Quantifying the Value of Financing IT Analytics Solutions

Published by: Ravi Shankar

The speed and scope of the business decision-making process is growing because of several emerging technology trends in Cloud, Analytics, Social, Mobile, the Internet of Things (IoT) and Artificial Intelligence/Machine Learning (AI/ML). Of these intertwined trends, Analytics is a critical game-changing business opportunity with AI/ML experiencing significant growth. 


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projects for a fee and minimize losses and economically upgrade to the most current hardware without worrying about outdated technologies.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 including AI/ML.


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 the financial metrics for an IBM Analytics implementation project with and without IBM Global Financing 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 could be smaller with Financing even when early termination costs (only for some hardware) are considered. The IT Solution Value Predictor especially developed for IBM Global Financing by Cabot Partners automates the application of this model.


The analysis makes a compelling case for clients to choose IBM Global Financing for Analytics project implementations. The Payback Period (PP) is 2 to 4 times lower, the Internal Rate of Return (IRR) is 4 to 12 times better and the Return on Investment (ROI) is about 67% to 107% higher with IBM Global Financing.

For more details please see https://cabotpartners.com/wp-content/uploads/2018/10/Why-finance-IT-Analytics-October-2018.pdf


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