Finance your future growth
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.