Cisco this week unveiled a $2.5 billion financing program to help customers buy the technology they need while conserving their cash flow during the pandemic.
Its finance arm, Cisco Capital, will allow customers buying new equipment and services to defer payments for 90 days and then pay just 1 percent of the total contract value every month through the end of 2020. The remaining 95 percent of the contract is deferred to 2021, when they make monthly payments through a multi-year contract.
The deferred payment plan, called the 2020 Business Resiliency Program, will assist customers that need to upgrade and secure their networks and increase data center capacity to handle the surging demand to support remote workers or to shift their business strategies during the COVID-19 crisis, Oliver Tuszik, senior VP of Cisco’s Global Partner Organization, told DCK.
In some cases, enterprises need to invest in new equipment to digitize their business models, such as doctors’ offices that have started offering telehealth services, he said.
“We want to make sure companies have a chance to invest in technology right now and further grow their businesses without struggling with cash flow management,” Tuszik said.
Cisco is the latest enterprise technology company to offer a financing program that allows customers to buy technology now without immediate upfront costs. Hewlett Packard Enterprise last week put together a $2 billion series of programs to help cash-strapped companies buy the hardware, software, and services they need during the pandemic.
HPE’s Payment Relief Program is similar to Cisco’s new program in that customers only have to pay 1 percent of the total contract value each month for the first eight months, while deferring the rest of the payments through a normal 24-month to 60-month contract beginning next year.
To help customers increase cash flow, HPE’s offerings also include the option for customers to sell their data center equipment back to the vendor and lease it, temporarily converting a past large capital expenditure to an incremental operating one.
Analyst Will Townsend of Moor Insights & Strategy said Cisco and HPE’s financing programs are a valuable resource for their customers and partners, as they try to figure out what the short-term and long-term impact of the global coronavirus outbreak will be.
“It’s putting liquidity out there, and it will help companies continue to invest in needed infrastructure,” Townsend, a senior analyst of networking infrastructure, told DCK. “Business continuity is a challenge, given that everyone is working from home. From a networking perspective, it’s going to help drive deeper adoption of things like Wi-Fi 6 as well as SD-WAN.”
Tuszik said the $2.5 billion financing program is the next phase in Cisco’s effort to help customers and partners during the pandemic. The company’s first phase was to help enterprises with free WebEx video conferencing and security tools, including Cisco AnyConnect VPN software.
Cisco said all its solutions are eligible for the new finance program, including hardware, software, and services, as well as five percent of partner-provided services, such as installation. To take advantage of the program, customers must make their purchases by June 25, Tuszik said.
Besides purchasing new equipment, customers can finance the purchase of Cisco certified pre-owned equipment through the Cisco Refresh program, the company said.