A subsidiary of The Co-Operators insurance firm has decided vendor-developed IT financing programs beat outright purchasing as it grows its business.
HB Group Insurance, a provider of employer-sponsored group home
and auto insurance under the Direct Protect brand, based in Toronto, said Wednesday it has completed a desktop refresh of more than 500 PCs through a financing arrangement with IBM Canada‘s Global Finance unit. Ed Mugford, HB Group Insurance’s IT manager, said the company’s data centre servers will soon be in need of replacement, at which point it may extend the relationship further. “”The company that manufactures (the servers) has discontinued that particular line,”” he said. “”When we get new ones, IBM will certainly be an option.””
Mugford said the company’s history as an IBM Global Financing customer, which began in 1995 with leasing an AS/400, expanded following a disasterous financing deal with a well-known distributor. The firm, which Mugford wouldn’t name, offered little flexibility and frequent staff changes made it nearly impossible to manage growth of its IT infrastructure.
“”Their people didn’t know us, they didn’t know our account,”” he said. “”I’m sure you’ve all heard the horror stories. Well, we lived it for four years.””
HB Group Insurance had aimed to execute its desktop refresh in the third quarter of last year when it was approached by IBM, Mugford said. Big Blue offered a six month payment deferral and its ThinkVantage product line to manage remote deployment and systems migrations. The Compaq PCs the company owned were offered to employees, he said. As a result, the refresh was completed six months ahead of schedule.
Williamson Printing, a small distributor of printing plate materials based in Grimsby, Ont., said the flexibility of leasing allowed the company to handle its growth when one of its products saw a compound annual growth rate of 25 per cent. “”You don’t always plan for that,”” said Denis Glazebrook, Williamson’s finance and operations manager, “”but (IBM’s) been good at rolling over the contract to look at things as they change.””
Glazebrook said companies that consider financing should break the quote down to its component parts and caculate the implicit lease rate before moving forward. “”A lot of people think there’s IBM, and that’s the only option,”” he said. “”We check with the banks, we check with third parties.””
IBM Canada is trying to raise the profile of its financing operation, which has been available in Canada for 20 years, particularly among small and medium businesses who might otherwise put off technology purchases. Belinda Tang, Canadian vice-president of IBM Global Financing, said the unit manages $35 billion in assets and 30 per cent of all hardware sales in 2002. The company offers financing for both end users and its resellers, as well as a used PC refurbishment and disposal business. IBM earlier this year revamped its partner financing program to get information on potential deals in the works.
Tang, who predicted IBM will soon provide most of its financing to projects rather than hardware products, said the company has learned to include mid-term provisions for unexpected variables. “”Those questions come up usually as customers are coming to the decisions,”” she said. “”They should come up early.””
Though IBM offers financing for other products, 80 per cent of what’s leased comes from Big Blue, Tang said.