IBM help optimize your IT investment every step of the IT life cycle: (1) Plan, (2) Acquire, (3) Manage, (4) Retire.

1. George Mattathil -
5/9/2011
IBM Global Financing
Your comprehensive IT financing solution
Document number: GFP03184-USEN-02
© 2011 IBM Corporation

2. The broad, deep and lasting impact of the financial crisis
Global financial crises Signs of recovery The new normal
Global outlook (GDP)
 Liquidity driven crises  Continued cost and
 Collapse of the real productivity pressures
estate bubble  Subdued growth and
 Failure of collateralized reduced demand
debt obligations  High unemployment
 Drop in global commerce  Government stimulus
 Pressure to cut costs programs
 Rising unemployment Consumer confidence  Sovereign debt concerns
 Sinking commodity values  Limited access to capital
 Dramatic drop in  Industry restructuring
consumer demand and consolidation
 Increased risk, volatility  Continued risk, volatility
and uncertainty and uncertainty
1 Comprises China, India, Russia, South Africa, Turkey, Indonesia, Malaysia, Philippines, Thailand, Bulgaria, Sources: IBM Institute for Business Value, based on IMF Global Economic
Estonia, Hungary, Latvia, Lithuania, Poland, Argentina, Brazil, Chile, Colombia, Mexico, Peru, and Venezuela. Outlook, September 2009; CPB Netherlands Bureau for Economic Policy
2 Includes only economies that report quarterly data; see list in footnote 3. Analysis, December 2009; JP Morgan Global Manufacturing PMI (July 2006
3 Comprises Australia, Canada, Czech Republic, Denmark, Hong Kong SAR, Israel, Japan, Korea, New – December 2009); Haver Analytics and NTC Economics; and IMF staff
Zealand, Norway, Singapore, Sweden, Switzerland, Taiwan Province of China, United Kingdom and United calculations and World Economic Outlook database. IMF Global Economic
States. Outlook, October 2010.
© 2011 IBM Corporation

3. CFOs believe that industry and sector pressures will increase both
challenges and opportunities
78% 74%
69%
61% 56%
40%
Potential
access to
Product short-term
Pressure to Need for Demand for and service Ability to liquidity and
reduce cost faster decision external demand attract and long-term
base making transparency growth retain talent capital
60 percent of financial decision makers
believe they have to make major changes to
respond to these concerns
Source: IBM Global Business Services, Global CFO Study 2010.
Note: Executives asked: In the next three years, how will the following conditions change in your industry or sector? Excludes respondents that select ―Don’t know.‖
Note: Defined as enterprises selecting [5] Increase considerably and [4] Increase on a five-point scale where 5 = Increase considerably and 1 = Decrease considerably.
© 2011 IBM Corporation

4. The bottom line is still top priority
Although the global economy is on the road to recovery,
many organizations may still be:
 Concerned about the high cost of acquiring and
maintaining technology
 Keeping a close watch on their IT investments
 Demanding that every investment provide a quick
return
 Conserving capital wherever possible
 Favoring short-term over long-term initiatives
“The economic downturn has rewritten the rules of IT investment, and IT organizations will need
more-rigorous investment management practices in order to adapt. Only then can IT organizations
meet the business requirement to continue to improve IT efficiency, while increasing the value
delivered to the enterprise.”
—Gartner Research, New Realities of IT Investment, September 27, 2010
© 2011 IBM Corporation

5. Taking the long view
Nevertheless, for companies to succeed in the
new economy they still need to invest to:
 Grow the business
 Stay competitive and innovative
 Keep up with the latest technologies
 Meet the evolving needs of employees,
customers and partners
“In the current environment, innovation must address
not only growth but also transformational change in
how organizations drive productivity, reduce costs
and spend differently. This reality will be an important So how can companies make
driver of IT investment choices in the next few years.” smart IT investments while
positioning themselves for the
—Gartner Research, New Realities of IT Investment, September 2010.
economic recovery?
© 2011 IBM Corporation

