Plenty of interest in 0% financing offers
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So it was with no small degree of interest that we spotted the recent scaling back of Gartner’s spending predictions for the year. Just 16 days into January, the major analyst house made the bold move of reducing its previous estimate of a 4.6 percent growth in global IT spending to a - comparatively low 3.7 percent.
Now, even though those figures have come down a bit, that doesn’t equate to doom and gloom. We’re still talking about a buoyant market growing by almost four percent. IT spending remains healthy, even with the combined effects of Eurozone uncertainty and the longer-term repercussions of the Thailand floods taken into account.
Of course, technological spend doesn’t always equate to innovation and progress. In a survey of 200 firms last year, more than half said that while their overall IT budgets had increased, far too much of that cash was being diverted towards maintenance, rather than new products and services.
While spending overall may be on the rise then, gaining approval to spend on new technology doesn’t seem quite so easy. With cash flow and other priorities continuing to compete with ambition, getting the green light for an all-new technology deployment can still be tough.
It’s little surprise that zero percent financing is proving to be an increasingly popular way of getting hold of new technology without taking on the immediate financial commitments that come with a large cash expenditure. Major vendors from both the hardware and software fields have been placing renewed focus on zero percent schemes in the past couple of years, and with good reason.
Deal or no deal?
Sadly, not all zero percent offers are the same however. As with any financial offer, the devil is in the detail, and the small print may reveal that what looks like zero percent on the surface might not be as good as it sounds. ‘Cash’ discounts can sometimes be excluded, and processing charges and end of term payments applied, making the overall cost of the product higher than it would normally have been. Finding an offer that’s actually zero percent is key.
One such company to offer what can best be described as “genuine” zero percent finance is Cisco. “We know it’s not always as easy as it should be for businesses to secure the funding they need to move their company forward,” Cisco’s UK Commercial Director, David Critchley, told us when we caught up recently. “So we wanted to make things as simple - and clear - as possible. And that means making sure that when we say zero percent, we mean it.”
Cisco’s programme is one aimed at breaking the potential Catch-22 of technological investment: spending on technology can help to give a company a competitive edge, thus increasing turnover and profits - but you need the turnover and profit, of course, before making the investment. “We know that can be tough,” explained Critchley. “So we wanted to help people transfer their IT spend from being one large capital investment to one that could be more easily spread over time. That makes it easier for our customers to get on with using the tech for what it is designed for, rather than saving and planning in order to get it in the first place.”
Choice and flexibility
Of course, such an offer isn’t limitless. Cisco sets its terms at a three-year (36-month) repayment period, a maximum £200,000 investment, and orders need to be in before July 2012. Interestingly however, the firm doesn’t lock its zero percent customers into a wholly-Cisco deployment, allowing for products from other vendors to enter play, vital for anyone looking at integrating different devices.
Cisco’s approach is proving popular, according to Critchley: “The feedback we get most often is just that the Cisco EasyLease scheme is simple to use. Payments are structured and predictable, so you know what’s going out and when. And some of our payment plans start at under £30 per month, so it’s less than a mobile phone rental in some cases.”
The ultimate choice on whether zero percent finance is the right approach comes down to the buyer. But with the Cisco scheme offering the purchase of the technology at the end of the lease at only 1% of the original funded value, it presents a potentially rewarding alternative to an all-at-once cash outlay.