IBM Global Financing
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Transcript of IBM Global Financing
© 2011 IBM Corporation
IBM Global Financing Your comprehensive IT financing solution
George Mattathil -
5/9/2011
Document number: GFP03184-USEN-02
© 2011 IBM Corporation
The broad, deep and lasting impact of the financial crisis
The new normal Global financial crises
Liquidity driven crises
Collapse of the real estate bubble
Failure of collateralized debt obligations
Drop in global commerce
Pressure to cut costs
Rising unemployment
Sinking commodity values
Dramatic drop in consumer demand
Increased risk, volatility and uncertainty
Continued cost and productivity pressures
Subdued growth and reduced demand
High unemployment
Government stimulus programs
Sovereign debt concerns
Limited access to capital
Industry restructuring and consolidation
Continued risk, volatility and uncertainty
1 Comprises China, India, Russia, South Africa, Turkey, Indonesia, Malaysia, Philippines, Thailand, Bulgaria,
Estonia, Hungary, Latvia, Lithuania, Poland, Argentina, Brazil, Chile, Colombia, Mexico, Peru, and Venezuela.
2 Includes only economies that report quarterly data; see list in footnote 3.
3 Comprises Australia, Canada, Czech Republic, Denmark, Hong Kong SAR, Israel, Japan, Korea, New
Zealand, Norway, Singapore, Sweden, Switzerland, Taiwan Province of China, United Kingdom and United
States.
Sources: IBM Institute for Business Value, based on IMF Global Economic
Outlook, September 2009; CPB Netherlands Bureau for Economic Policy
Analysis, December 2009; JP Morgan Global Manufacturing PMI (July 2006
– December 2009); Haver Analytics and NTC Economics; and IMF staff
calculations and World Economic Outlook database. IMF Global Economic
Outlook, October 2010.
Global outlook (GDP)
Signs of recovery
Consumer confidence
© 2011 IBM Corporation
CFOs believe that industry and sector pressures will increase both challenges and opportunities
60 percent of financial decision makers believe they have to make major changes to respond to these concerns
78% Pressure to reduce cost base
74% Need for faster decision making
69% Demand for external transparency
61% Product and service demand growth
56% Ability to attract and retain talent
40% Potential access to short-term liquidity and long-term capital
Source: IBM Global Business Services, Global CFO Study 2010.
Note: Executives asked: In the next three years, how will the following conditions change in your industry or sector? Excludes respondents that select ―Don’t know.‖
Note: Defined as enterprises selecting [5] Increase considerably and [4] Increase on a five-point scale where 5 = Increase considerably and 1 = Decrease considerably.
© 2011 IBM Corporation
The bottom line is still top priority
Although the global economy is on the road to recovery,
many organizations may still be:
Concerned about the high cost of acquiring and
maintaining technology
Keeping a close watch on their IT investments
Demanding that every investment provide a quick
return
Conserving capital wherever possible
Favoring short-term over long-term initiatives
“The economic downturn has rewritten the rules of IT investment, and IT organizations will need
more-rigorous investment management practices in order to adapt. Only then can IT organizations
meet the business requirement to continue to improve IT efficiency, while increasing the value
delivered to the enterprise.”
—Gartner Research, New Realities of IT Investment, September 27, 2010
© 2011 IBM Corporation
Taking the long view
Nevertheless, for companies to succeed in the
new economy they still need to invest to:
Grow the business
Stay competitive and innovative
Keep up with the latest technologies
Meet the evolving needs of employees,
customers and partners
“In the current environment, innovation must address
not only growth but also transformational change in
how organizations drive productivity, reduce costs
and spend differently. This reality will be an important
driver of IT investment choices in the next few years.” —Gartner Research, New Realities of IT Investment, September 2010.
So how can companies make
smart IT investments while
positioning themselves for the
economic recovery?
