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

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

© 2011 IBM Corporation

IBM Global Financing Your comprehensive IT financing solution

George Mattathil -

5/9/2011

Document number: GFP03184-USEN-02

Page 2: IBM Global Financing

© 2011 IBM Corporation

The broad, deep and lasting impact of the financial crisis

The new normal Global financial crises

Liquidity driven crises

Collapse of the real estate bubble

Failure of collateralized debt obligations

Drop in global commerce

Pressure to cut costs

Rising unemployment

Sinking commodity values

Dramatic drop in consumer demand

Increased risk, volatility and uncertainty

Continued cost and productivity pressures

Subdued growth and reduced demand

High unemployment

Government stimulus programs

Sovereign debt concerns

Limited access to capital

Industry restructuring and consolidation

Continued risk, volatility and uncertainty

1 Comprises China, India, Russia, South Africa, Turkey, Indonesia, Malaysia, Philippines, Thailand, Bulgaria,

Estonia, Hungary, Latvia, Lithuania, Poland, Argentina, Brazil, Chile, Colombia, Mexico, Peru, and Venezuela.

2 Includes only economies that report quarterly data; see list in footnote 3.

3 Comprises Australia, Canada, Czech Republic, Denmark, Hong Kong SAR, Israel, Japan, Korea, New

Zealand, Norway, Singapore, Sweden, Switzerland, Taiwan Province of China, United Kingdom and United

States.

Sources: IBM Institute for Business Value, based on IMF Global Economic

Outlook, September 2009; CPB Netherlands Bureau for Economic Policy

Analysis, December 2009; JP Morgan Global Manufacturing PMI (July 2006

– December 2009); Haver Analytics and NTC Economics; and IMF staff

calculations and World Economic Outlook database. IMF Global Economic

Outlook, October 2010.

Global outlook (GDP)

Signs of recovery

Consumer confidence

Page 3: IBM Global Financing

© 2011 IBM Corporation

CFOs believe that industry and sector pressures will increase both challenges and opportunities

60 percent of financial decision makers believe they have to make major changes to respond to these concerns

78% Pressure to reduce cost base

74% Need for faster decision making

69% Demand for external transparency

61% Product and service demand growth

56% Ability to attract and retain talent

40% Potential access to short-term liquidity and long-term capital

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.

Page 4: IBM Global Financing

© 2011 IBM Corporation

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

Page 5: IBM Global Financing

© 2011 IBM Corporation

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

driver of IT investment choices in the next few years.” —Gartner Research, New Realities of IT Investment, September 2010.

So how can companies make

smart IT investments while

positioning themselves for the

economic recovery?

Page 6: IBM Global Financing

© 2011 IBM Corporation

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

technology and financial needs

55+ countries

125,000+ clients

Page 7: IBM Global Financing

© 2011 IBM Corporation

A comprehensive IT financing solution

Client Financing

Experts in financing technology and solutions

IBM Global Financing

Client financing

Provides leases and

loans to help clients

acquire solutions and

technology

Commercial financing

Provides working capital

and supply chain

financing for technology

manufacturers and

resellers

Global Asset Recovery Services

Offers comprehensive

services for technology

assets including

remanufacturing,

buyback and resale

Page 8: IBM Global Financing

© 2011 IBM Corporation

How IBM Global Financing can address CIO challenges

The challenge How we can help

Budget reductions Acquire more technology without significantly affecting the

current budget

Get more for less with IBM Certified Pre-owned Equipment

Turn large, up-front costs into smaller, predictable payments

over a fixed period of time

Bundle project costs into a single recurring payment stream

Realize a significantly lower TCO with leasing than with

outright purchase

Lower ongoing maintenance and support costs with leasing-

based refreshes

Increase capacity with little to no change in monthly payments

with midlease upgrades

Save time and resources by tracking and managing equipment

online

Keep IT equipment current by shifting obsolescence risk to

IBM

Budget forecasting

Increasing total cost of ownership (TCO)

IT refresh and upgrade management

Asset management and tracking

Technology obsolescence

Page 9: IBM Global Financing

© 2011 IBM Corporation

How IBM Global Financing can address CFO challenges

Optimize cash flow Reduce up-front costs and better align costs to expected

benefits

Free up cash and preserve credit lines for core business

needs Maximize liquidity

Lower ongoing maintenance and support costs with leasing-

based refreshes

ImproveROI with FMV leases that are lower in cost (on a

present value basis) than outright purchase

Reduce costs, improve return

on investment (ROI)

Manage risk with predictable, known costs over a fixed term

Increase capacity with little to no change in monthly payments

with mid-lease upgrades

Reduce financial unpredictability

Help ensure optimization with leasing refreshes

Renew, return or extend lease at the end of the term

Optimize assets; improve utilization

Get fixed-rate capital at competitive rates with flexible terms Acquire new funding sources

The challenge How we can help

Page 10: IBM Global Financing

© 2011 IBM Corporation

IBM Global Financing can help you affordably invest in your future—today

Better manage your cash flow

Accelerate your break-even point

Better match costs to expected benefits

Improve key financial metrics

Speed project approval

Accelerating a project’s cash flow break-even

point with IBM Global Financing

Positive $

Negative $

Time

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

Note: does not take into consideration incremental client benefit for having

funds available for investment in other areas

SOURCE: Hypothetical example that helps illustrate the fundamental

differences between upfront project costs and a project utilizing financed

monthly payments

Page 11: IBM Global Financing

© 2011 IBM Corporation

A leasing strategy can help reduce costs throughout the IT life cycle

Leasing, coupled with blade swaps, is a far more

economical approach to blade server management for

Intel-architecture blade server farms. Enterprises could

save as much as 20% (and possibly more) through

"swap to grow" when all costs are considered over five

years.

