© 2009 ibm corporation building a smarter planet with a dynamic infrastructure 0 creating a smarter...

1 © 2009 IBM Corporation

Building a smarter planet with a dynamic infrastructure

Creating a Smarter Funding and Asset Recovery Strategy for a Dynamic Infrastructure

IBM Global FinancingFebruary 2009



The 2008 legacy in today’s credit markets: lack of liquidity

25 US banks and dozens more across the world failed during 2008. The IMF had to rescue 6 country economies.

On average, stocks lost 42% of their value worldwide, erasing almost $30 trillion in market value.

Distrust in the financing system deepened after various alleged frauds.

In 2008, US loans dropped 55% from $1.69 trillion to $764 billion.

In 2009, 10% of companies will face liquidity issues.

Financial markets turmoil

Fraud issues

Stock marketvolatility

As a result, credit markets continue to conserve cash



Today’s marketplace demands dynamic and new funding sources

Need to conserve cash– strategic growth investments– shrinking capital budgets– credit lines used for core business

needs Do more with less:

– demonstrate rapid ROI– reduce and manage costs– optimize TCO– improve existing asset utilization

Respond rapidly to marketplace shifts

– grow capacity– improve availability and service levels– consolidate platforms



Today, funding a dynamic infrastructure requires creativity and faster “time to value”

Costs are heaviest at the front end of a project, while benefits do not fully accrue until the project is implemented

When the project is financed, replacing up-front costs with payments over time, costs and benefits track much more closely

SW Licence

Maintenance & Tech support

Services

ROI

$ $ $

Years Years Years

Phase I

Phase II

Phase III

Year 1

Year 1

Year 1

Year 2

Year 3

ROI

Major cost / returnmismatch

Improved cost / return alignment

Year 1 Year 2 Year 3

Phases I - III

ROI

Costs more closely aligned

to returns

BAU Term Financing example 1 IBM Project FinancingTM example

Year 1 Year 2Year 3



IBM Global Financing can help address Dynamic Infrastructure needs

Obtain access to capital – conserve cash, credit qualified clients can overcome today’s economic challenges with fixed rate financing

Reduce costs – lower IT acquisition costs and improve overall TCO with a programmatic IT refresh strategy based on leasing

Improve Service levels – customized, flexible financing structures to rapidly adapt to IT priorities while matching costs to benefits

Manage risk – minimize IT obsolescence, project and financial risk, protect data, help ensure safe & secure asset disposal

Act with Speed – accelerate project implementation, obtain capacity without impacting budget; consolidate funding for multi-vendor projects

Optimize your IT Lifecycle – end to end support for planning, acquiring, managing and retiring your IT assets



There are a number of funding and asset disposal considerations

• Minimize project risk• Reduce technology

obsolescence risk• Reduce asset

disposal risk• Protect sensitive data

• Accelerate projects; achieve rapid ROI

• Add capacity with minimum downtime and little impact to budget

• Lower IT acquisition costs

• Maximize IT investments to lower TCO



That IBM Global Financing can help address

• FMV leases - 3 yr Technology Refresh

• Asset Disposal Solutions

• Disk Overwrite Services

• Project Financing• Hybrid migrations to

minimize downtime• Customer Centre for

asset management• Mid-lease upgrades

for little impact to budget

• Access to capital• Programmatic IT refresh

to improve TCO• FMV leases• IBM Certified used

equipment



IT lifecycle strategy considerations in a dynamic Infrastructure

How can I add capacity without impacting my budget?

How can I add capacity without impacting my budget?

How can I simplify billing and reduce costs for multi-vendor projects?

How can I simplify billing and reduce costs for multi-vendor projects?

How do I reduce project and financial risk?

How do I reduce project and financial risk?

How do I protect sensitive data?

How do I protect sensitive data?

What is the lowest cost funding option, yet delivers rapid ROI?

What is the lowest cost funding option, yet delivers rapid ROI?

Do my existing assets have any value to fund new investments?

Do my existing assets have any value to fund new investments?

Plan Retire

Acquire Manage

How do I obtain the solution I need within budget?

How do I obtain the solution I need within budget?

How do I safely dispose of end of life assets?

How do I safely dispose of end of life assets?



