IBM Global Financing


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IBM help optimize your IT investment every step of the IT life cycle: (1) Plan, (2) Acquire, (3) Manage, (4) Retire.

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IBM Global Financing

  1. 1. George Mattathil -5/9/2011IBM Global FinancingYour comprehensive IT financing solutionDocument number: GFP03184-USEN-02 © 2011 IBM Corporation
  2. 2. The broad, deep and lasting impact of the financial crisis Global financial crises Signs of recovery The new normal Global outlook (GDP)  Liquidity driven crises  Continued cost and  Collapse of the real productivity pressures estate bubble  Subdued growth and  Failure of collateralized reduced demand debt obligations  High unemployment  Drop in global commerce  Government stimulus  Pressure to cut costs programs  Rising unemployment Consumer confidence  Sovereign debt concerns  Sinking commodity values  Limited access to capital  Dramatic drop in  Industry restructuring consumer demand and consolidation  Increased risk, volatility  Continued risk, volatility and uncertainty and uncertainty1 Comprises China, India, Russia, South Africa, Turkey, Indonesia, Malaysia, Philippines, Thailand, Bulgaria, Sources: IBM Institute for Business Value, based on IMF Global EconomicEstonia, Hungary, Latvia, Lithuania, Poland, Argentina, Brazil, Chile, Colombia, Mexico, Peru, and Venezuela. Outlook, September 2009; CPB Netherlands Bureau for Economic Policy2 Includes only economies that report quarterly data; see list in footnote 3. Analysis, December 2009; JP Morgan Global Manufacturing PMI (July 20063 Comprises Australia, Canada, Czech Republic, Denmark, Hong Kong SAR, Israel, Japan, Korea, New – December 2009); Haver Analytics and NTC Economics; and IMF staffZealand, Norway, Singapore, Sweden, Switzerland, Taiwan Province of China, United Kingdom and United calculations and World Economic Outlook database. IMF Global EconomicStates. Outlook, October 2010. © 2011 IBM Corporation
  3. 3. CFOs believe that industry and sector pressures will increase bothchallenges and opportunities 78% 74% 69% 61% 56% 40% Potential access to Product short-term Pressure to Need for Demand for and service Ability to liquidity and reduce cost faster decision external demand attract and long-term base making transparency growth retain talent capital 60 percent of financial decision makers believe they have to make major changes to respond to these concernsSource: 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
  4. 4. The bottom line is still top priorityAlthough 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
  5. 5. Taking the long viewNevertheless, for companies to succeed in thenew 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 So how can companies make driver of IT investment choices in the next few years.” smart IT investments while positioning themselves for the —Gartner Research, New Realities of IT Investment, September 2010. economic recovery? © 2011 IBM Corporation
  6. 6. 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 55+ 125,000+ technology and financial needs countries clients © 2011 IBM Corporation
  7. 7. A comprehensive IT financing solution IBM Global Financing Global Asset Client financing Commercial financing Recovery Services Provides leases and Provides working capital Offers comprehensive loans to help clients and supply chain services for technology acquire solutions and financing for technology assets including technology manufacturers and remanufacturing, Client Financing resellers buyback and resale Experts in financing technology and solutions © 2011 IBM Corporation
  8. 8. How IBM Global Financing can address CIO challengesThe challenge How we can help  Acquire more technology without significantly affecting the Budget reductions current budget  Get more for less with IBM Certified Pre-owned Equipment  Turn large, up-front costs into smaller, predictable payments Budget forecasting over a fixed period of time  Bundle project costs into a single recurring payment stream  Realize a significantly lower TCO with leasing than with Increasing total cost of outright purchase ownership (TCO)  Lower ongoing maintenance and support costs with leasing- based refreshes IT refresh and upgrade  Increase capacity with little to no change in monthly payments management with midlease upgrades Asset management and tracking  Save time and resources by tracking and managing equipment online Technology obsolescence  Keep IT equipment current by shifting obsolescence risk to IBM © 2011 IBM Corporation
  9. 9. How IBM Global Financing can address CFO challengesThe challenge How we can help  Reduce up-front costs and better align costs to expected Optimize cash flow benefits  Free up cash and preserve credit lines for core business Maximize liquidity needs  Lower ongoing maintenance and support costs with leasing- Reduce costs, improve return based refreshes  ImproveROI with FMV leases that are lower in cost (on a on investment (ROI) present value basis) than outright purchase Reduce financial  Manage risk with predictable, known costs over a fixed term  Increase capacity with little to no change in monthly payments unpredictability with mid-lease upgrades Optimize assets; improve  Help ensure optimization with leasing refreshes utilization  Renew, return or extend lease at the end of the term Acquire new funding sources  Get fixed-rate capital at competitive rates with flexible terms © 2011 IBM Corporation
  10. 10. IBM Global Financing can help you affordably invest in your future—today Accelerating a project’s cash flow break-even point with IBM Global Financing Positive $  Better manage your cash flow  Accelerate your break-even point  Better match costs to expected benefits Time  Improve key financial metrics  Speed project approval Negative $ 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 FinancingSOURCE: Hypothetical example that helps illustrate the fundamentaldifferences between upfront project costs and a project utilizing financed Note: does not take into consideration incremental client benefit for havingmonthly payments funds available for investment in other areas © 2011 IBM Corporation