6. IBM Global Financing can help
 IBM Global Financing helps companies
acquire the IT solutions they need, more
easily and cost-effectively, so they can:
– Preserve cash for strategic business
needs
– Obtain the solutions they need—
potentially without cutting back
 We are the world’s largest technology
financier, providing services in more than
55 countries
 We work with more than 125,000 clients,
from small businesses to large enterprises,
including roughly 80% of the Fortune 100
 Our decades of IT expertise give us an
exceptional understanding of a company’s
55+ 125,000+
technology and financial needs
countries clients
© 2011 IBM Corporation

7. A comprehensive IT financing solution
IBM Global Financing
Global Asset
Client financing Commercial financing
Recovery Services
Provides leases and Provides working capital Offers comprehensive
loans to help clients and supply chain services for technology
acquire solutions and financing for technology assets including
technology manufacturers and remanufacturing,
Client Financing resellers buyback and resale
Experts in financing technology and solutions
© 2011 IBM Corporation

8. How IBM Global Financing can address CIO challenges
The challenge How we can help
 Acquire more technology without significantly affecting the
Budget reductions current budget
 Get more for less with IBM Certified Pre-owned Equipment
 Turn large, up-front costs into smaller, predictable payments
Budget forecasting over a fixed period of time
 Bundle project costs into a single recurring payment stream
 Realize a significantly lower TCO with leasing than with
Increasing total cost of outright purchase
ownership (TCO)  Lower ongoing maintenance and support costs with leasing-
based refreshes
IT refresh and upgrade  Increase capacity with little to no change in monthly payments
management with midlease upgrades
Asset management and tracking  Save time and resources by tracking and managing equipment
online
Technology obsolescence  Keep IT equipment current by shifting obsolescence risk to
IBM
© 2011 IBM Corporation

9. How IBM Global Financing can address CFO challenges
The challenge How we can help
 Reduce up-front costs and better align costs to expected
Optimize cash flow benefits
 Free up cash and preserve credit lines for core business
Maximize liquidity needs
 Lower ongoing maintenance and support costs with leasing-
Reduce costs, improve return based refreshes
 ImproveROI with FMV leases that are lower in cost (on a
on investment (ROI) present value basis) than outright purchase
Reduce financial  Manage risk with predictable, known costs over a fixed term
 Increase capacity with little to no change in monthly payments
unpredictability with mid-lease upgrades
Optimize assets; improve  Help ensure optimization with leasing refreshes
utilization  Renew, return or extend lease at the end of the term
Acquire new funding sources  Get fixed-rate capital at competitive rates with flexible terms
© 2011 IBM Corporation

10. IBM Global Financing can help you affordably invest in your future—
today
Accelerating a project’s cash flow break-even
point with IBM Global Financing
Positive $
 Better manage your cash flow
 Accelerate your break-even point
 Better match costs to expected benefits Time
 Improve key financial metrics
 Speed project approval
Negative $
Cumulative cash flow with IBM Global Financing
Cumulative cash flow without IBM Global Financing
Cumulative cash payments with IBM Global Financing
Cumulative cash payments without IBM Global Financing
SOURCE: Hypothetical example that helps illustrate the fundamental
differences between upfront project costs and a project utilizing financed Note: does not take into consideration incremental client benefit for having
monthly payments
funds available for investment in other areas
© 2011 IBM Corporation

11. A leasing strategy can help reduce costs throughout the IT life cycle
Leasing, coupled with blade swaps, is a far more When all factors are taken into account, Robert
economical approach to blade server management for Frances Group's total cost of ownership analysis shows
Intel-architecture blade server farms. Enterprises could that Fair Market Value (FMV) leasing, coupled with in-
save as much as 20% (and possibly more) through place upgrades is a more economical approach to
"swap to grow" when all costs are considered over five server management for Unix server farms with
years. increasing workloads. This approach can reduce both
– Robert Frances Group, May 2010* capital and operational expenditures over a five-year
period, bypasses the need for 60% additional floor
space and eliminates the administrative overhead of
added server configurations.
– Robert Frances Group, April 2009+
SOURCE: Robert Frances Group, Leased x86 Blade Swaps To Grow – A Best Practice SOURCE: Robert Frances Group, The Advantages of IBM Power™ Systems In-Place
Upgrades
© 2011 IBM Corporation

