Accelerating IT Transformation through Payment Solutions · IT transformation can pose challenges...
Transcript of Accelerating IT Transformation through Payment Solutions · IT transformation can pose challenges...
An IDC InfoBrief, sponsored byIDC #EMEA44896019 1
June 2019
AuthorsMargaret AdamAndreas StorzSusan Middleton
IDC #EMEA44896019
Accelerating IT Transformation through Payment Solutions
An IDC InfoBrief, sponsored by
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BIGGER. FASTER. MORE FLEXIBLE.How payment solutions present an opportunity for EMEA partners to enable digital transformation
Source: IDC European Multicloud Survey, 2018; IDC #US43799218 (June 2018); IDC US Competitive Market Survey, September 2017 (n=300)
of customers use leasing and financing to improve their operational flexibility. Leasing enables planned upgrade cycles and reduces capital outlays.73%
50% of European customers are piloting the use of payment solutions—representing a significant opportunity.
According to Dell Technologies, partners selling with Dell Financial Services grow at twice the rate of those that don’t.2XFASTER
GROWTH
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WHAT DELL TECHNOLOGIES PARTNERS CAN LEARN FROM THIS INFOBRIEF
Digital transformation is driving customers to transform their IT environments — this creates opportunity for partners.
Funding this IT transformation (ITT) can be challenging for your customers but payment solutions can help address this.
Beyond funding, payment solutions offer additional benefits to both customers and partners.
How to build, leverage and grow with payment solutions.
PART 2PART 1 PART 3 PART 4
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IT TRANSFORMATION IS A NECESSARY FIRST STEP TOWARD DIGITAL TRANSFORMATION: PARTNERS CAN UNLOCK THIS OPPORTUNITY BY OFFERING PAYMENT SOLUTIONS
billion on the technologies and services to help them automate, develop new digital offerings, and create new digital business models.
IT transformation is a necessary first step on the
journey to digital transformation.
In 2019, EMEA organizations will spend
BECOMING DIGITAL
$280.9
Source: IDC Worldwide Digital Transformation Spending Guide 2018; IDC Channels and Alliances Survey 2018; IDC MCS Infrastructure Channels Survey 2018
IN IDC CHANNELS RESEARCH
Partners have an opportunity to help their customers fund this IT transformation with multiyear financing approaches and costs amortized over a number of years, enabling end-to-end transformation upfront, and empowering them to become more agile by paying for technology as they consume it and as their business grows.
Payment solutions enable partners to engage at a higher level and develop a closer and stickier relationship, and this may lead to more profitable business with their customers.
Most enterprises are not born digital. Instead, they have legacy business processes, applications, and infrastructure that they need to evolve in line with both today’s and tomorrow’s digital business needs.
Financing is a critical enabler for businesses that are grappling with the desire to transform to new IT models but are anchored by existing infrastructure investments. Using payment solutions enables businesses to bridge between both worlds with minimal cost outlay and focus on the demands of a rapidly transforming marketplace.
41%of partners say leasing and financing programs have a considerable effect on increasing share of wallet with their businesses.
93%of European channel partners say the availability of finance and leasing is an important function offered by their suppliers.
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FLEXIBLE PAYMENT SOLUTIONS HELP CUSTOMERS ACHIEVE THEIR IT TRANSFORMATION GOALSDisjointed capex-centric budgets can be a significant challenge for your customers because they want to enable strategic end-to-end IT transformation, but their isolated, inflexible budgets only allow for small islands of innovation.
of customers say they have to fund their transformation projects through cost-cutting initiatives.
of customers working with a
channel partner say that the availability
of finance and/or leasing impacts
their choice of vendor.
IT transformation can pose challenges for customers: • Customers need the latest technologies, but cannot afford large upfront investments in one go.• Customers have many complex IT transformation challenges, and need partners to help navigate this. • Customers want to transform, but still require an element of predictability in their costs.
Partner-led financing solutions can help to overcome these.
Funding transformation through cost-cutting initiatives can be
counterproductive for customers, as they are simply moving money out of
one budget and into another.
Partners can help customers avoid having to do this by offering them
flexible payment solutions.
49%79%
Source: IDC Worldwide DX Survey, 2018 (n = 100) (IDC #US43606618, March 2018); U.S. Competitive Market Survey*, September 2017 (n = 300) (IDC research shows that trends and dynamics around financing and payment solutions in EMEA are similar to those in the U.S.)