  11. 11. A leasing strategy can help reduce costs throughout the IT life cycle Leasing, coupled with blade swaps, is a far more When all factors are taken into account, Robert economical approach to blade server management for Frances Groups total cost of ownership analysis shows Intel-architecture blade server farms. Enterprises could that Fair Market Value (FMV) leasing, coupled with in- save as much as 20% (and possibly more) through place upgrades is a more economical approach to "swap to grow" when all costs are considered over five server management for Unix server farms with years. increasing workloads. This approach can reduce both – Robert Frances Group, May 2010* 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
  12. 12. We help optimize your IT investment every step of the way Do my existing assets have any value to fund new Plan investments? RetireHow do I obtain the solution Ineed within budget?How do I reduce project and Support How do I safely dispose of end-of-financial risk? for the life assets? IT life cycleWhat is the lowest cost fundingoption that delivers rapid returnon investment? Acquire How can I simplify Manage billing and reduce costs for multivendor projects? © 2011 IBM Corporation
  13. 13. 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 Support for the Align costs with expected benefits to better predict your IT life cycle Plan return on investment and accelerate project approvals Acquire Manage Improve budget predictability by making regular monthly Retire payments Extract more value out of existing equipment to save funds for new investments © 2011 IBM Corporation
  14. 14. 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 Support for the Preserve capital with competitive loan rates for software and IT life cycle Plan services Acquire Manage Retire Cut costs even further by using IBM-Certified Pre-owned equipment, at significant savings over the original price1 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
  15. 15. 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 Support for the technology with minimal disruption IT life cycle Plan Refresh your technology to reduce IT obsolescence using Acquire Manage Retire fair market value leases Use competitively priced software loans to add new licenses or upgrades © 2011 IBM Corporation
  16. 16. 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 Support services from IBM for the IT life cycle Return leased equipment* with no disposal or resale Plan Acquire Manage concerns Retire* Refers to equipment on an FMV lease © 2011 IBM Corporation
  17. 17. Support for your visionIBM Global Financing We are well positioned We can help acceleratedelivers the IT financial to assist you with not only the implementation ofexpertise and capabilities financing but also IT life- innovative solutions oryou need today to cycle management projects such as cloudsupport your vision for challenges computing or businesstomorrow analytics © 2011 IBM Corporation
  18. 18. 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
  19. 19. Global Asset Recovery Services Returning assets Parts and machinesIn 2009, Global Asset Recovery Servicesremanufacturing operations processedmore than one million machines with aweight of more than 27.8 million pounds.This equated to more than 19.4 thousandmachines a week. Warehouse 90.2 percent of the units processed IBM sales channels and fulfillment Processing and refurbishment Scrap vendors were readied for resale and reuse IBM sales force, Business Partners and the® of machines Excess and obsolete parts Harvesting of parts while the other 9.8 percent were website sent for scrapping The landfill plus incineration disposal rate continued to decline to 0.68 percent Global Asset Recovery Services has Machines and parts operation sites in more than 55 Packaged for sale countries © 2011 IBM Corporation
  20. 20. IBM Global Financing versus financing providers IBM Global Financing Other IT companies More than 30 years of experience as an asset-  Generally can’t match the depth and breadth of based lender IBM’s IT portfolio and IBM Global Financing’s scope, experience and expertise Optimal understanding of IT across businesses of all sizes and virtually all industries  Often must use third-party finance providers Global client financing and asset recovery reach Comprehensive financing portfolio to address Traditional banks needs across the IT life cycle  Generally lack expertise in technology financing Competitive rates, terms and conditions  Tend to be limited to the acquisition phase of IT life designed to be easy to understand, and flexible cycle end-of-lease options  Often have limited scope to exploit residual value of Based on our expertise and market knowledge, financed equipment we are able to take strong residual value positions with respect to hardware, resulting in  Rarely serve the full needs of IT life cycle very competitive rates for our FMV lease  By and large require restrictive loan covenants and offerings end-of-lease options Integration of financing into IBM’s solutions  Offer no equipment recycling or disposal © 2011 IBM Corporation
  21. 21. Why IBM Global Financing? Competitive The world’s More than 30 Virtually Serving global rates largest IT years of IT unmatched enterprises, financier with financing capabilities for with offices more than experience supporting the in more than US$34.6B in IT life cycle 55 countries assets © 2011 IBM Corporation
  22. 22. Trademarks and notes IBM Corporation 2009  IBM, the IBM logo and 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  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:  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
  23. 23. Trademarks and notesIBM Corporation 2011 IBM, the IBM logo, IBM Project Financing, and 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 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. © 2011 IBM Corporation