Stretching the global IT budget

Stretching the global IT budget

Part one of three
by
Gerhard Malan, CFO, Viadex

Serving the needs of the customer, not those of the supplier

The question for any growing business is how it can confidently finance its growth plans without undermining the stability of the existing business.

It’s a question that becomes more pertinent when those growth plans involve diverse geographical goals; serving, equipping, and maintaining offices or datacentres as part of a global growth strategy

New finance solutions for new business agility

The flexibility a business retains becomes greater in almost direct proportion to the cash it can safeguard, rather than having cash locked up in assets. Liquidity is obviously a concern and a goal for any business; size is not a factor, the ratio is.

I wrote an article, ‘Lease is more’ at the end of 2018 about the business value of leasing IT equipment which touches on these areas. Sometimes it’s unnecessary to reassess more generally how finances are structured, particularly how they have often been put together to serve legacy support contracts and costs and can dampen the agility a business needs in an age of global competition driven by digitisation: i.e. abundant opportunities, where moving fast is critical to opening up new revenue streams, ahead of the competition.

As much as any business needs to be constantly looking at new IT solutions, it needs also to be looking at new finance solutions.

For any business of any size, the risk factor increases. New and often unfamiliar challenges come into play, and despite best laid plans, availability of funds, and a confident feeling that you have done the necessary groundwork, complications can arise when dealing with third parties in foreign countries or even third parties at home who pledge to serve your interests in foreign countries.

Resources, skills, and funding: Common ailments in foreign climes

As Viadex are only too well aware, the world is full of unique markets and, in most of them, they do things differently. In some of them, economic instability prevails, complex legislation that seems occasionally to have been created in a bygone age (and sometimes has been) and even the world’s most reputed vendors have difficulties in serving and supporting customers due to laws and regulations that either befuddle them or are simply not worth their time and effort trying to deal with.

For global mega-corporations, there’s not too much of a problem. They have the manpower, resources, skills and funding to move fluidly around the world using local or nearby resources wherever they wish to operate. For mid-market companies, every one of these considerations can be a challenge that guzzles up time and money and exacerbates risk. For manpower, resources, skills, and funding, they rely on others; specialist third parties to whom the challenges are their bread and butter.

Download our Finance as a Service info sheet here

Supporting global expansion for the globally-dispersed mid-market business

I once came across some very sage advice applicable as much (or more so) to business as it is to life. Imagine you have won a huge amount on the lottery…so the advice goes. How would you feel the next day? Empowered? Confident? Free, flexible, and untethered from any of the constraints that had held you back or qualified your behaviours and approach in your pre-lottery-win life?

Now, catch that feeling and behave as if you had won. All that might hold you back is that you haven’t actually just come by mega-millions. So, if you can find a way of financing your dreams, why not go ahead and live them? This is an approach to global expansion that Viadex dedicate our efforts to; facilitating, de-risking, and supporting global expansion for the globally-dispersed mid-market business.

So much of the traditional way of financing is about locking customers in for as long as possible. For providers of finance (often the vendors supplying the equipment or solutions) it extends the lifetime value if not of the customer, at least of the individual financing option entered into.

Viadex have a very different approach to financing; it’s not about locking customers in, it’s about helping them to unlock their potential to stretch their budgets, to approach their global growth plans as if they had just won the lottery. It’s about giving them choice and recognizing that an approach that works for every customer can only deliver if each iteration of it is designed to address the unique needs of that customer, through tailored finance solutions.

This is where the idea of Finance as a Service was born; tailoring financial arrangements to drive customers’ global growth objectives. Our financial solutions are powered by our strategic financial partner, Ingram Micro, who back up our ability to make global expansion possible for our customers through deep logistics experience, with the finance that makes it possible.

Time to market is an unforgiving task master

If, for example, you wanted to transition to a new storage solution, migration from your current vendor’s existing equipment could be a long process. The vendor would invariably look to renew an annual support contract for the existing equipment which would trigger a wait of perhaps a year before the transition could be made.

The expedient alternative would be to put in place a third-party maintenance solution for the legacy equipment, matching the temporary support requirements and migration timelines, at around 40% of the OEM renewal rate. This approach removes any hurdles.

In a situation such as this, a tailored finance solution fits the bill; structuring the new solution – including all associated migration costs, new support costs, the interim third-party maintenance, and the data erasure of the legacy storage – while deferring the initial payment until the next budget cycle.

Strategies like this allow new solutions to move forward immediately when the decision is made, when the market dictates, when the business potential can’t be put on hold just because the finance options are rigid and serve the purpose of the provider rather than the business and operational needs of the customer.

If you’re looking to stretch your budget to expand your vision just get in touch anytime. We’re always here to help. Email us at marketing@viadex.com

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