Adopting an IT refresh strategy can help support your Dynamic Infrastructure requirements

Help meet capacity needs

while controlling costs

Reduce IT obsolescence

risk Reduce project and financial

risk

Help reduce floor space & energy requirements

Reduce asset disposal risk

Protect sensitive data

Maximum flexibility to meet dynamic infrastructure imperatives



Client Results - Gwinnett County, an IDC Buyer Case Study*

Challenge Large population growth, increased demand for county services by the 14

towns that make up the county IT organization strained to meet computing requirements; data center

transformation needed Limited county budget with competing non-IT projects; unpredictable

funding process Owned equipment disposal required open bid process for sale and county

resources for data removal and decommissioning at little financial return

Solution Four phase migration technology migration from IBM z9 mainframe to

distributed Power platform FMV leases bundled with third party software and hardware maintenance Established four year technology refresh to minimize costs and stay within

annual budget

Results Achieved technology refresh while remaining within budget; predictable

payments and yearly budgeting helped avoid additional county approvals for incremental funding

FMV lease structure allowed County to easily return assets and avoid equipment disposal concerns

*IDC, Gwinnett County Enables IT Change with Structured Financial Solutions, Doc # 205725, February 2007*IDC, Gwinnett County Enables IT Change with Structured Financial Solutions, Doc # 205725, February 2007



Regional Refinery – US

Client results

Although the bank is owned by 71 of the largest financing institutions in the world, the client chose IBM Global Financing for its ability to construct a finance deal:

– That matched cash flow to project benefits.

– With fixed interest rates over the period.

– That enabled speed of implementation and flexibility in the funding arrangements.

– That provided certainty of facility funding and budgeted payments.

– That gave it flexibility and control over service.

Ability to provide – the right information at the right time in the right place – to improve patient care.

Verified IT cost savings of more than 20%; estimated savings over the course of the transformation period will conservatively range from $18 to 22 million.

Major increase in efficiency through server consolidation and virtualization.

Increased cost predictability through IBM Open Infrastructure Offering (OIO) financing model.

Increased flexibility to grow systems and add new technologies by virtue of open systems support.

Large population growth, increased demand for county services.

IT organization strained to meet computing requirements; data center transformation needed.

Limited county budget with competing non-IT projects; unpredictable funding process.

Established four year technology refresh to minimize costs and stay within annual budget.

Achieved technology refresh while remaining within budget. FMV leases with third party software and hardware maintenance allowed County to easily return assets and avoid equipment disposal concerns.

By implementing its new open source solution from IBM, the company realized:

– Infrastructure simplification.

– Cost reduction.– Technology refresh.– Competitive

replacement of its previous environment.

– Combined with services from the IBM Global Technology Services team and financing from IBM Global Financing, the engagement offers a comprehensive single-source solution.

Major Bank – UK

Univ. of Pittsburgh Medical Center –

US

Gwinnett County - US



IBM Global Financing offerings & capabilities.

IBM GLOBAL FINANCING OFFERINGS

Hardware Financing With facilitated mid-lease technology

upgrade and end-of lease options.Software and Services Financing Turning up-front costs into affordable

monthly payments, control expenses and match cash flow to business benefits.

Conserve cash for other strategic initiatives.

IBM Project Financing A customized, all inclusive

financial package for services, infrastructure solutions and business transformation projects.

IBM LEADERSHIP

We provide capabilities and offerings that address each phase of the IT lifecycle in more than 55 countries across the globe.

IBM Global Financing is a stable, proven partner that has been in the IT financing business more than 25 years and has financed over US $36 billion in IT assets for our clients in each of the last three years.

IBM's Global Asset Recovery Services helps ensure that end-of-lease and client-owned IT equipment is refurbished, resold, disassembled and sold as parts, used for repair and maintenance work or scrapped.

Over the past three years, clients have signed up to have over 2.1 million of their end-of-life assets disposed of through the Asset Recovery Solutions (ARS) offering.

Asset Recovery Solutions For asset disposal (recycling)

and disk data overwrite services. Customer Center An IT asset management tool.IBM Certified Used Equipment



IBM Global Financing – a strategic Dynamic Infrastructure enabler

Access to capital – conserve cash, credit qualified customers can overcome

today’s economic challenges with fixed rate financing

Reduced costs – lower IT acquisition costs and improve overall TCO with a

programmatic IT refresh strategy based on leasing

Managed risk – minimize IT obsolescence, project and financial risk, ensure

safe & secure asset disposal

Speed – accelerate project implementation, obtain capacity without

impacting budget; consolidate funding for multi-vendor projects

Improved service levels– customized, flexible financing structures to rapidly adapt to

IT priorities while matching costs to benefits

Let us help you build the dynamic infrastructure you need, rather than the data center or IT infrastructure you can afford

Let us help you build the dynamic infrastructure you need, rather than the data center or IT infrastructure you can afford



Backup



Planning your dynamic infrastructure

Find the optimal funding solution for a business or infrastructure project

Undertake a large project with multiple vendors and partners

Work within available budget and timing…

For clients that need to… IBM Global Financing can provide…

Fixed rate funding to credit qualified clients in a tight credit market

Sale/leaseback capabilities to generate cash from owned assets to fund new projects

