Big tech financing can help companies weather the economic storm
It’s becoming increasingly apparent that businesses require the tools and security solutions to facilitate safe remote-working environments needed for them to continue operating. At the same time, budgets are being frozen – organizations won’t always have the funds to invest in new software, hardware and services.
Few sectors will be immune from the financial impact attached to the Covid-19 pandemic.
This week, TrustRadius said it was “sobering” to see that an early April indication of a “software spending boom” had ended, after it resurveyed just a few weeks later.
Down 44 percent, marketing software has seen the biggest hit, followed by IT support tech (36 percent) and project & task management software (33 percent).
In order to acquire and maintain a flow of customers and users amid this period of thinning spend, leading tech companies are opening up financing programs, helping customers furnish themselves with the technology they need while conserving cash flow.
Technology multinational Cisco has this week unveiled a US$2.5 billion financing program.
The initiative from its finance division Cisco Capital will enable customers to continue purchasing equipment, solutions and services, but they’ll be able to defer payments for 90 days, after which they can pay just 1 percent of the total contract value every month until the end of the year.
The remaining contract can then be paid off monthly in 2021.
Cisco says its 2020 Business Resiliency Program will help companies that need to up their security and increase data center usage in order to handle the demand to support remote workers or shift business strategies during the current crisis.
“We want to make sure companies have a chance to invest in technology right now and further grow their businesses without struggling with cash flow management,” Oliver Tuszik, senior VP of Cisco’s Global Partner Organization, told DCK.
That could include companies that suddenly must digitize their business, such as a doctor’s office that has started offering telehealth services.
The announcement follows Cisco’s free release of its video conferencing tool WebEx and security tool Cisco AnyConnect VPN software.
Elsewhere, the firm has been upfront about the impact of Covid-19 on its industry. At its Cisco Live Virtual Event APJC, hosted here on Tech Wire Asia – and available to rewatch here – Cisco’s president for Asia Pacific, Japan and China (APJC), Miyuki Suzuki, said: “The future has changed irrevocably – we have to make sure that we emerge and learn the lessons from this period and make changes – lasting changes – that will benefit businesses, the market and the community at large.”
Elsewhere, Hewlett Packard Enterprise launched a scheme of similar magnitude, putting together US$2 billion worth of programs allowing companies to defer payments up to 60 months on software, hardware and services.
It’s likely larger software firms who are able to weather longer periods could follow in this trend, ensuring customers remain on their books for the period maintaining business continuity – and ensuring advanced technologies like Wifi-6 and SD-WAN continue to be integrated – until the market begins to recover.