Syscap reports leap in IT vendor agreements

02/02/2010

Access to vendor finance now seen as a critical success factor by increasing number of vendors, according to independent IT finance provider Syscap, and some vendors already seeing benefits as investment in IT bucks the recessionary trend. Syscap has recorded a 127 percent leap in the number of exclusive partnership agreements it has signed with IT vendors over the last year. At the end of 2009, Syscap could look to 62 signed partnership agreements with IT vendors, compared to just 49 in the previous 12 months. In total, 2009 has seen the total number of IT vendors working with Syscap to provide finance to their customers break the 800 mark for the first time.

 In the opinion of Syscap, there is now a groundswell of recognition amongst IT vendors that their ability to provide competitively priced financing to their customers is critical to closing sales in a tough economic climate. The company believes that although businesses are now considering upgrading their IT systems in preparation for the economic recovery, purchasing decisions are being held back by their low levels of cash, and their inability to access bank funding.

 Philip White, Chief Executive of Syscap, says, “Demand for both software and hardware is beginning to rebound, and where vendors can offer their customers finance they are finding it easier to close sales. Those vendors who do not provide finance are now beginning to realise that they may be at a competitive disadvantage.”

 Syscap points out that, in the last quarter, investment in IT by UK businesses has bucked the overall trend in capital equipment, which has been falling. Investment in computer hardware in Q3 09 jumped 43 percent to £1.39 billion, from £973 million in Q2 09. Investment in software in Q3 09 increased by a more moderate 11.8 percent to £1.39 billion, from £1.24 billion in Q2 09. Overall business investment fell by 0.6 percent in Q3 09 compared to Q2 09 (source: ONS).

 Philip White adds, “Government statistics confirm our [earlier] forecast that investment in hardware would recover quite strongly. In part, that is because so much hardware investment that would have taken place in Q2 was put on hold. It is hard to say how sustained this recovery in IT investment is going to be but vendors who want to take advantage of this should be offering finance to capture as much of this growth as they can.

“Lack of cash and bank lending amongst their customers is now the single the biggest sales barrier for IT vendors.”

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