HPE and Cisco banks on financing schemes, delayed payment for tech orders

Technology

Mumbai: HPE and Cisco are relying on financing and delayed payment schemes to keep the tech orders coming in amid the COVID-19 crisis globally.

These new schemes from HPE and Cisco are aimed at helping customers and partners buy new or upgrade technology products and solutions through their financing arms.

In a way, HPE and Cisco want to encourage customers to place tech orders and not let financial constraints come in the way of IT needs to run and support their businesses and organizations.

HPE’s financing initiative

HPE (Hewlett Packard Enterprise) was the first to announce more than $2 billion in financing through its internal financing arm – HPEFS (HPE Financial Services).

HPEFS will help customers overcome monetary challenges in technology purchases or upgrades and convert their IT infrastructure into new sources of capital through buyback.

HPEFS can also buy back excess newer generation technology that customers no longer require for their business. Through buyback, HPEFS claims to have infused over $642 million back into clients’ budgets in the last two years.

Beside, HPE has also announced a delayed payment scheme called as New Relief Program. It will allow customers to buy their technology need today but pay only 1% of the total deal value each month for the first eight months, deferring over 90% of the cost until 2021.

However, once the payment cycle starts in 2021, the customers would end up paying approximately 3.3% of the total order every month.

This, according to HPE will help to ensure customers are not under financial pressure on an immediate basis as they are faced with sluggish and declining business demands, coupled with the financial impact triggered due to the novel coronavirus pandemic world over.

“This is a challenging time to lead a business. Today more than ever, IT leaders and CFOs play a central role in ensuring the financial health while continuing operations”, said Irv Rothman, President & CEO – HPE Financial Services.

HPE is also enabling a 90-day delayed payment structure to help ease customers’ tight budgets. This payment option is available on new technology purchases and is eligible for a range of HPE hardware and select software, software appliances, services, and installation packages.

“At HPE Financial Services, we are committed to helping businesses align their priorities from an IT economics perspective and provide them with concrete solutions so they can move forward,” added Rothman.

Cisco’s financing initiative

Following HPE’s initiative, Cisco also announced a $2.5 billion in financing through its financing unit – Cisco Capital. The company’s new Business Resiliency Program will help customers and partners mitigate financial challenges in their IT procurement.

“Cisco’s customers and partners are under enormous pressure to keep their businesses connected while remaining productive and secure. Whether it’s technology, financing or helping those most in need, Cisco is committed to working together to fight this pandemic on every front,” said Chuck Robbins, Chairman & CEO – Cisco.

Cisco Capital’s new business resiliency program includes an up-front 90-day payment holiday, allowing a customer to defer 95% cost of a new product or solution until 2021.

This is aimed to help customers protect their business and increases their existing cash flow. And from January 2021, the customer will make a monthly payment of the total financed deal and its remaining term.

Unlike HPE, Cisco is offering the new Business Resiliency Program across all its solutions including hardware, software and services and up to 5% of partner provided services, such as installation.

Cisco is offering its new program globally through a strong 60,000 partner network. These partners will push their sales cycles and help their customers with payment options and better manage their cash flow.

While Cisco wants to enable fresh or new sales across solutions through its partner ecosystem and help customers with financing. It is also pushing the sale of certified remanufactured and preowned products.

Through the Cisco Refresh portfolio, the networking giant is offering a wider range of products at competitive prices to partners and customers with further discounts and promotions.

Cisco also has put its Refresh portfolio under the new Business Resiliency program, so customers can benefit from the deferred payment scheme as well.

“Cisco Capital’s goal is to make it easier for customers and partners to acquire the technology they need to keep their businesses running and productive. Their success is our priority,” said Kristine A. Snow, SVP & President – Cisco Capital.

“The new Business Resiliency Program is designed with this in mind and will help address some of our customer’s most pressing concerns,” added A. Snow.

These new initiatives from HPE and Cisco are likely to get positive responses from customers and partners globally. But will also help these tech vendors in their business.

These vendors will also be able to navigate through sluggish market demands and slow sales cycles, which has been the trend in the first quarter of 2020. And given the COVID-19 crisis, the trend is expected to continue over the next few quarters as well.

Market analysts give thumbs up

“During this crisis, businesses need help regardless of the size of the company or industry vertical,” said Susan Middleton, IDC Research Director – Flexible Consumption and Financing Strategies for IT Infrastructure.

“IDC recommends that organizations focus on two immediate needs: Conserving capital and utilizing flexible payment options like leasing or as-a-service to meet the urgent capacity requirement with limited financial impact,” Middleton pointed out.

“By dedicating $2 billion in financing and leveraging its broad portfolio of flexible payment solutions, HPEFS will help business leaders navigate through the impact of COVID-19 on their markets,” added Middleton.

Will Townsend, Moor Insights and Strategy’s Senior Networking Infrastructure Analyst called Cisco’s new program ‘a valuable offering’.

“Through my countless discussions with organizations, balancing cash flow while maintaining robust network operations is critical given the impact of COVID-19,” noted Townsend.

“I continue to be impressed with Cisco’s proactive strategy to enable its customers, partners, employees and the community overall to maintain productivity in these trying times. The Business Resiliency Program is another example of the company’s overall effort,” commented Townsend.

Market analysts have welcomed these initiatives in the larger interest of the industry and economy world over.

But will other IT and technology vendors follow in the footsteps of HPE and Cisco? Or will not roll out similar financing and delayed payment schemes as they are not financially sound? That remains a big question.

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