Asset disposal for end of life owned assets Customized financing structures to meet ROI

hurdles

That can help clients…

Better manage the planning process for transformational projects and technology

Stretch existing budgets Accelerate implementation Improve financial measurements Align costs to project milestones Streamline budgeting



Acquiring your dynamic infrastructure

ensure that their budget addresses ongoing infrastructure requirements

Simplify complex projects with multiple vendors

Obtain capacity for growth or seasonal demands

For clients that need to… IBM Global Financing can provide……

Competitive lease and loan rates for qualified clients

Funding for IBM and non-IBM components, including software and services

IBM Certified Used Equipment when new is not an option

Commercial financing for distributors and resellers

that can help clients…

Lower the cost of technology acquisition Preserve cash Benefit from payment and term

flexibility Consolidate payments and provide

single source financing



Managing your dynamic infrastructure

take control of technology infrastructure Quickly respond to dynamic capacity

needs avoid technology obsolescence Manage special projects and temporary

needs..

For clients that need to.. IBM Global Financing can provide……

Online asset management capabilities and tools

Mid-lease upgrades Asset disposal IBM Certified Used Equipment from

IBM for special projects


Lower total cost of ownership stay in tune with IT strategy, maintain IT service levels by safe, easy

or, if needed, non-disruptive upgrades, stretch budgets, meet temporary

demands on operations or infrastructure.



Retiring your assets

easily dispose of assets in compliance with environmental laws and regulations

Protect sensitive data

For clients that need to.. IBM Global Financing can provide……

secure asset disposal through Asset Recovery Solutions

Disk overwrite (Asset Recovery Solutions – ARS)


Avoid financial, logistical and legal risks, costs and burdens associated with disposing of retired IT assets

Reduce costs Improve service Manage risk

•Reduce technology obsolescence risk•Eliminate asset disposal risk•Protect sensitive data

•Reduce technology obsolescence risk•Eliminate asset disposal risk•Protect sensitive data

•Access to capital at fixed rates•Programmatic IT refresh to lower TCO•IBM Certified Used Equipment

•Access to capital at fixed rates•Programmatic IT refresh to lower TCO•IBM Certified Used Equipment

•Non-disruptive hybrid upgrades •Capacity for little budget impact•Flexible, customized financing for rapid ROI

•Non-disruptive hybrid upgrades •Capacity for little budget impact•Flexible, customized financing for rapid ROI

Throughout the IT lifecycle, IBM Global Financing is uniquely positioned to help you….

Throughout the IT lifecycle, IBM Global Financing is uniquely positioned to help you….



IBM Project Financing

Facilitates project approval, preserves cash flow and credit lines, matches cost outlays with projected benefits and enables self-funding

Covers the entire project and all deliverables, including IBM and non-IBM hardware, software, services and maintenance

Integrates all costs and payments in one place and meets the CFO's requirements through financial structuring capabilities

Improves budget management with predictable costs and accelerates project and ROI benefits

Benefit of project (ROI)

IGF financed payments

Cost of project$

Time

Benefit of project (ROI)Benefit of project (ROI)

IGF financed paymentsIGF financed payments

Cost of projectCost of project$

Time

A customized, all-inclusive financial package for business transformation projects that lets you tailor cost to milestones



IBM Open Infrastructure Offering

ONE multi-year financial agreement to cover your IT requirements

ONE strategic partner to deliver “multi-sourcing” options that address your specific business and IT infrastructure needs

ONE pre-stated price for total infrastructure cost of ownership including price performance improvements, interest rate protection, upgrade pricing for all brands and services within the offering

Achieve a predictable IT expense process which makes budget planning easier

Implement critical, new applications, while maintaining or improving Service Level Agreements within current budget

Streamline procurement and budgeting Achieve better consistency through

standards implementation in IT architecture

Address reliability, scalability and flexibility of IT environment

Gain control over infrastructure complexity

Improve productivity by eliminating time spent on vendor management activities that yield only marginal benefit

Achieve a predictable IT expense process which makes budget planning easier

Implement critical, new applications, while maintaining or improving Service Level Agreements within current budget

Streamline procurement and budgeting Achieve better consistency through

standards implementation in IT architecture

Address reliability, scalability and flexibility of IT environment

Gain control over infrastructure complexity

Improve productivity by eliminating time spent on vendor management activities that yield only marginal benefitIBM can help address these issues with our Open

Infrastructure Offering (OIO).

© 2009 ibm corporation building a smarter planet with a dynamic infrastructure 0 creating a smarter...

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