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Getting the Credit You Deserve: How Will the Credit Crisis Affect IT Spending?

If you’ve looked at your investment portfolio recently you may have concluded you are going to be in that IT job much longer than you’d been planning. But aside from the personal ramifications, are there also consequences for your business? Will the turmoil on Wall Street and in the banking industry affect credit available for […]

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Jessica Davis

Sep 18, 2008

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If you’ve looked at your investment portfolio recently you may have concluded you are going to be in that IT job much longer than you’d been planning. But aside from the personal ramifications, are there also consequences for your business?

Will the turmoil on Wall Street and in the banking industry affect credit available for technology purchases?

According to Joe Pucciarelli, program direct for technology financing and management strategies at IDC, recent events have already affected financing.

“The sources of funding are shifting,” he said. “Leasing companies used to rely on collateralized debt obligation to raise money, but right now the market is unreceptive.”

Still, he said, there’s been no evidence of lack of capital available so far. Rather, the money is going after deals for big-name companies.

“If I’m a bank I would like to be able to say I’m lending money to Johnson and Johnson or Exxon Mobile,” Pucciarelli said. “There are any number of companies that are happy to lend money to these companies.”

But smaller companies may be paying a greater risk premium – higher rates for their weaker credit status.

And how will all this affect technology spending? While the credit may be less available to smaller companies, resellers would be wise to focus on finding a way to make a financing option available to their customers anyway, Pucciarelli said. That’s because such an option can soften a major objection to the sale – the immediate cost to the IT budget.

“There are some companies that have maintained excellent banking relationships and they have reservoirs of credit if they need it,” Pucciarelli said. “There are some companies that have done nothing.”

For those companies, Pucciarelli said it is a question of building on their success. Those resellers should review their portfolios and look for those deals they financed successfully, and ask themselves “what did they do in those situations that won?”

Getting the Credit You Deserve: How Will the Credit Crisis Affect IT Spending?

Jessica Davis

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