REGIONAL CHANNELS
Vendors as such do
not get involved
with the channel
for credit in any
which way.
Dharmendra L Sawlani
Dharmendra L Sawlani, Managing Director,
Smile Computers.
Stephan Berner, CEO at Help AG.
Possibly the main
hurdle remains the
unwillingness of
banks and financial
institutions to play
an active role in
channel financing.
Stephan Berner
Juniper Financial Services provides a
facility to partners so their customers can
avoid technology obsolescence thanks to
flexible upgrade and migration options,
and protect their current capital and cash
flow with predictable payment schedules
24
to alleviate budget pressures. Most of
the engagement Juniper Networks has
with Juniper Financial Services are over
multiple years with partners, allowing
them to build longer-term engagements
with their customers.
“The feedback we have from the
channel on the Juniper Networks’
credit schemes is very positive. The only
challenge partners have is to manage and
broker multiple vendor financing offerings
when selling a solution incorporating
many different vendors,” adds Kerr.
For businesses today, managing the
cost of technology over its life cycle is
becoming an increasingly important focus.
Businesses want to commoditise the usage
of technology as a known and predictable
cost over its lifetime.
“There is always a financial wrapper
because there is always an investment,
return on investment and a total cost
of ownership discussion. It is becoming
increasingly important as people move
from just simply buying technology to
basically buying usage of technology and
buying business outcomes,” says Sven
Jirgal, Vice President and Chief Operating
Officer, Cisco Capital.
As part of this opportunity, Cisco Capital
offers channel partners and end customers
options to upgrade and add equipment
as part of a financing agreement. This
helps to plan out the technology roadmap
more strategically without necessarily
requiring further capital investment.
Cisco Capital financing helps to integrate
asset management with financing strategy
to optimise return on investment while
lowering total cost of ownership. The
costs of implementation, servicing and
maintenance costs can also be added,
spreading upfront costs over time.
“There are three key reasons for Cisco
Capital’s go to market initiatives. The
first is to differentiate itself from among
other vendors and to meet end user
expectations during purchase negotiations.
The second is to provide an alternative
form of technology ownership model. And
the third is to provide an alternate and
additional stream of credit for channel
partners and end customers,” adds Jirgal.
Cisco Capital is there to basically help
Cisco customers and partners adopt Cisco
technology and provide the financial
wrapper for that adoption. Cisco Capital
helps to acquire technology, use it and, at
some point of time, upgrade it or dispose
of it and then take it back.
Positives and negatives
Availability of channel financing in the
regional supply chain reduces the financial
burden on channel partners, allowing
them to focus on large-scale technology
projects, solution opportunities and value
addition for end-user enterprises. For high
growth technology segments like security
and cloud, availability and provisioning
of financing can give high returns for both
the financer and the channel partner.
Help AG’s Berner points out, “In a
fast-growing market, financial services
will be one of the most demanded value-
added services, so of course value-added
distributors might want to think of leasing
services as part of financial services. This
will most probably take some time but the
sooner it happens the better.”
Smile Computers’ Sawlani also
supports the positive gains from channel
financing. “If managed properly and with
discipline, credit can be very useful for
business. It can help resellers to maintain
reasonable inventory levels and help them
fulfil smaller daily requirements without
the inconvenience of daily purchases.
Credit also provides consistency in flow of
business and distributors and vendors can
forecast and plan future business.”
Sawlani also stresses the need for
a high level of compliance both from
the channel partner and the financial
institution. There is a distinction between
financing the business of a channel partner
and financing a transaction for a channel
partner, and this line cannot be blurred.
“Financial discipline is very important in
any business and if credit is not dealt with
with care, it can be fatal for business,”
summarises Sawlani.
Issue 12
INTELLIGENT TECH CHANNELS