Fi­nance your fu­ture growth

CRN - - EDIT OPINION - DHAVAL VALIA E-mail CRN Ex­ec­u­tive Edi­tor Dhaval Valia at dhaval.valia@ubm.com

The past few years have been tough for the IT in­dus­try and par­tic­u­larly the IT chan­nel. Apart from the tran­si­tions and trans­for­ma­tion in the tech­nol­ogy land­scape, fac­tors like GDP slow­down, weak ru­pee, de­cline in IT spends, longer pay­ment cy­cles, pay­ment de­faults and high in­fla­tion have re­sulted in many IT part­ners strug­gling to keep their topline and bot­tom­line.

Ac­cord­ing to part­ners, high in­fla­tion has dou­bled their op­er­a­tions costs in the past 5-7 years, even as mar­gins have de­clined. Hence, to en­sure the growth of their or­ga­ni­za­tions, part­ners should look for newer ways to fi­nance and fund.

Here we should take a cue from the con­sumer elec­tron­ics and auto in­dus­tries that used cus­tomer fi­nanc­ing op­tions ef­fec­tively to con­vert strong la­tent de­mand into sales. In the last two years most of these com­pa­nies have used fi­nanc­ing op­tions as the pivot of their mar­ket­ing and sales strat­egy.

To­day most ven­dors in­clud­ing HP, Cisco and IBM of­fer cus­tomer and project fi­nanc­ing through their fi­nanc­ing arms. Com­pa­nies that don’t have fi­nanc­ing arm have tied-up with those that of­fer. Ear­lier these fi­nanc­ing arms had too many dos-and-don’ts, but to­day they have be­come ag­gres­sive and are fi­nanc­ing projects that are as small as ` 5 lakh` 6 lakh and at in­ter­est rates that are 3-4 per­cent less than that avail­able from the tra­di­tional fi­nan­cial in­sti­tu­tions.

A strong in­di­ca­tor of how smart cus­tomer fi­nanc­ing can help boost busi­ness lies in the 2013 Cisco Cap­i­tal com­mis­sioned For­rester Group study, which found that at least 30 per­cent of In­dian mid-sized and large en­ter­prises planned to use fi­nanc­ing op­tions to fund tech pur­chases. The study also in­di­cated that 78 per­cent of com­pa­nies would con­sider fi­nanc­ing op­tions at or be­fore the pro­posal stage. This clearly sug­gests that if a cus­tomer is of­fered fi­nance op­tions dur­ing the sales pitch, the chances of con­vert­ing the pro­posal to a sale is much higher.

What’s more is that cus­tomers who have used smart fi­nanc­ing even once, tend to spend more on IT in the fol­low­ing cy­cles. Nearly 77 per­cent of sur­vey users who had used fi­nanc­ing ear­lier said that eas­ier ac­cess to ex­ter­nal fi­nance has lead to pro­cure­ment of additional ICT so­lu­tions be­yond cur­rent needs.

In this edi­tion, we have listed var­i­ous fi­nanc­ing op­tions that part­ners can lever­age for their or­ga­ni­za­tion as well as that for their cus­tomers. Many part­ners are al­ready us­ing smart fi­nanc­ing to grow, and their ex­am­ples will surely in­spire you to ex­plore var­i­ous op­tions for your or­ga­ni­za­tional growth.

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