Flexible financing to keep digital transformation on track

As we move into a post-pandemic digital world, companies simply cannot afford to take the pedal off the gas of their digital transformation. As challenges mount across sectors, IT management has, in particular, had to ramp up to accommodate sweeping changes and client demands, demands that are not likely to lessen as many businesses move from recovery to building resilience.

For businesses everywhere it has been a struggle to get a true sense of the impact that the COVID-19 crisis has had - according to Deloitte the virus has had ‘a significant impact on the technology sector, affecting raw materials supply, disrupting the electronics value chain, and causing an inflationary risk on products.’

With governments now deciding on how best to lessen lockdown measures without risking a second wave, the uncertainty of how to go forward is weighing heavily on businesses eager to get back to work. For example, whilst thoughts have begun to turn from immediate and pressing issues like business continuity and the challenges of employees working from home, the far more wide-reaching financial fallout that the pandemic may cause is now taking front and center stage. The long-term economic impact has left many businesses facing significant cash flow and liquidity challenges.

In fact, according to Forrester, global tech market growth will slip to 3% in 2020 and 2021 as a direct result of the pandemic. Meanwhile, a recent survey of CFOs by Gartner found that 70% of are making changes to their long-term investment plans.

Keeping the focus on Digital Transformation

Companies previously lagging in digital transformation are feeling the pressure to fast track their strategies or be left behind, but many are constrained by tighter budgets and cost-cutting measures. This fast track often requires an overhaul of their IT infrastructure as the gaps in current systems become more apparent with various new demands coming to light.

One way to tackle the challenge of how to finance these much-needed improvements would be to explore flexible financing options. Vendors like Aruba, a Hewlett Packard Company, are among the first to evaluate our financial portfolios to find a way to support both customers and partners. There are two key ways that they are making this possible:

• Defer or reduce expenses – vendors may let you delay payments for a set period (typically several months) or start your payments on a reduced rate and offset the balance at an agreed date in the future (i.e. one year from now)
• Generate cash from assets – vendors will offer to buy back your existing IT assets or other infrastructure and lease it to you as a service.

Start by asking the right questions

Questions companies should be asking include which option best suits their business, this will largely depend on what existing assets they have and make it easy to identify the gaps this and their preferred future consumption model. They should also be clear on whether they prefer to keep IT management functions in house or outsource. Some companies prefer to own their infrastructure rather than pay to use it and some may be guided by more stringent security needs based on sector demands.

Certain sectors will be more risk-averse when it comes to moving their IT solutions off-premises and handing over their management to a third party. Prime examples of this being financial services and healthcare, both of whom face various and serious challenges to overcome to implement any changes to their IT infrastructures - namely data protection, user privacy and complying with government regulation.

Where to next?

We are already starting to see the shift to the new normal where slick infrastructure is vital to put your best foot forward in today’s digital-first world. Companies cannot afford to stagnate if they want to stay in the game and for many this will require creative ways to keep their digital transformation strategies on track.

To do this they will need to challenge their leadership to find ways to push forward and they will need to challenge their vendors to support them through these unprecedented challenges. The resilient business of the future will be agile and adaptable, but most of all they will be open to changing the way they do things, whether that means finding smart ways to finance innovation or taking bold steps to find the right partners to support them on their journey.

• Matt Valentine, Managing Director UK&I, Aruba.

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