SPECIAL REPORT tions continue to pay off
end-to-end solution which is convenient, simple and easy to manage. There’s little sign of the economy bursting back into life, so we expect leasing to continue to grow in popularity. It’s a vital way forward for many resellers and their customers.”
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Alcatel-Lucent Financial Services, in association with BNP Paribas Leasing Solutions, is currently offering businesses zero per cent financing through to the end of this year. The offer, which includes a three month payment deferral for bedding-in of new technology, is available through the network of Alcatel-Lucent Business Partners, and can be used to fund Alcatel-Lucent’s complete portfolio of Enterprise solutions for voice, data and Unified Communications.
Trevor Evans, Alcatel-Lucent Financial Services, noted: “In the current economic situation, many businesses are facing a lack of budget. Coupled with restricted bank lending, they are struggling to invest in new technology. Leasing provides greater flexibility as technology infrastructure can be scaled as business needs evolve. New solutions can be added easily, and old or redundant equipment replaced more quickly. In addition, a lease plan can help with technology lifecycle management.”
Where leasing is used as a core enabler of sales, Evans typically finds that additional bundling of services is particularly evident. “Resellers tend to work to customer budgets, and are
then in a position to factor in additional services which may otherwise not get consideration when faced with a fixed capital budget,” he said. “Depending on the product capabilities, some finance providers, such as BNP Paribas Leasing Solutions, are able to finance the entire deal, including 100 per cent software solutions, ensuring that the reseller has absolute flexibility to address the customer’s total solution requirements. Leasing can also help the reseller to enhance its value proposition, rather than simply being viewed as a provider of ICT solutions. By offering the means to acquire, resellers can grow their stature with customers based on trust, and can consequently come to be viewed as a long-term partner.”
Martin, BNP Paribas Leasing Solutions, cited research by IDC that reckons over 50 per cent of customers say that solution finance is an important consideration when selecting IT suppliers. “Leasing is viewed as a strategic enabler for product placement by leading blue- chip organisations and there is evidence that there is demand for financial
solutions across all business sizes, not just SME,” observed Rix. “While leasing penetration varies by asset sector, the office equipment and vehicle sectors typically lead the way, followed by telecoms and IT.”
Customers can escape the constraints of current budgets by using leasing which not only improves their cash flow but can help to move these costs from capital expenditure into a more controlled operating expense by reducing upfront outlay and spreading the cost across regular payments over the useful life of the equipment, reaffirms Jon Palmer, IT Sales Manager, Siemens Financial Services. “Finance also provides the opportunity to manage the costs associated with the whole life of the equipment acquisition cycle such as procurement, asset disposal and technological obsolescence which according to respected industry research can save between 15-25 per cent of the initial investment,” said Palmer.
By adopting a regular and budgeted refresh programme, customers can also improve asset management, financial planning and have the
By
using leasing,
Jon Palmer
dealers find they can close deals more easily
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right equipment at the right time to develop their business. By refreshing technology in line with a warranty or support contract renewal, associated break fix costs as well as expensive warranty extensions, can be avoided. Therefore, the business can invest in new technology when it is needed increasing productivity and controlling expenditure.
Palmer added: “Through using leasing, dealers find that they can close deals more easily as financing options overcome the most common objection to a sale – price and budget constraints. In addition, by providing solutions that meet the customer’s needs rather than what they can currently afford, dealers can create upsell opportunities enhancing their revenue. Once completed and correct lease documentation has been received, payment can be made immediately to the dealers and this helps reduce debtor days and improve cash flow.
Generate more loyalty “Moreover, the ongoing financing relationship allows dealers to improve customer loyalty and build long-term customer relationships, as equipment refresh requirements can be discussed on a regular basis both during and at the end of the lease term.”
According to the white paper Managing IT Infrastructure Renewal, published by IDC last year, a leasing option is increasingly important to IT and comms resellers. “Our experience shows that budget pressure and increased approvals required for budget spend mean that
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those resellers introducing a leasing option as part of their value proposition have considerably higher chances in closing the deal,” Palmer noted. “Increases in stand-alone and associated software and services spend are also changing the typical lease deal these days. Relative hardware percentage costs are declining, instead, we are seeing hardware, software, services and other costs such as training and consultancy included in the deal more often than not. Customers want to see all project- related costs bundled into a single finance solution.”
Considering the current availability of credit in the market, it is increasingly difficult, not to mention time consuming, for end users to independently source financing for their desired technology requirements. “Our feedback from resellers across the market is that end users have been increasingly raising the question of availability of finance options either informally during the sales process or as part of formal tender requirements,” observed Palmer. “The lack of finance options at point- of-sale could have a serious impact on the resellers’ ability to win the business such is the importance of this requirement today for end users.
“In light of the restricted credit conditions, especially in the SME sector, and the slow economic recovery, the ability to provide a competitive, flexible and tailored financial solution to end users give resellers a significant advantage over their competitors and is often a crucial factor in determining the success of a sale.” n
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channelpartners@kcom.com COMMS DEALER DECEMBER 2011 55
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