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PRINT.IT
01732 759725
FINANCE
With today’s accelerated pace of
technological change, periodically
upgrading IT systems is not just
a ‘nice to do’, it’s a business
imperative.
According to an IBM global
infrastructure study, more than 90%
of large organisations believe that
IT is a key provider of competitive
advantage
1
. Updating technology
is particularly important in highly
regulated sectors where change
requirements can be mandatory,
driven by regulatory, customer and
market demands.
Across all sectors, the judicious
application of up-to-date technology
is becoming an increasingly
important competitive differentiator
that can have a significant impact on
operational efficiency and business
performance. Application areas
that have a disproportionately large
impact on business differentiation
include: customer self-service;
customer relationship management;
management information and
analysis; automated decision
support; internal knowledge sharing;
and mobile workforce management.
The importance of acquiring up-to-
date technology is not confined to the
IT arena. Office imaging devices, such
as digital copiers, optical scanners,
high-speed printers and document
publishing systems, are equally
indispensable.
The acquisition cost of a laser
printer typically represents as little
as 20% of the total cost of ownership
(TCO), with consumables, such
as cartridges, maintenance costs
and repairs usually making up the
majority of overall life-cycle costs
2
. As
a printer gets older, these costs tend
to increase steadily. Older devices
also have higher energy consumption
than modern ones that use up to
65% less power
3
.
Asset financing
Despite the need to create a
technologically efficient working
environment, businesses may not
have sufficient capital to acquire and
upgrade the technology required.
Even where capital is available,
the outright purchase of systems
that could fall into obsolescence
within a short space of time may not
represent a sound investment. Given
that affordable bank credit is harder
to come by (business bank borrowing
has fallen since 2009, according to
Bank of England data), companies
may also want to avoid tying up
capital in technology when it could be
deployed better in other ways.
If a business operates in a volatile
market where capital reserves may
be needed at a moment’s notice for
sudden tactical initiatives, such as
a marketing/sales campaign or the
acquisition of an ailing rival, asset
financing provides a cost-effective
solution that enables technology
investment without tying up precious
capital in capital expenditure.
It is a useful option for any
organisation that is close to the limit
available from traditional sources
of finance, such as standard bank
credit, as it keeps credit available
for other business activities. It also
allows businesses to invest their
own capital in appreciating assets
(property, new ventures, stocks &
bonds) where they can see it grow,
rather than committing that capital to
depreciating assets.
Fixed costs
Asset financing techniques are
gaining popularity as an investment-
enabler. The user effectively pays for
the use of the technology/system
over a given financing period. Costs
are spread over the financing term to
align with the benefits produced by
the acquired asset, such as operating
cost savings, greater throughput or
improved productivity. This eases the
user’s cash flow and frees working
capital for business-generating
activities. Fixed monthly costs
eliminate the volatility of short-term
economics including interest rates,
inflation, credit conditions and
market dynamics.
Such financing arrangements are
often offered by original equipment
manufacturers (OEMs), equipment
resellers and specialist brokers, in
cooperation with specialist financiers,
as part of a value proposition that
encompasses both technology and a
financing solution.
Financing arrangements can
embrace not only the acquisition
price, but also running costs, such
as maintenance. In this way, a
business can take all operational
costs associated with an asset
into consideration in its financial
planning. A financing contract
can also include the possibility of
upgrading the technology within
agreed parameters at certain points
in the financing period. Businesses
therefore need not fear investing in
rapidly outdated technologies, but
can instead harness technological
innovations to drive growth.
Financing makes essential IT
investments and new office technology
affordable for businesses, whether in
tough times or in a growing market.
Seeing the cost of a system in terms
of a monthly payment, rather than an
overall big capital outlay, customers
can become more ambitious about
what they ‘can afford’. It encourages
the customer to invest in best-in-class
solutions, rather than compromising
on second best.
A modern IT solution, supported
by efficient office technology, is a
prerequisite for every successfully run
business. With the help of flexible,
alternative financing techniques,
companies can take advantage of
emerging technology to improve
efficiency and streamline processes.
Financing competitive
advantage
If a business
operates in
a volatile
market
capital
reserves may
be needed at
a moment’s
notice
[1] IBM global, ‘Infrastructure Matters’
[2] University of Miami, Computer printers, 2008.
[3] Forbes, Kerry A. Dolan, HP Takes A Green Step With Energy Efficient Printers, 20 September 2010.
Emma Thomas,
Head of Sales
South & Brokers
(Vendor Finance)
Siemens Financial
Services
Emma Thomas, Head of Sales South & Brokers (Vendor
Finance) at Siemens Financial Services, explains how smart
financing can help businesses meet evolving IT requirements
