Rajiv MenonMD , APJ & Greater China Cisco Capital
Vendor financing arms certainly influence an organization's IT purchase decision, given today's tight budgets and demand for flexible payment options. Though a company's CFO plays a key role in the discussion, vendor financing is not just about economics, according to Cisco Capital, the networking vendor's financing arm. It instead shows a great value to the CIO as well, by enabling him to stay out of IT obsolescence.
Cisco Capital has been around for more than 8 years now. Have you seen a recent change in the way your customers approach financing and the way they look at IT spending as a whole?
Rajiv Menon: We have certainly noticed a change. Firstly, financing as an alternative way to pay for the technology that they acquire has become more and more upfront and center in their decisions. In other words, while several years ago, a company might start with identifying what technology they needed, making the decision to purchase it and then figuring out how they will pay for the purchase. Recent researches and our interactions with customers have shown that organizations now want to understand and evaluate their payment options right up front, when they consider the technology and make the decisions. So that is one very important change, which is perhaps related to what has happened in the global economy in the last few years. But we have seen that actually a very large percentage of CIOs or CTOs now report into the CFO. That has become very apparent in several instances. Therefore we're getting engaged very early with customers.
You're right. An increasing number of CIOs now seem to be reporting to their CFOs. But how good a change is that? Do you think a CIO's role is getting diluted in the IT purchase decision-making process?
Menon: We think it is a great change. Even when the percentage of CTOS reporting to CFOs was lower, the reality was that the purse strings are controlled by the CFOs of the organization. Line managers or even CTOs would always have some spending budget, but typically these are relatively small compared to large projects or organization-wide technology deployments. Decision-making around large projects still ended up in the finance organization. We actually find that because CTOs now report to CFO, we are able to get to those conversations much quicker and therefore actually help our customer to deploy those technologies much faster. From a technology stand point, we bring a lot of value to our customers' businesses. When a CFO gets involved, it is easier to have fact-based discussions. We are then able to layer that with what Cisco Capital can do by leveraging Cisco's balance sheet. So I find that it is actually a good change for us.