© 2011 IBM Corporation
IBM Global Financing can help
IBM Global Financing helps companies
acquire the IT solutions they need, more
easily and cost-effectively, so they can:
– Preserve cash for strategic business
needs
– Obtain the solutions they need—
potentially without cutting back
We are the world’s largest technology
financier, providing services in more than
55 countries
We work with more than 125,000 clients,
from small businesses to large enterprises,
including roughly 80% of the Fortune 100
Our decades of IT expertise give us an
exceptional understanding of a company’s
technology and financial needs
55+ countries
125,000+ clients
© 2011 IBM Corporation
A comprehensive IT financing solution
Client Financing
Experts in financing technology and solutions
IBM Global Financing
Client financing
Provides leases and
loans to help clients
acquire solutions and
technology
Commercial financing
Provides working capital
and supply chain
financing for technology
manufacturers and
resellers
Global Asset Recovery Services
Offers comprehensive
services for technology
assets including
remanufacturing,
buyback and resale
© 2011 IBM Corporation
How IBM Global Financing can address CIO challenges
The challenge How we can help
Budget reductions Acquire more technology without significantly affecting the
current budget
Get more for less with IBM Certified Pre-owned Equipment
Turn large, up-front costs into smaller, predictable payments
over a fixed period of time
Bundle project costs into a single recurring payment stream
Realize a significantly lower TCO with leasing than with
outright purchase
Lower ongoing maintenance and support costs with leasing-
based refreshes
Increase capacity with little to no change in monthly payments
with midlease upgrades
Save time and resources by tracking and managing equipment
online
Keep IT equipment current by shifting obsolescence risk to
IBM
Budget forecasting
Increasing total cost of ownership (TCO)
IT refresh and upgrade management
Asset management and tracking
Technology obsolescence
© 2011 IBM Corporation
How IBM Global Financing can address CFO challenges
Optimize cash flow Reduce up-front costs and better align costs to expected
benefits
Free up cash and preserve credit lines for core business
needs Maximize liquidity
Lower ongoing maintenance and support costs with leasing-
based refreshes
ImproveROI with FMV leases that are lower in cost (on a
present value basis) than outright purchase
Reduce costs, improve return
on investment (ROI)
Manage risk with predictable, known costs over a fixed term
Increase capacity with little to no change in monthly payments
with mid-lease upgrades
Reduce financial unpredictability
Help ensure optimization with leasing refreshes
Renew, return or extend lease at the end of the term
Optimize assets; improve utilization
Get fixed-rate capital at competitive rates with flexible terms Acquire new funding sources
The challenge How we can help
© 2011 IBM Corporation
IBM Global Financing can help you affordably invest in your future—today
Better manage your cash flow
Accelerate your break-even point
Better match costs to expected benefits
Improve key financial metrics
Speed project approval
Accelerating a project’s cash flow break-even
point with IBM Global Financing
Positive $
Negative $
Time
Cumulative cash flow with IBM Global Financing
Cumulative cash flow without IBM Global Financing
Cumulative cash payments with IBM Global Financing
Cumulative cash payments without IBM Global Financing
Note: does not take into consideration incremental client benefit for having
funds available for investment in other areas
SOURCE: Hypothetical example that helps illustrate the fundamental
differences between upfront project costs and a project utilizing financed
monthly payments
© 2011 IBM Corporation
A leasing strategy can help reduce costs throughout the IT life cycle
Leasing, coupled with blade swaps, is a far more
economical approach to blade server management for
Intel-architecture blade server farms. Enterprises could
save as much as 20% (and possibly more) through
"swap to grow" when all costs are considered over five
years.
– Robert Frances Group, May 2010*
When all factors are taken into account, Robert
Frances Group's total cost of ownership analysis shows
that Fair Market Value (FMV) leasing, coupled with in-
place upgrades is a more economical approach to
server management for Unix server farms with
increasing workloads. This approach can reduce both
capital and operational expenditures over a five-year
period, bypasses the need for 60% additional floor
space and eliminates the administrative overhead of
added server configurations.
