Accelerating IT Transformation through Payment Solutions · IT transformation can pose challenges for customers: • Customers need the latest technologies, but cannot afford large

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


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


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


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.


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.)


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.)


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)


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)


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)


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


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


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


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


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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Accelerating IT Transformation through Payment Solutions · IT transformation can pose challenges for customers: • Customers need the latest technologies, but cannot afford large