12. We help optimize your IT investment every step of the way
Do my existing
assets have any
value to fund new
Plan investments? Retire
How do I obtain the solution I
need within budget?
How do I reduce project and Support How do I safely dispose of end-of-
financial risk? for the life assets?
IT life cycle
What is the lowest cost funding
option that delivers rapid return
on investment?
Acquire How can I simplify Manage
billing and reduce
costs for
multivendor
projects?
© 2011 IBM Corporation

13. Support for the IT life cycle—plan
 Leverage customized financing structures and low
competitive rates to lower initial payments, helping you
get the technology you need without large, up-front
expenses
 Dramatically simplify budget management and reduce
risk with predictable, known costs over a fixed term
Support
for the
 Align costs with expected benefits to better predict your IT life cycle
Plan
return on investment and accelerate project approvals Acquire
Manage
 Improve budget predictability by making regular monthly Retire
payments
 Extract more value out of existing equipment to save
funds for new investments
© 2011 IBM Corporation

14. Support for the IT life cycle—acquire
 Finance your hardware, software and services acquisitions
while keeping your IT infrastructure robust and up-to-date
 Lower your acquisition costs by 10 to 16 percent1 using fair
market value (FMV) leases Support
for the
 Preserve capital with competitive loan rates for software and IT life cycle
Plan
services Acquire
Manage
Retire
 Cut costs even further by using IBM-Certified Pre-owned
equipment, at significant savings over the original price
1 Represents a range of net present value savings achieved on a 36-month FMV lease for IBM hardware for a ―best‖ credit customer.
© 2011 IBM Corporation

15. Support for the IT life cycle—manage
 Manage your portfolio of leased assets with easy-to-use
online management tools
 Take advantage of mid-lease upgrades to add capacity—
potentially without significantly affecting your budget
 More affordably perform side-by-side migrations to new Support
for the
technology with minimal disruption IT life cycle
Plan
 Refresh your technology to reduce IT obsolescence using Acquire
Manage
Retire
fair market value leases
 Use competitively priced software loans to add new
licenses or upgrades
© 2011 IBM Corporation

16. Support for the IT life cycle—retire
 Dispose of older IT equipment in compliance with
environmental laws and regulations
 Simplify compliance with hardware disposal regulations
 Get fair market value for your retired assets with buyback
Support
services from IBM for the
IT life cycle
 Return leased equipment* with no disposal or resale Plan
Acquire
Manage
concerns Retire
* Refers to equipment on an FMV lease
© 2011 IBM Corporation

17. Support for your vision
IBM Global Financing We are well positioned We can help accelerate
delivers the IT financial to assist you with not only the implementation of
expertise and capabilities financing but also IT life- innovative solutions or
you need today to cycle management projects such as cloud
support your vision for challenges computing or business
tomorrow analytics
© 2011 IBM Corporation

18. IBM Global Financing key offerings
 Hardware financing
 Software financing
 Services financing
 Financing for midsize businesses
 Certified Pre-owned equipment
 Global Asset Recovery Services
© 2011 IBM Corporation

19. Global Asset Recovery Services
Returning assets
Parts and machines
In 2009, Global Asset Recovery Services
remanufacturing operations processed
more than one million machines with a
weight of more than 27.8 million pounds.
This equated to more than 19.4 thousand
machines a week.
Warehouse
 90.2 percent of the units processed IBM sales channels
and fulfillment
Processing and refurbishment Scrap vendors
were readied for resale and reuse IBM sales force, Business
Partners and the ibm.com®
of machines Excess and obsolete parts
Harvesting of parts
while the other 9.8 percent were website
sent for scrapping
 The landfill plus incineration disposal
rate continued to decline to 0.68
percent
 Global Asset Recovery Services has
Machines and parts
operation sites in more than 55 Packaged for sale
countries
© 2011 IBM Corporation

