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Why financing or leasing can be a deal-maker

I attended a partner conference last week hosted by distributor Westcon, where I was honored to facilitate their opening industry panel. I’m not allowed to report on who exactly said what, but I can tell you that one sleeper topic (actually, not-so-sleeper but not-so-talked-about) among the five VARs on stage was leasing and financing. This theme also popped up a few weeks back during the Ingram Micro VentureTech Network Invitational, and it was also the recent focus of a videocast that I recorded for another client.

It really shouldn’t be surprising that access to credit by technology buyers is definitely being pinched, although it’s not talked about as much as all the other horrific bad news hogging the business news headlines over the past month or so.

During her keynote speech at VentureTech last month, IDC channel analyst Christina Richmond noted that it’s in the best interest of solution providers to figure out how their customer prospects can afford the project they’re suggesting. If you’re NOT pitching some sort of financing or leasing option as part of the total solution, you’re really NOT pitching a total solution, she says.

Consider that roughly $130 billion was spent on technology during 2007, while $23 billion was attributable to leasing. A couple of pretty obvious advantages pointed out by Richmond: Leasing can help overcome the obsolence argument, because the terms can be structured to provide for regular upgrades. Speaking of which, if you’ve got a lease relationship with your customer, you’ve got a regular touch point as which to have conversations with the account. It should not be lost on the channel that approximately 85 percent of IBM’s mainframe sales, as an example, are handled through a leasing relationship. There’s another advantage as well, especially in these days of green tech scrutiny, and that’s that there is a clearer end-of-life path for the equipment.

With all the debate and chatter over cloud computing and software as a service, it’s clear that IT buyers are better prepared to consider consuming technology as a monthly or quarterly expense, so why shouldn’t you be broaching the discussion?

Incidentally, how many of you are using the 2008 Economic Stimulus Act to help close sales by the end of the year? One section of the act provides for accelerated depreciated for capital equipment while another increases the write-off cap for small businesses. Here’s another reference with some more information.

This is clearly a time when VARs and solution providers need to get more creative about financing, not just to protect their own bottom line but to help seal deals. As your own access to credit dries up, can you really afford not to understand more about what leasing or other financing options mean to your clients?

Heather Clancy is a business journalist and strategic communications consultant with SWOT Management Group. She can be reached at

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