IBM Revamps Financing Plans For System X Sales
IBM financing executives also said the new “IBM System x Solution Financing” plan, which the company is expected to announce next Monday, simplifies the financing application process -- responding to partner complaints that the process was too complex -- and should help resellers close smaller deals.
In the U.S. some 80 percent of System x deals are $500,000 or less with many as low as $20,000 or even $10,000, said Dan Ransdell, general manager of IBM Global Financing – North America, in an interview. Some of those sales are direct, but many are through channel partners to small and midsize businesses.
Because earlier financing plans were complex, many partners and their customers often avoided financing and paid cash, Ransdell said, while some deals were lost. “We weren’t even showing up in some of these deals. We needed to make it more simple,” he said.
The new financing plan offers a zero-percent, 36-month lease on System x servers and a zero-percent-interest loan on add-on hardware, software and/or services – either from IBM or another vendor – as long as the System x hardware makes up at least 70 percent of the total cost of the contract. Previously IBM offered zero-percent financing only on the server lease, Ransdell said.
The offer of zero-percent-interest financing on the software and services components of a contract is in step with IBM’s new emphasis on selling integrated hardware and software systems. That strategy follows last week’s corporate reorganization that brought the company’s hardware and software businesses under a single executive, Steve Mills, as group executive for Systems and Software.
Another change in the new plan is that customers will get a simple pass/fail decision on whether they are eligible for credit from IBM Financing, based on the contract’s purchase price. In the past the final price of the contract was based on complex calculations that included a customer’s credit rating.
That move also makes it easier for customers to calculate their monthly payments by simply dividing the total value of the deal by 36 (for the 36-month lease), Ransdell said.
Channel partners receive incentive payments for leveraging IBM’s leasing and lending services. IBM is piloting the new financing plan in the U.S. and could expand it to other countries if it “resonates in the marketplace,” Ransdell said. Additional information can be found on IBM's Web site.