Vendors are encouraging partners to offer leasing and financing as a way of boosting their solutions play and helping customer cash flows. But while some resellers are embracing alternative financing options, many opportunities, particularly with SMBs, are still being missed. Over the past year, industry heavyweights such as HP, IBM and Cisco have fine-tuned their financing terms for channel partners, covering emerging technology sets such as blade servers and unified communications, as well as SMB customers.
Managing director at NSW-based integrator Regal IT, Mark Gluckman, is strongly committed to leasing and said it was a great way to help customers over the line. "If a bigger business has a strategic project where the money hasn't been approved but it's perceived as a good idea, then leasing is a way of finding those funds," he said.
Gluckman said Regal IT, a small business itself, also often leased goods because it brought value to the business.
"It's a good way to get stuff into the business without affecting cash flow. It allows users to have technology on the operating budget instead of on the capital expenditure budget," he said. "Financing is a way of positioning however; it's not a foot in the door. Enticing customers starts with proof of concept, then working out a strategy to migrate their systems to new technology with minimum risk."
Gluckman was less enthusiastic about vendor financing, and said it could tie customers into one technology.
"With things like pay as you grow financing, you may put in a 10TB SAN, and only pay for 1TB now. But you are tied to that technology and with the speed of development there are concerns around that," he said. "Customers see through this type of stuff."
Frontline Systems recently established its own branded financing initiative based on the success of offering third party and vendor terms to its customers. Marketing communications manager, Greg Wade, claimed up to two-thirds of the integrator's revenue stemmed from financing.
"We see this as a significant market - but it's also a market that hasn't been properly explained to SMBs," he said. "As these organisations move into new technologies and capacity on demand offerings such as virtualisation, we're finding it fits more and more into that space."
Wade said larger organisations like banks and telcos were seasoned leasers, but IT could be a roadblock. "IT managers with a budget don't understand they could be getting a better deal through the balance sheet," he said.