– Robert Frances Group, April 2009+
SOURCE: Robert Frances Group, Leased x86 Blade Swaps To Grow – A Best Practice SOURCE: Robert Frances Group, The Advantages of IBM Power™ Systems In-Place
Upgrades
© 2011 IBM Corporation
We help optimize your IT investment every step of the way
Plan
Acquire Manage
Retire
How do I safely dispose of end-of-life assets?
How do I obtain the solution I need within budget?
What is the lowest cost funding
option that delivers rapid return
on investment?
How do I reduce project and financial risk?
Do my existing
assets have any
value to fund new
investments?
How can I simplify
billing and reduce
costs for
multivendor
projects?
Support
for the
IT life cycle
© 2011 IBM Corporation
Support for the IT life cycle—plan
Leverage customized financing structures and low
competitive rates to lower initial payments, helping you
get the technology you need without large, up-front
expenses
Dramatically simplify budget management and reduce
risk with predictable, known costs over a fixed term
Align costs with expected benefits to better predict your
return on investment and accelerate project approvals
Improve budget predictability by making regular monthly
payments
Extract more value out of existing equipment to save
funds for new investments
Support
for the
IT life cycle Plan
Acquire
Manage
Retire
© 2011 IBM Corporation
Support for the IT life cycle—acquire
Finance your hardware, software and services acquisitions
while keeping your IT infrastructure robust and up-to-date
Lower your acquisition costs by 10 to 16 percent1 using fair
market value (FMV) leases
Preserve capital with competitive loan rates for software and
services
Cut costs even further by using IBM-Certified Pre-owned
equipment, at significant savings over the original price
Support
for the
IT life cycle Plan
Acquire
Manage
Retire
1 Represents a range of net present value savings achieved on a 36-month FMV lease for IBM hardware for a ―best‖ credit customer.
© 2011 IBM Corporation
Support for the IT life cycle—manage
Manage your portfolio of leased assets with easy-to-use
online management tools
Take advantage of mid-lease upgrades to add capacity—
potentially without significantly affecting your budget
More affordably perform side-by-side migrations to new
technology with minimal disruption
Refresh your technology to reduce IT obsolescence using
fair market value leases
Use competitively priced software loans to add new
licenses or upgrades
Support
for the
IT life cycle Plan
Acquire
Manage
Retire
© 2011 IBM Corporation
Support for the IT life cycle—retire
Dispose of older IT equipment in compliance with
environmental laws and regulations
Simplify compliance with hardware disposal regulations
Get fair market value for your retired assets with buyback
services from IBM
Return leased equipment* with no disposal or resale
concerns
Support
for the
IT life cycle Plan
Acquire
Manage
Retire
* Refers to equipment on an FMV lease
© 2011 IBM Corporation
Support for your vision
IBM Global Financing delivers the IT financial expertise and capabilities you need today to support your vision for tomorrow
We are well positioned to assist you with not only financing but also IT life-cycle management challenges
We can help accelerate the implementation of innovative solutions or projects such as cloud computing or business analytics
© 2011 IBM Corporation
IBM Global Financing key offerings
Hardware financing
Software financing
Services financing
Financing for midsize businesses
Certified Pre-owned equipment
Global Asset Recovery Services
© 2011 IBM Corporation
Returning assets Parts and machines
Warehouse and fulfillment
Processing and refurbishment of machines
Harvesting of parts
IBM sales channels IBM sales force, Business Partners and the ibm.com®
website
Machines and parts Packaged for sale
Scrap vendors Excess and obsolete parts
90.2 percent of the units processed were readied for resale and reuse while the other 9.8 percent were sent for scrapping
The landfill plus incineration disposal rate continued to decline to 0.68 percent
Global Asset Recovery Services has operation sites in more than 55 countries
Global Asset Recovery Services
In 2009, Global Asset Recovery Services
remanufacturing operations processed
more than one million machines with a
weight of more than 27.8 million pounds.
