Channel taps into leasing

HP launched its own pay as you grow program across its blade servers portfolio in September. "We are starting to see a lot of interest from resellers with customers that have fast growth cycles. The ad vantage for them is that we can deliver them the technology today and they can pay as their business grows," national channel manager, Andrew Charles, said. "There is no longer the need for a big capital outlay on day one, and for the SMB/ corporate market cash is king. Why throw money at such a rapidly depreciating asset class?"

IBM Global Financing head, Brett Vincent, also cited an increase in the amount of channel partners looking into leasing and financing plans.

IBM breaks financing into four areas: client financing, short-term inventory financing, global asset recovery and lifecycle management.

Vincent attributed the rise to the fact that more partners were selling IBM solutions. But there were still plenty of partners who hadn't considered financing, he said.

"The majority of partners don't understand what it can do for them. It comes down to education and showing them the additional products we can offer that they can sell," he said. Queensland-based Computer Merchants offers IBM Global Financing to its customers. Managing director, Norm Jefferies, said it was nice to be able to present customers with another financing option. But he pointed out that the majority of SMBs still purchased IT equipment outright.

Coretech sales and marketing director, David Wain, said only a small percentage of customers took up financing and saw more opportunity in lifecycle management.

Analysts agree there is still a lack of awareness about leasing in the channel and customer communities. In a Gartner survey published in April, leasing was rated as the least important selection criteria for SMBs when purchasing IT solutions. Its figures showed only 18 per cent of all organizations with up to 1000 employees leased IT equipment. Reasons for not leasing product included a preference for upfront capital expenditure and a fear that leasing was more expensive than purchasing.

To try and combat this trend, Cisco recently launched its SMB Easy Lease initiative for partners to attract smaller organizations across to new technologies.

Express Data Cisco business manager, James Mackay, said the distributor had run seminars around Cisco financing and received positive partner feedback. Cisco's program allows resellers to extend leasing across other non-competing products such as software licensing.

Mackay said he expected reseller uptake to increase as the program gained broader awareness. There were plans to "make more noise" around SMB leasing next year. For Gartner, leasing is an "untapped opportunity" for solution providers. Benefits for the channel included the ability to expand their business; selling higher-margin services over hardware and software procurement; forming long-term relationships with customers; and selling at a higher level into an account.

IBM's Vincent agreed financing helped resellers transition from simple product selling to more solutions.

"A lot of partners are struggling as prices go down. The smart ones are the ones using financing," he said. "It helps with cash flow, and gives partners more value-added services they can provide to the customer."