Cover all bases when innovating your business!

It's a huge challenge for companies to assess where they will be in three years, in which markets they will operate, or which customer groups they will serve. In addition, business models are evolving at an increasingly faster rate. The same applies to the IT sector itself, which makes these innovative business models possible. Similarly, which IT infrastructures will be necessary, particularly in light of the exciting new technologies that are continuously being developed? These are technologies that will no doubt have a major impact on your new business opportunities. At the same time the question arises: how do you budget for this?

These days, IT infrastructures are designed for long-term use, which means they often require significant investments. The pressure on these infrastructures is two-fold: On the one hand, they are expected to help companies streamline their work processes and save costs; on the other they need to support business innovation. We all know technologies are being developed at an increasingly faster rate to facilitate both. This rate, however, is starting to affect depreciation periods. Continuously reinvesting in new components or entirely new infrastructures can sap the financial capacity of any company. It also raises the question of what the returns on investment will be, a question that seems impossible to answer given the uncertainty of what the future might hold.

Opex potentially out of reach

An obvious solution is to shift from capital expenditure (CAPEX) to operational expenditure (OPEX) – a solution that involves a full or partial transition to cloud services that charge per user, per month. But this transition is not always possible or desirable, which makes this type of OPEX hard to achieve.

 Flexible IT financing solutions

Another solution offered by various parties is IT infrastructure leasing. Sounds interesting, but I feel the question here is whether these parties cover the entire IT infrastructure or only the products they offer. And another one: do the leasing conditions allow for the necessary flexibility? In order to be truly effective, financing should be as flexible as the IT solutions.

 Optimal contribution

The transition from technology to ROI, and the anticipated cost savings this brings with it, is not always a smooth one, especially if financing issues stand in the way of innovation. Suitable IT leasing calls for an understanding of the technology in question and its impact on financing. It also calls for the development of financial strategies that are in line with the IT strategy. So, make sure you’ve covered all bases! This requires close collaboration between the CIO and the CFO, as well as a party that understands the ins and outs of IT and financing. Ideally, this party views leasing as part of a total solution in which all elements contribute to the client's ultimate business goals. This is how it should be.

 Watch this space regularly as I will be elaborating on several of the topics I discussed in this post.

 Rafael Chacon, Commercial Leader for Cisco Capital EMEAR

Rafael Chacon is truly passionate about enabling digital transformation and innovation in Commercial customers throughout EMEAR. Over the past 14 years he held various roles within Cisco Capital evolving from individual sales contributor to a sales manager and now focusing on business development and sales enablement across the EMEAR region.

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