IBM Global Financing (IGF) recently announced that it would make an additional $4 billion available to help SMBs finance technology purchases through IBM’s partner channel. While this sounds like a very large amount of money (and it is), consider that in less than one year, 7,000 SMBs took advantage of the $1 billion in financing that IGF offered up in late 2011. In fact, IBM had underestimated pent-up demand—IBM had expected the $1 billion to last 18 months.
IGF is quadrupling its initial commitment to help SMBs finance new cloud, analytics, mobile and infrastructure technologies to help grow their businesses. The program also makes it easier for IBM business partners—including managed service providers (MSPs), who are often SMBs themselves—finance the infrastructure investment they need to build the hosting environments they need to serve customers.
Some of the details include:
In addition, IBM has created a new mobile app to further streamline the process. Business partners can quickly provide their clients with price proposals and generate credit approvals using an iPad, iPhone or Android mobile device.
As discussed in The Technology—Performance Connection for Midmarket Businesses, technology has become a critical lynchpin for business success. Businesses of all sizes increasingly view technology as an essential to improving customer engagement, raising employee productivity, and creating innovation and differentiation—all necessary to building economic value.
SMB Group research reveals a distinct correlation between SMB investments in technology and their business performance. 'Progressive SMBs,' who invest more in technology are much more likely to anticipate revenue gains than peers whose tech investments are flat or declining. For instance, our recently completed 2012 SMB Routes to Market Study shows that while 57% of SMBs that plan to invest more in technology anticipate revenue increases in 2012, only 11% of those planning to decrease IT spending expect revenues to rise, and 32% that planning for flat IT investments are anticipating growth.
Figure 1: IT Spending Current and Planned
Source: 2012 and 2011 Small and Medium Business Routes to Market Study, SMB Group
Meanwhile, as more SMBs come to view technology as a key enabler to create market advantage, level the playing field against bigger companies, and adapt to new business and market requirements, the percentage of SMBs that are planning to increase IT spending is growing, as shown in trending analysis of 2011 and 2012 SMB Routes to Market Studies (Figure 1).
However, access to capital remains tight, and many SMBs find it challenging to get the capital required for the technology investments they need to grow their businesses. A July 2012 survey by the National Small Business Association (NSBA) found that 43 percent that needed funds for their businesses over the past four years were unable to find a lender. As important, 53 percent said they’d been unable to grow their business or expand operations due to a lack of capital—and almost one-third had to lay off workers.
IBM isn’t a charity or governmental agency. As a for-profit organization, one of IBM’s key goals for the program is to fuel sales of IBM products, including PureSystems, which offers a new, integrated platform to tune hardware and software resources for data intensive workloads, and gain more flexibility to configure applications for either an on-premise or hosted environments, and a multitude of infrastructure, cloud, mobile and business intelligence solutions. If past success is an indicator of future performance, IBM will certainly achieve this goal with its new round of financing.
Furthermore, this fresh pool of financing should help MSPs to build scalable infrastructure and hosting environments, and provide more innovative and differentiated offerings to SMB customers. As I discussed in MSP Cloud Challenges in the Midmarket–and How IBM Helps Meet Them, top MSP challenges are to: procure and deploy the resources they need to scale and grow; stay ahead of the technology curve; and to provide the end-to-end services their customers want. Since IBM financing will cover both IBM and non-IBM content in one contract, it will make it easier for MSPs to build out a more comprehensive, end-to-end infrastructure.
The result? IBM can attract new MSP and other partners, and get them outfitted with the solutions they need more quickly. The net-net is that MSPs and other IBM business partners will be able to speed up and scale their ability provide new solutions that SMBs need for business growth and agility, and help SMBs finance this investment.
Finally, IBM isn’t just throwing money (albeit a large amount) at the situation. The new round of financing is additive to several new global initiatives for MSPs, which IBM launched in September. IBM has put together an integrated program that provides the money, expertise and solutions that both MSPs and their Progressive SMB customers require.
This is the fifth and final post in a five-part blog series by SMB Group that examines the evolution of midmarket business technology solutions and IBM’s Managed Service Provider Channel programs.
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Published by: IT Analysis Communications Ltd.
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