Offering a financing option from an unlikely source has helped local resellers close deals they may have otherwise struggled to.
Since Microsoft launched its financing programme here last July, its partners have signed up about $2 million worth of loans to around 30 customers.
One such partner is Microsoft Dynamics specialist Koorb Consulting, which has two financing agreements under its belt and now includes Microsoft financing as an option on every proposal, says director Nicholas Birch. “It is part of the offering from day one. We introduce the option of financing in the very first discussion and it is included all the way through.”
Having financing as an option removes the issue of money for customers evaluating a new IT project and gives the decision-making process the right focus, says Birch. “When people are justifying a project a lot of the focus goes on money, where it should be on the business partner and tangible benefits of the project.”
Through financing customers pay for their projects on a monthly basis, which means the large sum of money they would usually spend upfront “just disappears”, says Birch.
With less of a focus on money, talk of discounting also takes a back seat, adds Birch.
While unable to reveal details of Koorb’s two Microsoft financing clients, saying he does not have their permission to name them in an article, Birch says the companies were very different.
One is a large, profitable company, which could have funded the project itself if it chose to, while the other is an up-and-coming business with less cashflow and found financing was an easy way to fund its project.
Microsoft financing gives customers access to funds they may not be able to secure from other sources, such as traditional financial institutions, says Birch.
“With IT a lot of what you buy you can’t touch – banks would not finance as much as Microsoft would.”Microsoft funds its own software, as well as third-party software, hardware, consulting, implementation and maintenance costs. Customers need to buy at least $3500 worth of Microsoft software however.
Partners do not earn extra margin for selling the financing option, but Birch says it gives a customer more ways to approve a project. “If Microsoft financing will encourage a customer to go ahead with the project, it is another way we can sell a solution.”
Local Microsoft Dynamics manager, Stewart Gibbs says Dynamics partners were among the first to adopt Microsoft financing locally, adding the programme has helped them close deals.
“Approximately 20 percent of the business we chase stalls because of funding issues. In each case, with Microsoft financing, we found it enabled us to close the business.”
A number of New Zealand companies are SMEs struggling to raise funds for large capital projects such as IT, says Gibbs. “Often they make business decisions around when the money is available and not necessarily the strategic plans for their business.”
Partners who offer Microsoft financing use it as a competitive tool in all of their sales campaigns, he says.
Gibbs expects a sharp rise in uptake of the programme among partners over the next year, as Microsoft works to boost awareness of the initiative.
At its Worldwide Partner Conference in July, the company announced a new training programme for Microsoft financing partners, along with a partner website, which includes an online proposal tool and a credit application facility.
Microsoft will also run sessions on the programme at its local partner conference later this month.