LAN Systems makes networks leasable

LAN Systems makes networks leasable

If your customers won't buy a network from you, perhaps they will rent it.

A new, innovative financing package from value-added distributor LAN Systems will allow Australian resellers and integrators to sell an entire network including installation, maintenance and consulting services on a leased basis.

"Finance is typically linked to a single vendor's hardware, but the problem with that is most network solutions a reseller puts together include a range of products," said Nick Verykios, chief marketing officer of LAN Systems.

"What's more, one of the largest costs of putting in any network is the labour and consulting."

That has so far precluded resellers and integrators from being able to offer customers the ability to lease anything other than just the hardware.

That will change around the middle of this year, when LAN Systems offers its whole-of-network finance package. According to Verykios, it is currently in final negotiations with a number of finance providers to underwrite the offering.

"This is going to enable resellers to close more deals," Verykios said. "In any sales situation you first have to qualify if the customer has the budget. Many SMEs, for example, don't have the kind of up-front money needed to build a network but they can afford to pay a fixed amount each week."

It also makes purchasing more attractive because the entire network becomes a tax write-off.

The offering would not replace vendor financing, rather it would fill the holes that enable the customer to lease an entire network including implementation, maintenance and consulting services, if needed.

The biggest problem with convincing the underwriters is that, unlike hardware, you can't take back the services if the customer can no longer meet the repayments, Verykios said. To overcome that, customers put up some of the assets of their business as security to guarantee that they can meet the repayments.

To the reseller there is no change in the way they do business. The finance company pays the reseller the same up-front costs, while the customer pays the finance company the periodic payments. Verykios is encouraging resellers to use such financing schemes creatively to reinvent the way they sell technology.

"Lease the customer the hardware at no margin and then charge them based on the productivity gains that result from your solution and services. If you reduce the cost of doing business by 8 per cent, take 2 per cent back as the fee.

"The reseller can then invest in providing better service levels rather than just cost-basing them."

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