IBM Finance to Make $3.4B Available in '06

IBM Global Financing, the IT giant's leasing and lending arm, expects a streamlined process and favorable market trends to drive a busy lending year.

IGF (IBM Global Financing) expects to deliver $3.4 billion in loans in 2006 to customers working through partners on IT projects, up 26 percent from $2.7 billion in 2005 and 41 percent since 2.4 billion 2004.

IBM executives expect a streamlined process, including a one-hour turn-around in the U.S. and eight countries, and market trends—increased IT spending and rising interest rates--to drive customers, especially in the SMB (small to midsize business) market, to IGF's door and more spending in the channel.

The increased spend is driving business for IBM and partners that might not be available otherwise, said John Callies, General Manager of IBM Global Financing.

"When you talk about the SMB, the one major thing they have little of is access to capital," he said.

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"They might not be getting that at a [commercial lender] who is in the business of satisfying shareholders on the financing returns. We are in business to satisfy clients and grow business for IBM and partners... We want to be able to finance in a way that allows them to make investments."

IGF is open to customers working with IBM partners.

IGF in 2005 introduced its Rapid Online Financing, a one-hour turn-around commitment and a Web portal to speed applications, and expects to streamline the process further in 2006.

Partners are able to enter a customer's project and financial information into a Web portal and receive approval and a contract ready to sign within one hour, according to IBM.

In 2005 IBM met the one-hour goal in 86 percent of applications and approved more than 80 percent of those, IBM said.

IBM uses its own credit scheme to deliver speedy results, Callies said.

While IGF's goal is to get money into the channel, it is not in business to lose money, Callies said. All transactions are scrutinized, even under the Rapid Online Financing model, to ensure loans and leases are appropriate.

Because it has a different mission—to drive IT spending rather than interest rate returns--IGF is typically able to offer more competitive rates than its commercial counterparts, partners and executives said.

IGF also considers an entire IT project, rather than tangible items, such as hardware, Callies said, enabling customers to finance more of the project including software ad services.

"For a customer considering installing an ERP solution for $250,000 to $300,000, maybe $200,000 of that is software and services," Callies said. "Only financing the hardware is standing in that customer's way."

Vector New England, an IBM premier partner that fulfills complete solutions, including hardware, software and services, on IBM's i5 series platforms, has used the IGF extensively, including a $500,000 project in December 2005.

Financing the entire solution has been so much of a benefit, that Vector includes the service in the sales pitch, said Tammy Trumper, vice president of Sales and Marketing.

"The fact that we can provide them financing, we consider that, another step in the turn-key solution," Trumper said.

"We will deliver the hardware, the software, the services, the integration and we'll find you a way to pay for it? That is an end-to-end deal… Customers are usually very impressed."

The one-hour turn-around has sweetened the deal, shortening the sales cycle by weeks in some cases, Trumper said.

A recent customer, who had approached a bank, on their own, to finance a $40,000 upgrade, received two quotes (based on two-year or three-year options) and a ready-to-sign contract from IGF in less than 12 hours, she said.

While IGF's goal is to get money into the channel, it is not in business to lose money, Callies said. All transactions are scrutinized, even under the Rapid Online Financing model, to ensure loans and leases are appropriate.