Seeking to offer its partners a wider range of leasing, subscription, and other financing options, HP has tacked three years onto its existing partnership with HPE Financial Services (HPEFS) and forged a new alliance agreement with global financing provider DLL Group.
Both moves are the latest reflections of ongoing efforts by hardware manufacturers to make financing the shift toward services-led business models easier for traditional VARs.
“These two relationships are going to continue to help accelerate and enhance the financing experience with the channel,” says Deborah Baker, HP’s head of worldwide leasing and financing. “That will help our channel partners secure recurring revenue, offer competitive payment options, increase the level of engagement with their customers, and really continue the ability to bundle products and maximize opportunities in the channel.”
It will also help partners satisfy mounting end user demand for subscription-based and consumption-based purchasing options, according to Paul Sheeran, worldwide channel leader for HPE Financial Services. †
“We all want to consume everything as a service in our lives, especially in IT,” he says. “Most if not all of the channel partners we work with [are] moving their customers along that IT consumption journey, and they really need a partner who can help them embed clever financial solutions into their offerings.”
For DLL, a 50-year-old lender with over 1.2 million contracts under management at present, partnering with HP aligns with its own shift from traditional to as-a-service financing.†
“We’ve moved from a business model that was heavily dependent and reliant on data center and software financing to a model which is much more reliant on device, cloud, and service financing,” says Rick Trobman, president of DLL’s Technology Solutions Global Business Unit. “I think that the fit is perfect between what DLL has evolved to in the last number of years and where HP indeed is taking their business right now.”
Offerings available from HPEFS and DLL, which are supplemental to those available from HP’s own financial services group, will cover a wide range of structures to accommodate today’s equally wide range of end user requirements. “It could be a straightforward look at an operating lease over three years, or it could be a subscription model,” Sheeran says.
In some of those deals, customers will remit payment directly to HPEFS or DLL. In others, money will flow to a partner instead. Both HPEFS and DLL will provide training and education to help partners navigate the options available to them, and consultants from both companies will be available to assist partners with especially complex financing arrangements.
“They’ll partner with the channel, and they’ll have the conversations with the end user customer,” Baker says.
Including payment solutions in hardware purchases results in higher transaction sizes, lower discount rates, and thicker margins on average, according to HP statistics. Contractual payment solutions stretching across 72 or 84 months, Baker adds, offer further benefits to partners.
“It creates stickiness for that end user customer with the channel,” she says.
In addition to underwriting new technology purchases, Sheeran notes, HPEFS can also help end users defray those expenses by selling, rather than simply discarding, their existing infrastructure.
“There’s a common belief out there that older technology has no remaining value when it comes to retiring the assets, but that’s just not the case,” he says. “We strive to be experts in helping customers monetize their existing IT assets, and freeing up what I call ‘trapped capital.'”
Last year alone, he continues, HPEFS paid businesses $330 million for legacy systems through its Accelerated Migration and Asset Upcycling Services programs.
According to Baker, HP will add further vendors to its roster of financing partners next year in a bid to provide more local and regional coverage, especially in emerging markets.
HP has offered as-a-service financing since 2016, and has worked this year to give more partners access to that option. The company announced a security-as-a-service program for Windows 10 endpoints that includes real-time antivirus protection, threat isolation technology, and threat analytics this March.
Other major hardware makers have been similarly bullish on subscription-based financing recently. Dell Technologies, for example, rolled out as-a-service purchasing for nearly all of its client and data center products last month.†
In June, meanwhile, HPE itself pledged to make its entire portfolio available on an as-a-service or pay-per-use basis by 2022. Orders for its consumption-priced GreenLake IT-as-a-service platform climbed 39% in the company’s 2019 fiscal year, which concluded in October, with orders through the channel spiking 200% in the same timeframe.
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Fully 87% of organizations have either begun or completed adoption of as-a-service programs, and 75% will move to “full adoption” of as-a-service solutions in less than five years, according to HPE research data published last week
