Why Finance IT Solutions for Analytics – a Quantitative Assessment

Published by: Srini Chari

The speed and scope of the business decision-making process is growing because of several emerging technology trends in Cloud, Analytics, Social, Mobile and the Internet of Things (IoT). Of these intertwined trends, Analytics is a game-changing business opportunity. With successful Analytics solutions, companies can deliver exceptional customer experience, enhance marketing effectiveness, increase operational efficiencies, reduce financial risks, improve product quality and reliability, etc. But these businesses are also challenged to make a compelling financial business case and manage the higher than normal risks and rewards inherent in their Analytics investments. Financing is an effective way to do this.
With financing, companies can conserve cash, get early access to new technologies, refine precise solution needs and stage investments before committing large capital outlays, exit unprofitable projects and minimize losses, and economically upgrade to the most current hardware without worrying about outdated technologies. Financing also allows clients to better align their cash outflows with benefits as they progress on their Analytics journey from descriptive to predictive to prescriptive and cognitive computing.
 

As the world’s largest captive information technology (IT) financier, IBM Global Financing provides a simple single financing solution with necessary funding approved upfront for IBM and appropriate non-IBM components. Cash outlays can be matched to benefits and specific milestones with attractive interest-rate protection. IBM Global Financing also provides asset disposition solutions and refurbished equipment to help clients with environmental and other corporate responsibilities. IBM Global Financing is an excellent choice for financing Analytics initiatives.

 

The three year business case analysis presented in this paper compares typical IBM Global Financing with the alternative of paying upfront for three Analytics solution sizes and investments – small, medium and large. The quantitative model incorporates scaling factors for lower failure risks and greater rewards in later years as the solution succeeds and matures. Unsuccessful projects contribute to sunk costs which are smaller with Financing even when early termination costs are taken into account.
 

These reduced sunk costs along with other attractive benefits of IBM Global Financing over Upfront Payments contribute to IBM Global Financing’s much higher (2-3 times) Internal Rate of Return (IRR) and lower (by 5-20 percent) Payback Period reported in this paper. Consequently, with IBM Global Financing clients can build a more compelling financial business case for their investment and improve their risk-reward profiles as they progress on their Analytics journey. IBM Global Financing is a very effective way to close a business case for investing in Analytics.

The full paper is on

Why_Finance_IT_Analytics_November_2015

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