Buy tech today, pay later? Cisco unveils billion-dollar financing program
- Several tech firms are offering delayed payments for their tools and services
- Cisco has earmarked US$2.5 billion for customer financing arrangements
- Initiatives could secure business and retain user-bases throughout period of uncertainty
Businesses are facing a critical need to outfit themselves with the tools to operate remotely and securely. But given market uncertainty, many are either shoring up (or simply don’t have) the funds ready to invest in the tools they need.
While certain sectors look to come off better than others – pretty much all will feel some degree of burn of decreasing external spend. 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, 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.