Innovative financing imperative as IT budget constraints in Middle East impede technology adoption and business growth

Information Technology is rapidly changing the nature of business in the Middle East. Organizations no long deploy the latest solutions because they want to. Instead, they must do so because they need to! While there has been an uptick in regional markets over the past 3 years with both government spending and increasing investment in the region driving growth, businesses in the Middle East are faced with a peculiar dilemma. 

According to Khaled Kamel, Territory Channel Manager, MENA at Brocade Communications, in the race to adopt the latest and best technologies, organizations have overlooked their critical network infrastructure. Aging network backbones are under tremendous strain from the exponential growth in data traffic. As the cost of operating and maintaining these legacy networks continually rises, IT departments now find that they can neither afford to invest in IT, nor can they afford not to invest in IT. 

With financial assistance from banking institutions become more difficult to attain, businesses hoping to upgrade their IT infrastructures are now beginning to look to the channel. And here Mr. Kamel believes lies a great opportunity for Value Added Resellers (VARs) and System Integrators (Sis) to remedy the situation. 

With profits and revenues being squeezed ever harder, where the money comes from to pay for critical IT investment is becoming an increasingly urgent issue. Already, almost 70 percent of organizations now select IT vendors based on the availability to offer leasing/financing solutions. So where does this leave VARs and SIs, other than potentially becoming financial advisors as well as technical ones, assisting customers who are trying to juggle multiple lease and purchase agreements to secure the solutions they need? 

Simpler, smarter, flexible financing

As with all things related to selling solutions and services, the objective should be to deliver the benefits the customer wants in as simple a way as possible.  The overly complex, proprietary, often over-priced, and short-term traditional approach to delivering networking solutions is aptly reflected in the approach taken to financing solutions and agreements.  

Process can be a useful tool if applied effectively, but channel are being asked to take on huge amounts of red-tape and administration in order to be able to “sell” technology to customers. But it does not have to be this way.  Rather than developing solutions that help lock in customers even further, and trying to pass on the complexity to the channel, vendors need to recognise a trend that is bigger than they are and which could, eventually, see a significant knock-on effect on their own revenues, not just those of their channel. 

An appropriate response to this would be to provide subscription based financing wherein the customer is permitted to increase or decrease the number of network ports they pay for on a 'pay-as-you-go-bundle' subscription basis. Extending this further, vendors may even  enable their partners to offer finance on complete end-to-end solutions, including all third party technology and services, thereby helping customers escape the CapEX trap and gain the solution they want on subscription. For the customer, this translates to simplicity- one contract, one deal and one solution through one partner. 

Such an easy way to engage with and straightforward financing model is only going to play a more critical role in enabling customers to adopt innovation, and for VARs and SIs will be an invaluable advantage in winning business and securing a sale.  Anyone who thinks finance is a little dull or the province of accountants, needs to wake up to business realities determining IT investment, and fast.