Siemens Financial Services supports partners with a wide range of flexible finance solutions so that their customers can acquire the best technology for their needs, including hardware, software, application development, services and the cloud. Technology Reseller asks David McCoubrie, Head of Technology Finance at Siemens Financial Services in the UK, about trends in the market, the company’s plans for 2021 and why SFS continues to be an ideal partner
Technology Reseller (TR): The IT industry had a mixed 2020, with the pandemic and WFH causing a spike in demand for some products and a decline in others as infrastructure projects were put on ice. How were these changes reflected in businesses’ demand for finance?
David McCoubrie (DM): In 2020, the demand for Tech Products was mixed overall. Mobile technology saw a significant increase, along with some software verticals, particularly around cyber security.
In the latter part of last year, we saw an increased demand for finance as businesses looked to preserve cash flow, not knowing how long the COVID situation might affect them. We saw a growing number of customers moving towards financing, who had previously always used their own cash reserves. Smart finance enables customers to conserve their capital, pay as they go, be tax efficient and budget reliably, so it makes logical sense that customers would take an increased interest in integrated finance from their vendor. With interest rates currently relatively low as well, there has never been a better time to use financing for Tech acquisition.
TR: How do you think the market might develop in 2021?
DM: We are already witnessing a cautious market developing in Q1 as COVID vaccination programmes gain traction. It is hoped that this will lead to a relaxation of lockdown regulations as per government plans and that businesses will move back into growth mode from Q2 onwards. In the Tech finance sector, this translates to a pent-up demand for investment in infrastructure which will start to materialise into sales for our tech partners.
Nonetheless, larger projects will likely continue to be treated with caution. Many UK companies are focusing on rebuilding revenue, reducing debt and prioritising working capital management.
TR: Two big trends last year were the transition to cloud and a move to services, including device-as-service. How have these trends impacted the leasing industry, and has Siemens Financial Services developed new products as a result?
DM: These two trends are not actually new to 2020, they have been happening for many years now. Demand for these technology solutions has been booming as the world goes through digital transformation and even prior to the current crisis both public and private sectors were undergoing a major shift towards a more digitalised world.
That said, the pandemic has become a key driver and accelerated companies’ digital transformation plans by a global average of six years, and a UK average of 5.3 years.1 2020 saw an uptick in both transitions to cloud and a move to services, the reason being that businesses need greater flexibility in their Tech infrastructure. As a result, financing for these contracts is moving forwards quickly.
SFS has been active in funding service-based contracts in many markets for some years now, and the Tech market is no exception. We have used our corporate experience round the world to develop further our offering around device-as-a-service and subscription funding.
TR: In general, are leasing companies providing businesses with the financing products they need to make necessary investments in technology? And if not, where is there room for innovation?
DM: I can’t speak for other funders/leasing companies but at SFS we have a unique relationship to the technology market through Siemens AG, a global technology powerhouse that has stood for engineering excellence, innovation, quality, reliability and internationality for more than 170 years. We understand the need for continual investment in necessary technology as we move further into a digital world. Given our longevity in the finance market (we turned 60 last year!), we’re mindful that companies that continued to invest intelligently in technology during previous challenging economic times survived, thrived and ultimately gained long-term competitive advantages.2
We are also acutely aware of the need for innovation in finance, alongside technology. Digitalisation is enhancing the value that financing partners bring to the party for vendors and this is why we have been investing in our digital tools to make financing easy to use for our vendor partners. Continued innovation in automation and online digital tools ensures that high-speed decisions and processes are delivered, so that more deals can be closed, faster.
Over the last year, we’ve seen a huge increase in our vendors using our digital tools to overcome challenges such as remote working and we believe 2021 will push this further still.
A smart finance platform helps close more business, accelerates growth and provides added-value information and insight. Innovative customers need innovative products and financing needs to support that. At SFS, we are well-positioned to provide that level of innovation and experience in this market.
TR: Are businesses making the most of the financing opportunities available to them? And if not, what is holding them back?
DM: There is still more to be done in this market to increase the opportunities for our vendor partners to use financing as a real value-add in their own markets and as a benefit to their own strategic drivers – it reduces the capex sale, offers the opportunity to sell up, no credit terms etc.. Most of their customers will be looking to preserve cash, working capital and existing credit lines – so there has never been a better opportunity for vendors to use integrated financing to promote their own solutions and keep their customers investing in them.
An ideal financing partner will draw on a wealth of funding knowledge to offer a range of flexible solutions, each designed to support the vendor’s sales process and enable customers to acquire the best technology solutions for their needs.
TR: Could resellers and MSPs be doing more to encourage their customers to explore different financing options? And if so, how is SFS helping them develop these opportunities?
DM: Part of our role is to make the vendors (both resellers and MSPs) understand how financing can work to their advantage. We’re incredibly proactive on this front and recently published a report, entitled The Ideal Partner,3 to help vendors gain an awareness of precisely what a finance partner can offer, as well as the right questions to ask to get the most from a financier. The paper lays out the key qualities to look for in a financing partner that will help you build your business.
Whether vendors are already working with a financing partner or simply considering its value as part of their sales offering, it’s important to know what’s available and how to get the most from a funding partner.
TR: What do you see as the big challenges facing the leasing industry – and SFS in particular – in 2021?
DM: Challenges for the finance market, and leasing in particular, will be around availability of credit for customers. Most customers will have suffered in 2020 and will need to re-build the business financially to position for future growth and stability, so at SFS we are looking to see what other means and information we can use, such as big data, in addition to more traditional P&L information to help vendors support customers through the volatility.
TR: What were SFS’s highlights last year and what are your priorities for 2021?
DM: The COVID crisis has been a challenge across industries but I’m incredibly proud of how we dealt with its impact at SFS. Like so many businesses, employees had to get used to the new regime of homeworking and the new practices that this brought. The positivity of the company was truly special and we transitioned the business remarkably well to deal with working from home, whilst still providing a great service to all our vendor partners. Even as the industry endured restricted operations, contact, and in some cases closures, at SFS we remained visible and available to our vendors throughout.
Our priorities for 2021 remain the same: taking care of our people; providing our vendors and customers with funding solutions to help them sell and acquire the technology they need to grow; and continuing to be their trusted financial partner, delivering the best customer experience through exceptional people, innovation and digitalisation.
1 Computer weekly, Covid-19 accelerates digital transformation by over five years, 16 July 2020 https://www.computerweekly.com/news/252486191/Covid-19-accelerates-UK-digital-transformation-efforts-by-over-five-years
2 Siemens Financial Ser vices, Food and Beverage: Rising to the new challenge, Summer 2020: https://new.siemens.com/global/en/products/financing/whitepapers/whitepaper-rising-to-the-new-challenge-food-and-beverage.html
3 Siemens Financial Ser vices, The Ideal Partner (2020) https://assets.new.siemens.com/siemens/assets/api/uuid:c17cf279-9dbc-4673-87d3-60d8da9c63e8/sfs-uk-digitalisation-transformation-tech.pdf