20. IBM Global Financing versus financing providers
IBM Global Financing Other IT companies
 More than 30 years of experience as an asset-  Generally can’t match the depth and breadth of
based lender IBM’s IT portfolio and IBM Global Financing’s scope,
experience and expertise
 Optimal understanding of IT across businesses
of all sizes and virtually all industries  Often must use third-party finance providers
 Global client financing and asset recovery reach
 Comprehensive financing portfolio to address Traditional banks
needs across the IT life cycle  Generally lack expertise in technology financing
 Competitive rates, terms and conditions  Tend to be limited to the acquisition phase of IT life
designed to be easy to understand, and flexible cycle
end-of-lease options
 Often have limited scope to exploit residual value of
 Based on our expertise and market knowledge, financed equipment
we are able to take strong residual value
positions with respect to hardware, resulting in  Rarely serve the full needs of IT life cycle
very competitive rates for our FMV lease  By and large require restrictive loan covenants and
offerings end-of-lease options
 Integration of financing into IBM’s solutions  Offer no equipment recycling or disposal
© 2011 IBM Corporation

21. Why IBM Global Financing?
Competitive The world’s More than 30 Virtually Serving global
rates largest IT years of IT unmatched enterprises,
financier with financing capabilities for with offices
more than experience supporting the in more than
US$34.6B in IT life cycle 55 countries
assets
© 2011 IBM Corporation

22. Trademarks and notes
IBM Corporation 2009
 IBM, the IBM logo and ibm.com are registered trademarks, and other company, product or
service names may be trademarks or service marks of International Business Machines
Corporation in the United States, other countries, or both. A current list of IBM trademarks is
available on the Web at ―Copyright and trademark information‖ at
www.ibm.com/legal/copytrade.shtml
 Adobe, the Adobe logo, PostScript, the PostScript logo, Cell Broadband Engine, Intel, the
Intel logo, Intel Inside, the Intel Inside logo, Intel Centrino, the Intel Centrino logo, Celeron,
Intel Xeon, Intel SpeedStep, Itanium, IT Infrastructure Library, ITIL, Java and all Java-based
trademarks, Linux, Microsoft, Windows, Windows NT, the Windows logo, and UNIX are
trademarks or service marks of others as described under ―Special attributions‖ at:
http://www.ibm.com/legal/copytrade.shtml#section-special
 Other company, product and service names may be trademarks or service marks of others.
 References in this publication to IBM products or services do not imply that IBM intends to
make them available in all countries in which IBM operates.
© 2011 IBM Corporation

23. Trademarks and notes
IBM Corporation 2011
 IBM, the IBM logo, IBM Project Financing, and ibm.com are registered trademarks, and other company,
product, or service names may be trademarks or service marks of International Business Machines
Corporation in the United States, other countries, or both. A current list of IBM trademarks is available on
the Web at “Copyright and trademark information” at www.ibm.com/legal/copytrade.shtml
 Other company, product, and service names may be trademarks or service marks of others.
 References in this publication to IBM products or services do not imply that IBM intends to make them
available in all countries in which IBM operates.
 IBM and IBM Credit LLC do not, nor intend to, offer or provide accounting, tax or legal advice to clients.
Clients should consult with their own financial, tax and legal advisors. Any tax or accounting treatment
decisions made by or on behalf of the client are the sole responsibility of the customer.
 IBM Global Financing offerings are provided through IBM Credit LLC in the United States, IBM Canada
Ltd. in Canada, and other IBM subsidiaries and divisions worldwide to qualified commercial and
government clients. Rates and availability are based on a client’s credit rating, financing terms, offering
type, equipment type and options, and may vary by country. Some offerings are not available in certain
countries. Other restrictions may apply. Rates and offerings are subject to change, extension or
withdrawal without notice.
© 2011 IBM Corporation