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For businesses today managing the cost of technology over its life cycle is becoming an increasingly important focus.

As businesses move away from investing time and money to buy technology towards a focus on how best to use technology, the need to approach financing in more innovative ways also comes to the forefront. Globally technology and other B2B services are moving towards a more utility and pay as you go approach. End customers are beginning to see the benefits of focusing more on their core business challenges rather than being overwhelmed with technology challenges. Typically these challenges appear in the form of product life cycle management including selection of technology, purchase, maintenance, upgrade and obsolescence.

For businesses today managing the cost of technology over its life cycle is becoming an increasingly important focus. Businesses want to commoditise the usage of technology as a known and predictable cost over its lifetime.“ There is always a financial wrapper because there is always an investment, return on investment, and a total cost of ownership discussion. It is becoming increasingly important as people move from just simply buying technology to basically buying usage of technology and buying business outcomes,” explains Sven Jirgal, Vice President and Chief Operating Officer, Cisco Systems Capital Corp.

Cisco Capital is a wholly owned subsidiary of Cisco, operates globally and across Africa and Middle East, and manages the circular product life cycle. Cisco Capital offers channel partners and end customers, options to upgrade and add equipment as part of a financing agreement. This helps to plan out the technology roadmap more strategically without necessarily requiring further capital investment. Cisco Capital financing helps to integrate asset management with financing strategy and optimise return on investment while lowering total cost of ownership. The costs of implementation, servicing and maintenance costs can also be added, spreading upfront costs over time.

There are three key reasons for Cisco Capital’ s go to market initiatives. The first is to differentiate itself from amongst other vendors and to meet end user expectations during purchase negotiations. The second is to provide an alternative form of technology ownership model. And the third is to provide an alternate and additional stream of credit for channel partners and end customers.

“ We are basically there to help Cisco customers and partners adopt Cisco technology and provide the financial wrapper for that adoption. Because they acquire technology, they use it and at some point of time they do not need it anymore. They upgrade it or dispose them. We take that back. That is what Cisco Capital does,” adds Jirgal.

IT vendors at the forefront of technology life cycles need to find ways of ensuring manufactured products are put to their best use across their complete lifespan. Manufactured products are sometimes displaced from the mainstream sales cycle from a number of sources. Distributors may be unable to sell-through their complete stocks over a period of time and are allowed a certain percentage of returns. Customers may return unused products due to a wrong order shipment. Products may be moved to various places for proof of concept or demonstrations and then returned. As part of a financing arrangement, products may be traded in or returned at the end of the lease agreement. All these returns creates a pool of

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