Pay no money now

IT vendors are fighting the downturn with interest-free finance

IT vendors are fighting the downturn with interest-free finance

Shrinking budgets and a lack of confidence are causing an increasing number of IT projects to be put on hold. That worries many technology vendors, but the big tech names are sitting on large piles of cash. Cisco, for instance, has $26.8 billion, while Microsoft has $2.7 billion and Oracle $10.6 billion in cash and readily available funds.

They’re not afraid to use it either. In a number of cases, they’re offering zero per cent financing deals for terms of up to three years – traditionally a sales tactic of white goods and sofa salesmen, but now indicative of the IT market at large. That adds up to some interesting opportunities for savvy businesses prepared to use the market conditions to give themselves a competitive advantage at a favourable cost.

Microsoft is offering zero per cent financing for three years on all its Dynamics (enterprise resource planning) software, covering licenses and first-year enhancements. The five-month promotion applies to deals starting from $20,000.

Germany-based applications maker SAP is offering zero per cent financing for certain customers as part of its Best-Run NOW drive. But zero per cent is not a goal in itself, says Dave Keen, SAP’s VP of industry and competitive marketing.

‘Throwing zero per cent finance offers [at customers] is the wrong thing to do,’ says Keen. ‘People don’t just want to get things cheaply; they want things that will help them succeed in the downturn, and that they can get up and running quickly.’

Purchaser power

The more organisations opt to pay for their IT using financing deals, the greater the bargaining power of those that can still afford to put up the cash. ‘If you were out on the high street today looking to buy something with cash, you could probably negotiate a good deal,’ says Keen.

And even if you can’t secure a zero per cent deal, the switch to a monthly financing model allows for greater financial predictability, and makes a lot of sense in an industry where technology is obsolete by the time you take it out
of the box.

Nick Britton

Nick Britton

Nick was the Managing Editor for when it was owned by Vitesse Media, before moving on to become Head of Investment Group and Editor at What Investment and thence to Head of Intermediary...

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