– Robert Frances Group, May 2010*

When all factors are taken into account, Robert

Frances Group's total cost of ownership analysis shows

that Fair Market Value (FMV) leasing, coupled with in-

place upgrades is a more economical approach to

server management for Unix server farms with

increasing workloads. This approach can reduce both

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

Page 12: IBM Global Financing

© 2011 IBM Corporation

We help optimize your IT investment every step of the way

Plan

Acquire Manage

Retire

How do I safely dispose of end-of-life assets?

How do I obtain the solution I need within budget?

What is the lowest cost funding

option that delivers rapid return

on investment?

How do I reduce project and financial risk?

Do my existing

assets have any

value to fund new

investments?

How can I simplify

billing and reduce

costs for

multivendor

projects?

Support

for the

IT life cycle

Page 13: IBM Global Financing

© 2011 IBM Corporation

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

Align costs with expected benefits to better predict your

return on investment and accelerate project approvals

Improve budget predictability by making regular monthly

payments

Extract more value out of existing equipment to save

funds for new investments

Support

for the

IT life cycle Plan

Acquire

Manage

Retire

Page 14: IBM Global Financing

© 2011 IBM Corporation

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

Preserve capital with competitive loan rates for software and

services

Cut costs even further by using IBM-Certified Pre-owned

equipment, at significant savings over the original price

Support

for the

IT life cycle Plan

Acquire

Manage

Retire

1 Represents a range of net present value savings achieved on a 36-month FMV lease for IBM hardware for a ―best‖ credit customer.

Page 15: IBM Global Financing

© 2011 IBM Corporation

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

technology with minimal disruption

Refresh your technology to reduce IT obsolescence using

fair market value leases

Use competitively priced software loans to add new

licenses or upgrades

Support

for the

IT life cycle Plan

Acquire

Manage

Retire

Page 16: IBM Global Financing

© 2011 IBM Corporation

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

services from IBM

Return leased equipment* with no disposal or resale

concerns

Support

for the

IT life cycle Plan

Acquire

Manage

Retire

* Refers to equipment on an FMV lease

Page 17: IBM Global Financing

© 2011 IBM Corporation

Support for your vision

IBM Global Financing delivers the IT financial expertise and capabilities you need today to support your vision for tomorrow

We are well positioned to assist you with not only financing but also IT life-cycle management challenges

We can help accelerate the implementation of innovative solutions or projects such as cloud computing or business analytics

Page 18: IBM Global Financing

© 2011 IBM Corporation

IBM Global Financing key offerings

Hardware financing

Software financing

Services financing

Financing for midsize businesses

Certified Pre-owned equipment

Global Asset Recovery Services

Page 19: IBM Global Financing

© 2011 IBM Corporation

Returning assets Parts and machines

Warehouse and fulfillment

Processing and refurbishment of machines

Harvesting of parts

IBM sales channels IBM sales force, Business Partners and the ibm.com®

website

Machines and parts Packaged for sale

Scrap vendors Excess and obsolete parts

90.2 percent of the units processed were readied for resale and reuse while the other 9.8 percent were sent for scrapping

The landfill plus incineration disposal rate continued to decline to 0.68 percent

Global Asset Recovery Services has operation sites in more than 55 countries

Global Asset Recovery Services

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.

Page 20: IBM Global Financing

© 2011 IBM Corporation

IBM Global Financing versus financing providers

Other IT companies

Generally can’t match the depth and breadth of

IBM’s IT portfolio and IBM Global Financing’s scope,

experience and expertise

Often must use third-party finance providers

Traditional banks

Generally lack expertise in technology financing

Tend to be limited to the acquisition phase of IT life

cycle

Often have limited scope to exploit residual value of

financed equipment

Rarely serve the full needs of IT life cycle

By and large require restrictive loan covenants and

end-of-lease options

Offer no equipment recycling or disposal

IBM Global Financing

More than 30 years of experience as an asset-

based lender

Optimal understanding of IT across businesses

of all sizes and virtually all industries

Global client financing and asset recovery reach

Comprehensive financing portfolio to address

needs across the IT life cycle

Competitive rates, terms and conditions

designed to be easy to understand, and flexible

end-of-lease options

Based on our expertise and market knowledge,

we are able to take strong residual value

positions with respect to hardware, resulting in

very competitive rates for our FMV lease

offerings

Integration of financing into IBM’s solutions

Page 21: IBM Global Financing

© 2011 IBM Corporation

Why IBM Global Financing?

Competitive

rates

The world’s

largest IT

financier with

more than

US$34.6B in

assets

More than 30

years of IT

financing

experience

Virtually

unmatched

capabilities for

supporting the

IT life cycle

Serving global

enterprises,

with offices

in more than

55 countries

Page 22: IBM Global Financing

© 2011 IBM Corporation

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.

Page 23: IBM Global Financing

© 2011 IBM Corporation

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.