IBM Global Financing Adds $4B to Coffers for VARs, MSPs

Written by Jessica Davis 1
November 15, 2012

IBM's (NYSE:IBM) financing organization has announced an additional $4 billion available for financing of technology purchases through IBM partners including resellers and managed services providers.

IBM‘s (NYSE:IBM) financing organization has announced an additional $4 billion available for financing of technology purchases through IBM partners including resellers and managed services providers. So what do MSPs have to gain through a technology financing offer like this one? MSPmentor spoke with IBM Vice President of Marketing for Midmarket Ed Abrams. Here’s how MSPs can take advantage of this new capital.

Although cloud-based services have made it easier for entry-level MSPs to gain access to the technology they need without a big capital investment, enabling them to get a leg up in the market, many higher-end MSPs have chosen to host their own infrastructure. The IBM Global Financing offer can enable MSPs who act as a financing customer to gain access to credit they can use to build out their own hosting environments if they are looking to provide hosting services to customers, Abrams told me. This can help them differentiate themselves in the marketplace, he said.

One of the technologies that IBM wants to make it easier for MSPs to buy is PureSystems, which the company launched in April. PureSystems is designed as a hosting center in a box with hardware, networking, software and services already built in and integrated. The hardware looks like a basic rack system that plugs into a standard 110 volt wall socket and a standard Ethernet connection. It supports Linux and Windows. MSPs can use these systems to host applications for end-user companies. MSPs can purchase these applications, which include enterprise standards such as SAP-based implementations, in a PureSystems app store. The basic system is priced at $100,000 before adding in the price of the apps. But the price of the entire system including apps is eligible for the financing. And actually there is no minimum amount of IBM technology that must be included in the total solution that is financed.

That PureSystems price tag, which might be high for some, makes the IBM technology a good fit for a financing program. And partners who may have been interested in PureSystems but hesitated at the price and large capital investment now have an easier path.

“We’ve spent a lot of time talking to and listening to MSPs. Access to capital is one of the things they were looking for,” Abrams told me.

IBM Global Financing announced $1 billion in available financing a year ago, and the company had expected that money to last 18 months. Instead IGF burned through it in less than 12 months. Abrams said that there appeared to have been a pent up demand for technology financing.

“We got technology into the hands of over 7,000 customers globally,” Abrams said. “So we decided we could step up and make much more capital available to market. Clearly there is pent up demand. As we grow in new markets with MSPs we want to see them successful sooner rather than later.”

Abrams said IBM expects that one-third of the new financing will go to U.S. partners with the rest going to partners internationally, although there is no earmarking program in place at all. Financing terms include a year of zero percent financing followed by competitive rates for subsequent years. Typical financing deals last 3 years, but there’s no time frame that is mandated.

In conjunction with the new round of financing, IBM Global Financing has launched a mobile app for both iOS and Android to enable quick access to the financing process. Abrams said the acquisition of financing either online or through these apps should take no more than minutes.

According to an IBM statement, the mobile app will be available in the United States this month and will be rolled out globally beginning in China in January 2013. The app is designed for contracts worth up to $500,000 and is based on IBM Global Financing’s simple Rapid Online Financing tool, designed for non-financing experts, where available, to generate fast approvals for credit applications.

The new round of capital is available starting today and will remain in place until the money runs out. At that point, Abrams said, IBM is likely to launch another round.