IT Budgets – Round 2 Means Budget Cuts…Or Does It?

When you spend all those hours trying to align your IT budget with company goals and fulfill the needs of your end-users for the upcoming year, it can be disheartening when the finance team asks you to cut more deeply. After all, the IT department’s needs are in alignment with company growth and strategies, not some made-up number. Fortunately, there is a way to get what you need to fulfill your obligations to end-users and still maintain a budget that finance will embrace.

Flexible Solutions for Flexible Needs

NEC Financial Services has provided IT finance solutions for more than 30 years, and during that time has supported many companies in getting their IT needs met through flexible financing options. The best part? You can purchase various IT hardware, software and associated items from multiple vendors and have NEC create a financing package customized to your specific needs.

“We believe in orchestrating the best solution for our customers so that it simplifies the overall IT purchasing process,” said Herschel Salan, vice president, NEC Financial Services. “IT acquisitions can be difficult. By simplifying the financing process with a single source, it removes some of the complexity and gives our customers an easy way to budget for their required technology.”

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Providing this type of service is a standard part of the NEC finance model. This team understands the nuances of purchasing technology, and the complexity that comes from needing to upgrade while maintaining legacy systems, or to utilize newer technology, such as cloud, while still keeping sensitive information on premise. In fact, the NEC Financial Services team goes beyond the dollars and cents, providing a common-sense approach to our customers’ technology acquisitions.

“We go the extra mile, essentially acting as a project manager or liaison,” said Salan. “Our team performs due diligence on the technology provider for the customer, so we can be sure that all parties are informed as the project comes together.”

Salan went on to explain:

“Sometimes our customer is not that familiar with a technology provider and is unsure on the best steps to take to learn more. Our service provides due diligence so the customers know the providers that they are doing business with, and will have good information to make a solid decision. This includes any red flags that may come up such as financial capacity being stretched too thin, as well as being manufacturer authorized to sell and support the products.”

Obviously, having this type of information helps buyers make a solid, secure decision on moving forward with a technology provider.

No Cookie Cutter Here

A common complaint regarding the financing of technology is how difficult it can be via traditional sources. Bankers are not technology people. “What sets NEC Financial Services apart from many of the traditional financing options are: (1) we understand how technology is a business enabler and (2) we have the ability to help enable the acquisition of the technology, “according to Salan.

Furthermore, underwriting is often standardized, making it difficult for loans to be issued unless you can find a less traditional resource. NEC Financial Services approves more than 90% of transactions submitted. How is that possible?

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“We have a proprietary credit scoring system that ensures we are making the best decisions for our customers,” said Salan. “We take the time to understand the customer’s needs and goals, and then to understand what the acquisition of the technology will do to improve and support the business. Doing so enables us to really invest in our customer’s success and future, and give them a way to finance technology that could be a real game-changer for their business.”

More Than One Way to Get that New Technology

NEC Financial Services has a multitude of finance options that allow for customers to acquire important technology, including:

  • Leasing Options – from Operating Leases to Finance to Own, NEC has several leasing options that support customers’ needs.
  • Maintenance Financing – how nice is it to have the option to finance one of the more expensive, yet critical components of a new technology purchase – maintenance?
  • Tech Refresh Lease – Customers can get technology  updated with a simple schedule as an addendum to the master lease or finance agreement. It’s easy and gives a customer an opportunity to keep on top of technology changes.

Winning Round Two of Budget Cuts

Don’t let those rounds of budget cuts get you down. Simply find the best finance option available and get the technology you need to be successful.

“Our goal is to develop long-term relationships with customers who are growing and need a partner that really understands technology to provide financing options,” said Salan. “Technology is in our DNA, and our team is committed to providing excellent service to ensure we get our customers the technology they need to improve their businesses.

Whether it’s aligning with a major business objective, needing to replace obsolete technology, or keeping on top of rapid technology changes, NEC Financial Services has options available for you.  Contact us today to learn more!

CapEx vs. OpEx: How Can IT and Finance Work Together?

Chief Financial Officers (CFOs) work with two distinct budget planning methods in mind:   capital expenditures (CapEx) and operating expenses (OpEx).     A study by Gartner and the Financial Executives Research Foundation reports that “The CFO is increasingly becoming the top technology investment decision-maker in many organizations.”   In nearly 500 enterprises surveyed, 42 percent of all CIOs report to the CFO, and in three out of four companies, the CFO has a major hand in all IT spending.

While the CFO and the financial organization ensure the business health of a corporation, the CIO and IT organization understand the technological needs and challenges and, in turn, devise solutions to address those challenges.  More often than not, those solutions include resources in the form of people, time or money.  Working in conjunction with one another, the CFO and CIO must oftentimes find ways to do more with less.  They’re being asked to support more devises and more applications on a network that can support more users.  When we as IT organizations are recommending a capital outlay, we will likely receive pushback because of the divot in a balance sheet.

While it is common to stretch budget by shifting capital expenses to operating expenses, it is beneficial to first understand the differences between the two.  Capital expenses are long-term investments, while OpEx financing models allow many organizations to leverage all the benefits of predictable monthly payments traditionally found in hosted solutions in an on-premises solution. For many, this can be the best of both worlds: a service-oriented model found with a hosted solution with none of the concerns some organizations may have with security and availability of a hosted service. What’s more, a $25,000 on-premises collaboration and audio conferencing solution may be a difficult solution to get approved, however, an on-premises solution with all of the capabilities of hosted for less than $400.00 per month can be a powerful internal conversation. Are you more comfortable paying out a lump sum or breaking payments down into a monthly scale? Regardless of where your preference lies, there is a financing option for you.

However, if we can shift thinking from all solutions being a capital expenditure to the integration of operating expenditures, we can realize efficiencies not only within the organization, but also perhaps a better response from finance. Operating expenses for solutions not only spread out costs on a monthly basis, but they also realize value each month as opposed to the depreciation of a capital expense. In addition to justifying costs, you must calculate the opportunity cost – the cost of doing nothing – to your organization. Are you losing things that provide value – employees, satisfaction or even customers?

Have you switched to an opex model? What are other ways your IT organization works in harmony with finance?  Watch the video “NEC Capex vs. Opex”, as Mark Hebner, senior business development manager, discusses costs vs. the cost of doing nothing and how switching from CapEx to OpEx actually helps you realize value month-to-month.