This equated to more than 19.4 thousand
machines a week.
© 2011 IBM Corporation
IBM Global Financing versus financing providers
Other IT companies
Generally can’t match the depth and breadth of
IBM’s IT portfolio and IBM Global Financing’s scope,
experience and expertise
Often must use third-party finance providers
Traditional banks
Generally lack expertise in technology financing
Tend to be limited to the acquisition phase of IT life
cycle
Often have limited scope to exploit residual value of
financed equipment
Rarely serve the full needs of IT life cycle
By and large require restrictive loan covenants and
end-of-lease options
Offer no equipment recycling or disposal
IBM Global Financing
More than 30 years of experience as an asset-
based lender
Optimal understanding of IT across businesses
of all sizes and virtually all industries
Global client financing and asset recovery reach
Comprehensive financing portfolio to address
needs across the IT life cycle
Competitive rates, terms and conditions
designed to be easy to understand, and flexible
end-of-lease options
Based on our expertise and market knowledge,
we are able to take strong residual value
positions with respect to hardware, resulting in
very competitive rates for our FMV lease
offerings
Integration of financing into IBM’s solutions
© 2011 IBM Corporation
Why IBM Global Financing?
Competitive
rates
The world’s
largest IT
financier with
more than
US$34.6B in
assets
More than 30
years of IT
financing
experience
Virtually
unmatched
capabilities for
supporting the
IT life cycle
Serving global
enterprises,
with offices
in more than
55 countries
© 2011 IBM Corporation
Trademarks and notes
IBM Corporation 2009
IBM, the IBM logo and ibm.com are registered trademarks, and other company, product or
service names may be trademarks or service marks of International Business Machines
Corporation in the United States, other countries, or both. A current list of IBM trademarks is
available on the Web at ―Copyright and trademark information‖ at
www.ibm.com/legal/copytrade.shtml
Adobe, the Adobe logo, PostScript, the PostScript logo, Cell Broadband Engine, Intel, the
Intel logo, Intel Inside, the Intel Inside logo, Intel Centrino, the Intel Centrino logo, Celeron,
Intel Xeon, Intel SpeedStep, Itanium, IT Infrastructure Library, ITIL, Java and all Java-based
trademarks, Linux, Microsoft, Windows, Windows NT, the Windows logo, and UNIX are
trademarks or service marks of others as described under ―Special attributions‖ at:
http://www.ibm.com/legal/copytrade.shtml#section-special
Other company, product and service names may be trademarks or service marks of others.
References in this publication to IBM products or services do not imply that IBM intends to
make them available in all countries in which IBM operates.
© 2011 IBM Corporation
Trademarks and notes
IBM Corporation 2011
IBM, the IBM logo, IBM Project Financing, and ibm.com are registered trademarks, and other company,
product, or service names may be trademarks or service marks of International Business Machines
Corporation in the United States, other countries, or both. A current list of IBM trademarks is available on
the Web at “Copyright and trademark information” at www.ibm.com/legal/copytrade.shtml
Other company, product, and service names may be trademarks or service marks of others.
References in this publication to IBM products or services do not imply that IBM intends to make them
available in all countries in which IBM operates.
IBM and IBM Credit LLC do not, nor intend to, offer or provide accounting, tax or legal advice to clients.
Clients should consult with their own financial, tax and legal advisors. Any tax or accounting treatment
decisions made by or on behalf of the client are the sole responsibility of the customer.
IBM Global Financing offerings are provided through IBM Credit LLC in the United States, IBM Canada
Ltd. in Canada, and other IBM subsidiaries and divisions worldwide to qualified commercial and
government clients. Rates and availability are based on a client’s credit rating, financing terms, offering
type, equipment type and options, and may vary by country. Some offerings are not available in certain
countries. Other restrictions may apply. Rates and offerings are subject to change, extension or
withdrawal without notice.