Cost, cash flow and liquidity management have long been on the priority list of IT decision makers, but with the recent unprecedented pace of change and disruption, cost control strategies have been pushed to the forefront. A recent IBM® Institute for Business Value (PDF, 333 KB) report highlights how organizations will need cost strategies that help balance value transformation with cash preservation, as cost control is a top priority and projected to grow significantly by 2022.1
Cost management strategies are critical as enterprises are accelerating their move to hybrid cloud and AI to enable digital transformation initiatives and meet the needs for improved speed, flexibility, resiliency and agility. As organizations look to strategic IT investments, they’re also facing budget and capital constraints, including the technical debt of old IT infrastructure that can’t support today’s digital enterprise business requirements.
“ When faced with the challenges of digital transformation and budget constraints, businesses are relying on innovative payment models — such as payment plans, leasing, and flexible payment options — as an important way to support their organization’s digital transformation and deliver the operational flexibility and budget transparency that inform IT decisions and provide customers with a choice to use OpEx models instead of CapEx to accelerate their transformations.”2
Figure 1. Cost control is still a top priority.
Question: To what extent is your organization prioritizing the following business competencies?
Enterprises are increasingly evaluating IT funding strategies and realizing the benefits of flexible payment plans, such as leasing and loans for cost management and capital preservation. As organizations look for innovative IT investment strategies, IBM Global Financing offers a portfolio of flexible terms and funding options. Payment solutions can help start projects sooner, enhance business results and align infrastructure investments with workload needs to provide increased flexibility and agility.
Benefits of flexible payment solutions
To avoid budget-related delays as new technology and market opportunities emerge, payment solutions, such as loans, leases or deferred payments, may help to source funding faster and help start projects sooner. Based on research from FinListics Solutions, using a payment solution can help speed up project approval by up to three months due to the lower investment required upfront. Additionally, accelerating project approval can result in a significant increase in a project’s cash flow.3
Enhance business results
Organizations that use payment solutions may realize faster return on investment (ROI), improved cash flow and reduced total cost of ownership (TCO). Aligning payments to a project’s anticipated benefits — typically several months into a project implementation — can potentially enhance ROI. FinListics Solutions found that payment solutions can help increase the project’s net present value (NPV), since payments are pushed further out. “Projects tend to realize a minimum of 1% increase in value and upwards of 5% improvement in the NPV of the project.”3 See Figure 2.
A payment solution, such as IBM Project Financing™, can be customized and include services, software and IT infrastructure.
As companies evaluate acquiring servers, storage solutions and software to build a more efficient and resilient IT infrastructure, leasing can offer lower costs and a minimal impact on capital budgets when compared to purchase. The FinListics Solutions report states that “The financial benefits of leasing can be up to a 14% reduction in the TCO, resulting in increased cash flow.” 3
Boost agility and flexibility
Flexible payment solutions can help improve agility and flexibility by aligning IT investments to workload needs. Using a payment solution may help minimize cash outlays and provide the ability to fund strategic initiatives. Through leasing, organizations may be able to conserve cash, get predictable monthly payments and improve operational flexibility with upgrades during a lease term.
For example, leasing provides a predictable, low-risk approach to building IT infrastructure with minimal impact on capital budgets, while helping to prevent technological obsolescence.
Furthermore, additional capacity or features can be added during the middle of the lease, often with little or no change in monthly payments. At the end of the lease term, businesses can renew or extend the lease, purchase the equipment or return it.
Funding strategic investments in hybrid cloud and AI can support your digital transformation initiatives and help meet business demands for speed, flexibility, resiliency and agility. Explore how IBM can help with flexible payment options for IBM hybrid cloud, IBM Services®, IBM and Red Hat® software, IBM servers and storage solutions and IBM Certified Pre-Owned.