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PAYMENT SOLUTIONS PROVIDE MULTIPLE BENEFITS FOR CUSTOMERS AS THEY TRANSFORMCustomer demand for flexible consumption models means partners have a great opportunity to position themselves as providers of business outcomes. Finance enables you to offer customers the following:
These business outcomes are the top 5 things customers want from flexible consumption models, according to IDC research.
SIMPLICITY SPEED PREDICT-ABILITY
Conservation of capital
Flexibility in both terms and
equipment types
Protection against technology
obsolescence
Lower equipment value risk
Budget/payment flexibility
Operational flexibility
Upgrade flexibility
EFFICIENCY SECURITY FLEXIBILITY
Which of the following are the primary drivers in using or planning to use a flexible consumption model? Pick all that apply.
Customers’ top requirements of payment solutions
Simplify device management
Reduce IT and procurement workload
Refresh devices at a faster pace
Safe and secure disposal
Predictable cost model
Customers want to work with trusted partners that can help deliver these outcomes. Partners that truly understand their customers’ models can help them thrive through payment solutions.
56%
48%
48%
46%
43%
Source: IDC, IT Procurement Trends and Consumption Models, 2018, August 2018 (n = 300); U.S. Competitive Market Survey*, September 2017 (n = 300) (*IDC research shows that the trends and dynamics around financing and payment solutions in EMEA are similar to those in the U.S.)
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EUROPEAN CUSTOMERS RECOGNIZE THE ADVANTAGES OF USING PAYMENT SOLUTIONS ACROSS THE DATACENTER AND ON DEVICESOver 80% of customers in Europe are onboard and use some form of payment solution. Almost a third of customers are already converted and more than half are piloting the use of payment solutions, leaving less than a fifth of customers resisting.
This represents a significant opportunity for partners to help customers achieve their transformation goals through flexible payment solutions.
We have full capex ownership of our datacenter infrastructure
We own most of or infrastructure and lease hardware occasionally
We combine capex ownership and flexible consumption models for our on premise infrastructure
We primarily use pay-as-you-grow models or other forms of flexible consumption (e.g. revenue-based)
We always lease hardware and write it off after a set number of years
Already converted
31.8%
The resistance
17.8%The potential
50.4%
What motivated you to try DaaS (Desktop-as-a-Service)?
Predictable cost model with a monthly payment per seat
Reduces IT and procurement workload by gaining efficiencies in procurement process
Ability to move from a transactional buying model to a contractual buying model
Ability to spread the cost over the entire term length instead of paying the full cost upfront
Ability to better understand my per user costs
Provides safe and secure disposal practices
17.8%
31.3%
14.1%
17.7%
19.1%
Source: IDC European Multicloud Survey, April 2018 (n=651); IDC DaaS Multiclient Study, June 2018, U.K. data only (n = 276)
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PAYMENT SOLUTIONS ALSO ENABLE PARTNER GROWTH IN SOFTWARE FINANCING Demand for software continues to outpace other IT equipment and services segments and this is mirrored in the growth for software financing
IDC WW IT spending forecasts IDC WW IT leasing and financing forecasts
2.7% 2.4%
2.8% 2.5%
CAGR* in hardware spend (2016–2021) CAGR in hardware financing (2016–2021)
CAGR in services spend (2016–2021) CAGR in services financing (2016–2021)
* Compound annual growth over five-year period (*IDC research shows that the trends and dynamics around financing and payment solutions in EMEA are similar to those in the U.S.)
Software financing enables customers to manage the tasks of adding and upgrading software and aligns budgets with usage, which improves IT efficiencies.
The increased demand for software financing demonstrates the value it brings to customers. Partners have an opportunity to help customers achieve their software goals through financing.
6.2% 8.0%CAGR in packaged software spend (2016–2021) CAGR in packaged software financing (2016–2021)
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PARTNERS CAN HELP THEIR CUSTOMERS TRANSFORM BY OFFERING FLEXIBLE, BUNDLED FINANCE OFFERINGS ACROSS MULTIPLE VENDORS
The complexity of digital transformation means customers are increasingly looking to their partners as “trusted advisors,” not just as transactional providers of technology.
Customers need help to understand what all of the technology — across different vendors — could really do for them, and how it could work. Partners are trusted to do just this.
But partners face a challenge doing this when it comes to finance if they are unable to package up a whole solution (with tech from multiple vendors) into one payment solution.
Therefore financial services agreements, which enable partners to bundle technology from a variety of sources into one package, can be a very valuable proposition for partners — and customers.
