Cisco to leverage on its financing arm to boost sales

Finance is often the biggest limitation when it comes to IT deployment in
corporates and SMB segments. This is why Cisco Systems India has started
offering financing options to these customers through Cisco Capital. It is the
company's self owned non-banking financing arm and is active in over 30
countries where the vendor is present. Cisco has already appointed Dhiraj Mehta
to head this division.

In most cases, users approach Cisco Capital directly for finance. In indirect
funding, the sales team leverages on Cisco Capital and offers attractive finance
options to the get the company to invest in IT infrastructure. All finance
programs are tailor-made for each customer and they can go for the
technology-refreshment options or pure-lease arrangements.

One of the biggest advantages that Cisco Capital provides customers is lower
Total Cost of Ownership (TCO), as the buyer does not have to make the entire
investment at one go. Secondly, there are built-in flexibility options within
the schemes offered by the financing arm, which take care of technology
obsolescence. In this case, Cisco will buy back some of the IT infrastructure at
residual value from the customer, who can then invest in upgradation of the

network.

Cisco has started offering these options initially to large enterprises and
will start targeting SMB buyers by March 2005. "We are fine-tuning the
conduit for offering this service to our SMB customers," said Jangoo Dalal,
Sr VP and Country Manager, Cisco Systems India. However, he assures that it will
be offered entirely through its partner network.

"We need to work out whether we should offer it through our distributors
solely or through our Gold partners or a mix of both," he added. Since the
SMB customer segment largely relies on the channel for its IT deployment plans
as well, Cisco wants to make sure that it has an airtight model in place before
approaching customers.

If the vendor takes the disty route for Cisco Capital, it will mean that the
latter will offer better credit terms to partners, which will then be passed on
to customers.

Likewise, it can use the channel to sell Cisco Capital as a product itself
and help partners build IT solutions around it. Cisco will first work on a pilot
project to understand the various nuances of selling finance to SMB customers,
before rolling out the option in 2005.

While offering Cisco Capital to a customer, the vendor considers several
qualifying parameters like the company's turnover, credit worthiness, nature
and size of IT purchase, the industry segment it is and how this is likely to
grow in the future. Initially, it will target high-growth sectors like
manufacturing, textile, pharma, telecom, BFSI and ITES, which are on the growth
curve and are traditionally heavy deployers of IT.

There is no ceiling on the finance offered and it entirely depends on the
results of the risk evaluation processes conducted by Cisco Capital. "There
will be a separate professional team which will manage risk and evaluate the
customer's credit rating, before suggesting whether we should extend finance
to them," informed Jangoo.

VINITA BHATIA