For as long as I’ve been with Carousel Industries, one of our main value propositions has been to offer clients options in the way they consume their technology investments. We’re always looking for a way help to them consume technology that meets their budget and cash flow needs. There are three aspects that clients should look at in any type of technology decision and financing. First, there’s the technical solution. Then there’s life cycle support—how are you going to support it from a break/fix or managed services perspective? And, how do you want to consume it financially?
Buy it. Lease it. Use it.
There are many clients who say, “I want to buy it.” Some say, “I want to lease it.” And others don’t want to buy or lease it; they just want to use it. And that brings us to what it is called in the finance organization “variable-predictable.”
If you ask a CFO how much their payroll service will increase if the company hires 100 employees, he or she will know. The same would be true of health benefits; that person will know how much that cost will go up incrementally.
But when you start talking about a technology decision from an application stack perspective, it might be a different story. Because there’s always the question about whether you want a technology investment on the balance sheet. Maybe you want to pay for it like electricity. Technology is not just a CapEx world any more. OpEx operating models are gaining favor.
Consumption Options and Moving to the Cloud
Moving to the cloud often indicates a shift in operating strategy and that possibly includes financing. Lines have blurred between cloud and on-premise. The term we hear all the time is hybrid. In the mid-market space, a move to the cloud is often cash flow- or skill set-driven. At the enterprise level, it’s usually more about the balance sheet.
But from a financial perspective, the conversation is around variable-predictable—cost per access point. It’s the same from the VAR perspective. They’re going to say, “Is it easier to justify a $100,000 solution or two grand a month?”
It’s all about cost justification, total cost of ownership, and ROI. If you’re going to New York City for a week, are you going to buy a car, rent a car, or use Uber? If you’re moving to San Francisco for a year, you might buy or lease. Of course, technology changes faster than automobiles.
When to Talk About Financing
A lot of times the conversation about financing a certain technology decision doesn’t happen until a deal is almost done. But that’s a mistake. It should be part of the conversation from the very beginning. Because the ownership model depends on the shelf life of the solution. Is it a commodity? Or is it mission-critical? How is TCO going to be measured? Over 12 months or three years?
Every product or solution sales call has a sales engineer. And they should also have a finance engineer — a professional. Because the fact finding that takes place in those initial conversations should include how the clients wants to financially consume technology. This method, one employed by Carousel, ultimately leads to a better solution and a happier client.
This article debuted on Carousel Industry’s website.