Flexible bundled payment solutions that allow customers to finance hardware, software, and services from multiple vendors — such as the offering from Dell Financial Services — offer maximum flexibility to customers.
of customers say the ability to obtain tech from multiple vendors but finance with a single financing provider is a primary driver for using
payment solutions.
41%
Source: IDC, U.S. IT Procurement Trends and Consumption Models, August 2018 (IDC research shows that the trends and dynamics around financing and payment solutions in EMEA are similar to those in the U.S.) (n = 300)
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BUNDLING FINANCING ACROSS MULTIVENDOR INFRASTRUCTURE AND SOFTWARE SOLUTIONS IS ANOTHER WAY PARTNERS CAN FUEL CUSTOMER SUCCESS
Separate approaches to purchasing infrastructure and software can be painful for customers. Purchasing and financing these elements separately costs customers more money, more time, and more resources which could be better spent elsewhere.
Payment solutions for multivendor solutions remove these barriers and increase simplicity for customers.
Customers that use a single contract to finance each element of the stack only invest in one contract, not multiple contracts — saving precious resources.
HARDWARE SINGLE CONTRACT
BUNDLED CONTRACT
SINGLE CONTRACT
SINGLE CONTRACT
SINGLE CONTRACT
SINGLE CONTRACT
SINGLE CONTRACT
INFRASTRUCTURE SOFTWARE
MIDDLEWARE SOFTWARE
APP SOFTWARE
SERVICES
SUPPORT
ServicesApplication
Software
Support Middleware Software
Hardware
Infrastructure Software
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WHY PARTNERS ARE EMBRACING PAYMENT SOLUTIONS: RETENTION, PROFITABILITY, AND COMPETITIVE DIFFERENTIATION
Value-based selling
Boost environmental credentialsClose deals faster
Improve customer loyalty
Get paid faster
Leverage specialist status
Better compete against others
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CHALLENGING MINDSETS — OVERCOMING OBJECTIONSMany partners appreciate the value that payment solutions can offer them and their customers, but have some practical concerns that can limit their uptake — necessitating a change in mindset
Mindset
FROM TO
Mindset
Finance slows down the sales cycle, which may put customers off
We’re adding real value to customers, which will help us long term
I need multiple financing agreements as the IT vendor only finances their own products
I can help customers by working with a financing vendor that can finance multi-vendor solutions
When we use finance, we’re concerned that we lose control of our customer to the financing provider
We’re tapping into the ecosystem to deliver customer value
Once a partner offers finance, future iterations are often quicker
Finance offerings are typically wrapped up into a single contract, offering great simplicity to the customer
Choose a financing partner that supports and encourages multi-vendor solutions to be financed under one umbrella agreement
Partners are able to position an entire solution to a customer, available through finance, meaning multiple finance for multiple tech is not needed
Partners are typically able to retain ownership of the customer and relationship with them
Customers value working with a trusted partner
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Customers that DO NOT leverage payment solutions
CONCLUSION FOR CUSTOMERS: LEVERAGING PAYMENT SOLUTIONS ENABLES FASTER TRANSFORMATION
Customers that DO leverage payment solutions
Transform at a faster rate than competitors with access to newer technology earlier without significant capital outlay
Enjoy more flexibility and budget predictability with monthly or quarterly payments that include hardware, software, and services
Benefit from scheduled refresh cycles that ensure you always have modern technology assets, resulting in improved security and increased employee satisfaction
Must sweat their IT assets as long as possible, stifling productivity and transformation efforts
Must make big capital outlays in one go, creating spiky, unpredictable budgets and spending
Risk losing out to competitors that leverage flexible payment solutions to invest in new technologies on a planned cycle
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Partners that DO NOT offer customers payment solutions
CONCLUSION FOR PARTNERS: OFFERING PAYMENT SOLUTIONS IS A SIGNIFICANT OPPORTUNITY
Partners that DO offer customers payment solutions
Earn trusted relationships with customers, which promotes loyalty, retention, and profitability
Offer customers simplicity with finance bundles across infrastructure and software
Avoid end-of-life challenges and improve their environmental impact
Exclude themselves from potentially profitable, long-term customer engagements
Risk losing strategic customers to competitors that do offer payment solutions
Risk being seen as inflexible and not an enabler of IT transformation by their customers
Customers are keen to undertake IT transformations as they digitally transform …
Customers want their channel partners to support their IT transformation journeys with payment solutions
… but many find it impossible to fund such activities due to restrictive cash flow and budgets
CUSTOMER SITUATION
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