For the research “Using ICT financing for strategic gain”, Quocirca asked respondents their general views on financing and leasing, and their thoughts about ICT financing in particular. The results reveal that many SMBs are unaware how ICT financing works, preferring to spend cash on ICT purchases. The research also revealed that few resellers include a finance option during sales negotiations.
Key findings from the research include:
- The majority of SMBs expect IT budgets to shrink this year. More than 64% of respondents expect technology budgets to decrease in 2013, with a further 21% expecting them to stay level. Through financing, this available budget can go much further.
- Acquisition costs are a key consideration for SMBs in new IT projects. Over half of respondents consider up-front costs to be of critical or high concern in their procurement process. Through financing there is no capital outlay, meaning this concern is allayed immediately.
- Many SMBs buy technology ad-hoc, mainly online. 41% of respondents use value added resellers (VARs) as their main channel for buying ICT hardware and software. However, some 81% use the internet as either their primary or secondary means of procurement. Ad-hoc purchasing could actually increase ICT costs in the long term, where financing can help SMBs make more cost-effective and strategic ICT investments.
- Few SMBs use ICT financing, while fewer still understand the benefits of it. While 76% of respondents currently use car financing, only 30% are using financing for IT and telephony equipment. Just 1% are using it for software – with some 40% never having considered software financing at all. To compound this, more than 50% of respondents are unaware of the benefits of IT finance in comparison to a cash purchase or bank credit lines, while just fewer than 40% believe financing is unnecessary as they have enough cash already. This demonstrates that much more must be done to help SMBs understand the benefits of ICT financing, and how it allows valuable cash reserves to be invested in supporting core, strategic objectives.
- Many ICT vendors hardly mention financing when discussing deals – if at all. The option to finance a deal is brought up regularly in around 30% of ICT purchasing negotiations, while in 15% of conversations it’s never brought up at all. However, nearly 45% of SMBs raise the option of finance in these discussions themselves. Clearly, resellers have an opportunity to be more proactive about financing, and SMBs are more receptive than they may think.
Benoît Dilly, UK Country Manager at BNP Paribas Leasing Solutions, believes the findings of the Quocirca research offer a golden opportunity for resellers: “Now is a great time for SMBs to procure ICT through financing. With budgets increasingly restricted, financing is the ideal way for them to get the technology they need to achieve their goals and go for growth. BNP Paribas Leasing Solutions is ideally placed to help resellers lead their discussions with financing, in order to make more strategic ICT sales to SMBs. In 2012, we supported nearly 40,000 UK businesses across all sectors invest in £1.1 billion of capital equipment, to help them progress their strategic goals. By working with us, resellers have an excellent opportunity to shift SMBs’ ad-hoc ICT purchasing practices towards more mutually beneficial, strategic business relationships.”