HP Financial Services: Solutions in a Changing IT World
Reducing capital expenditure on IT when investment is needed in new, more powerful and less energy-hungry hardware and software is a major challenge. Customers are now looking for new methods to acquire IT as Boorzin Hodiwalla, Hewlett Packard Financial Services EMEA marketing and business development director tells FDE.
‘Tight credit markets have obliged CFOs to look for a faster return on every dollar they spend,’ says Boorzin Hodiwalla of Hewlett Packard Financial Services (HPFS). ‘The demand for IT is not going to drop. To stay competitive they need the most advanced hardware and software. However, this demand is starting to force organisations to look at different ways of consuming IT and how they assess the total cost of ownership (TCO).’
The principle changes are coming from ‘cloud’ computing whereby users tap into extra IT infrastructure, platforms or software as and when they need them.
The first of these, also known as utility computing, means companies do not have to own server farms whose full capacity they rarely need. They can simply hire the
extra capacity when it is required, thereby slashing their hardware investments. The same applies to the emerging Software-as-a-Service market.
Two further drivers, explains Hodiwalla, are the lower power consumption and greener credentials of new advanced chips and servers such as the HP G6, which boosts the return on equity (ROI) achieved by upgrading.
‘Such fresh IT investment will often be financed by leasing. However, in general,only 30% of leasing costs come upfront. To calculate the real TCO you have to look at the remaining 70% of commitment over the three or four years of the contract to see what it provides in terms of upgrades and flexibility.’
HPFS, working closely with Hewlett Packard itself, provides a Life Cycle Management of IT assets from their procurement, right through to their maintenance, upgrading, management and tracking to their disposal.
‘We have done studies with major clients who previously sourced their own IT, but made substantial savings by working with HPFS. Depending on the asset, they can save between 20 and 40%.’
The value proposition and the benefits are this compelling, says Hodiwalla, because HPFS is not some outside provider of IT finance. Rather its solutions are built into every business proposal made by HP equipment providers.
‘We understand the assets, even if they are not all from HP, in a way that no bank provider of leasing finance can ever do. Equally, that full lifecycle management we provide means we still own the assets and can build in considerable flexibility in terms of upgrades. That flexibility also extends to expanding or reducing the amount of equipment in a lease, depending on an organisation’s requirements. We will sit down with a client and talk about their likely changing needs and build that into the leasing agreement.
Leasing is both tax-efficient and off-balance sheet. In most European jurisdictions software can be leased as well as hardware. There are therefore known costs as well as known benefits and flexibility.
‘We have a global master lease and finance agreement,’ explains Hodiwalla. ‘So customers have the same experience globally. Therefore, there are no hidden costs.’
The key at HPFS is to offer clear and competitively priced solutions that reduce the TCO and enhance the ROI. Clients are under increased pressure to increase ROI.
‘With the right financing partner,’ says Hodiwalla, ‘Risk is radically reduced because the assets are not owned and capital is preserved. Meanwhile, IT performance quality
is assured and our customers cut power bills and boost their green credentials.’