Hewlett Packard Enterprise has allocated $2 billion of supplemental credit to efforts aimed at easing widespread financial pressures caused by the coronavirus pandemic’s devastating impact on spending and employment.
Administered by the company’s HPE Financial Services group, the fresh funds and an associated set of new programs are designed to help partners keep business flowing despite rampant hesitancy among their clients to spend money in a stalled economy.
“Many of their customers are clearly going through a lot of strain in terms of liquidity and cash flow,” observes Paul Sheeran, vice president of worldwide channel and SMB in HPE Financial Services.
Other leading names in IT, including Ingram Micro, Lenovo, and HP, have introduced similar measures in recent weeks.
Included among HPE’s offerings is a new Payment Relief Program that allows companies to pay 1% of an IT contract’s total value each month for the first eight months of the deal.
“Essentially, we’re allowing customers to acquire what they need now and defer over 90% of the cost of that equipment until 2021, where hopefully we’re all be at a place that is more stable from a financial markets perspective,” says Lee Eberding, global director for channel and SMB sales in HPE Financial Services. “We wanted to give customers the confidence that they could bridge from, at a minimum, where we are today to the 2021 fiscal year.”
After eight months, buyers will pay more traditional monthly installments equaling 3.3% of contract value on average. “We’ll work with the customers to come up with the term and the pricing that’ll make the overall deal work for them,” Eberding says.
All HPE customers, regardless of size, are eligible for the program provided they clear standard lending terms and conditions.
Two additional programs unveiled today seek to help businesses turn equipment they already own into a much-needed source of cash. One, called “accelerated migration,” lets businesses sell products they already own to HPE, and then lease those same assets back for small monthly sums.
“It’s a way of taking IT assets that are sitting on a customer’s balance sheet and injecting cash back to that customer,” Sheeran explains. “We write them a big check, and then they’re going to give us small checks over a long period of time.”
A second program aimed at converting previously deployed infrastructure into cash lets end users sell unneeded hardware through HPE to organizations in the market for affordable “pre-owned” hardware.
“Many of our customers have assets on their balance sheet depreciating away, and we sort of view that as trapped capital,” Sheeran says. Under the new program, he continues, “we would take those assets back, we would reprocess and recycle them in our technology centers, we would make sure obviously the data is erased to industry standards, and we would sell that equipment back to the market and obviously share the proceeds with the customer.”
Typically, he continues, HPE pockets 30% of the sale price and the customer keeps the rest.
Cash-strapped customers in need of new equipment can also browse a significantly larger selection of pre-owned gear returned to HPE at the conclusion of a lease. Businesses that don’t find what they need there can work with HPE Finance to source it from other sellers. “We’re very active in the secondary equipment market,” Eberding says.
Companies with urgent but temporary hardware requirements, including those with employees in sudden need of notebooks and other PCs due to coronavirus-related “stay at home” orders, can now rent pre-owned technology for three to twelve months or new devices for twelve months. Rented equipment is factory-configured to customer specifications, available with warranty, and eligible for HPE Pointnext Services support.
“We’ve done some short-term rentals in the past around data center equipment, but short-term rentals on PCs is a new offer and is obviously very specific to the crisis,” Eberding says.
An additional payment option introduced before the COVID-19 outbreak, called the phased deployment program, allows businesses to acquire a year’s worth of HPE systems now but pay only for the portion of those products they’re using at any given time. A customer who expects to need 10 servers in the next 12 months, for example, could deploy all 10 devices now, but pay only for the two they need today and gradually begin paying for the rest as extra capacity is required.
“The customer doesn’t start making payments on the equipment until they start to use it in production,” Eberding says. “They have 12 months to turn it all on and begin to pay for it.”
Many of HPE’s new financing programs, including the accelerated migration offering and short-term rental plan, bear a strong resemblance to programs announced by HP Inc. last week, mostly because HPE Financial Services has handled both vendors’ credit needs since their split in 2015.
HPE’s $2 billion credit infusion arrives at a time of declining outlays on back office infrastructure due to rising economic anxieties inspired by the coronavirus pandemic. IDC expects server revenues to dip 3.4% and storage system spending to drop 5.5% in 2020.
