiny on their capital equipment purchases.

Companies of considerably large sizes are generally able to raise required capital from financial institutions. They owe this to their strong clout. However, companies in the SMB sector have fewer options for accessing capital. Moreover, they often face resistance from traditional lenders. This sector has been struggling to keep up with market transitions.

Options such as financing and leasing are alternatives available for acquiring technology. Financing allows spreading of costs over a period of time with monthly payments. The latter eases cash flow and ensures protection of capital and preservation of credit lines. What makes financing significant in recent times is the fact that businesses are looking out to be more strategic with budget and technology investments. Those in business realize that the decision to acquire technology and services is just as critical as the investment decision itself. In a recent Gartner report, it was revealed that through leasing, the total cost of ownership (TCO) is lowered. This is perhaps because IT hardware and software standards are introduced and companies begin to plan life-cycles for IT assets. This augurs well for SMBs.

Gautam Munish, Country Manager, Cisco Capital, Cisco India & SAARC

By utilizing flexible solutions to finance technology investments that spread the cost of new technology and services over time, businesses can maximize cash flow and conserve capital budgets. Depending on the demands of business, financing can also provide the flexibility to upgrade to new technologies. Most importantly, financing solutions make it possible to establish a technology life-cycle management strategy. This, in turn, offers a business opportunity for channel partners.

Customer Financing: An Emerging Channel Opportunity
As channel partners continue to evolve their businesses from 'provisioning' to delivering fully integrated 'customer solutions', the next obvious step is to expand the “solution” in order to include a customer financing component. Now, instead of questioning 'what the solution costs?', other questions emerge. These include 'what value does the solution bring to the customer's business?' and 'How can we map the monthly cost of the solution to its business benefits?' This stategic modification opens new frontiers to channel partners. Moreover, by investigating the financing options, tools, and resources available in the marketplace, channel partners can actively increase profitability. However, partners must address the challenges that hinder them from availing such options.

To begin with, partners need to have strong financial and transparent reporting. This feature currently lacks among a large number of partners. Lack of financial planning is yet another issue. To add to this, there is a misconception that availing loans can create a burden on the already dipping bottom-line due to interest.

Partners must realize that smart financing enables them to improve their capabilities, benefit from new opportunities and speed growth. They need to train their staff to be able to closely understand customer expectations and build their proposals to meet specific customer needs. In times when buying decisions are limited and business budgets have been cut, the channel partner should learn and speak the language of the CFO and effectively incorporate financing into their deals.

Better Options from OEM Providers
There can be major advantages in dealing with OEM financers. Vendors have a deep working knowledge of their technology and its potential benefits to the customer. This enables them to provide financial advice on IT and business strategies. They also have an intimate knowledge of technology life-cycles, as well as an under­standing of the impact of new and planned technology developments.

As a result, they can provide customers informed advice on investments that are future-proof and help them to plan their strategic business road maps. Customers also need to take into account the total cost of ownership over the life of the asset.

The true cost of a technology solution goes beyond the cost of the hardware. It includes software, deployment, servicing, maintenance and financing. By adopting a more formalized approach to acquiring technology, they may be able to reduce ongoing costs, improve productivity and maximize assets.

In essence, leasing and financing allows for a long-term discussion with customers. They also give channel partners the opportunity to help customers plan for the long-term and create financing structures that allow them to easily upgrade or add equipment over the course of the lease.

Conclusion
Leasing and financing are not new tools in the technology industry. They are, in fact, very common practices for the acquisition of IT network infrastructure and telecommuni­cations equipment in the developed world. In these mature markets, where technology obsolescence happens rapidly,
this model makes strong financial sense, and channel partners have been profitably providing this service to their customers for quite some time.

It would then only make sense for networking channel partners in India to closely examine financing offers and programs from their vendor partners and to begin to learn how to have meaningful financial discussions with their customers. By taking the requisite steps, channel partners will be rewarded with a tighter alignment with their customers and a solid strategy for increasing revenue streams and profits for their businesses.

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