October 15, 2019

Plan for Success: Include Finance in Your Project

By now, we all understand the value of cross-functional teams at the office.

Regardless of the project (creating a business plan, solving a supply chain issue, investigating a technology acquisition or sale, etc.), by including a diverse set of coworkers, you will create a team  that can bring different insights and experience from all aspects of the company.  The diversity of marketing, sales, and operations are commonly included in new projects, but don’t forget to include finance!  This is a department that should not be overlooked (but often is!).

Meetings
Source: https://pixabay.com/photos/meeting-business-architect-office-2284501/

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August 15, 2019

Navigating a Path to Value in a Complex Selling Environment

There are several new trends in the market that are having a significant impact on how customers want to buy and pay for new technologies:

  • Accounting changes – under ASC 842 / IFRS 16 for end user/lessee, lease obligations are now on book
  • Migration to the cloud – many customers are in the process of moving or planning to move at least some of their workload to the cloud
  • Utility/usage-based/pay-per-use payment schemes

For customers, there are a lot more nuances to consider than just the traditional CapEx vs. OpEx determination, and how much budget is available. Many customers are operating under great uncertainty regarding the number of workloads in scope, and how quickly to migrate to the cloud.  Meanwhile, savvy customers are also trying to optimize value on every dollar they spend regardless of the type of budget.

Navigation
Photo credit: Pixabay

The implication to technology vendors in this era of increasing complexity is clear: making a successful sale today requires a lot more than just having the best technology at the lowest price.  Vendors who can skillfully combine their technical savvy with the ability to evaluate customer economic and budget constraints in light of the evolving economic requirements are better positioned to increase their batting average, and at the same time gain customers’ trust as a good partner.

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June 28, 2019

Keeping Up with FASB and IASB Topics, Standards, Codifications and Updates

“Accounting is the language of business…” Warren Buffett

It may not be obvious, but it’s critical for sales and other non-accounting professionals to stay current on new accounting standards, including ongoing updates issued by the Financial Accounting Standards Board (FASB) and the International Accounting Standard Board (IASB).  Accounting standards and updates can impact corporate strategy and decision making, including how to best access, use or acquire technology, which is why we pay close attention to accounting.

First, some background on FASB and IASB.  What are these organizations?

The Financial Accounting Standards Board is a private, non-profit organization, standard-setting body whose primary purpose is to establish and improve Generally Accepted Accounting Principles (GAAP) within the United States in the public’s interest.  New standards are issued by topic and number as Accounting Standard Updates (ASU) and then finalized as Accounting Standards Codification (ASC); older standards were issued as Financial Accounting Standards (FAS), Statement of Position (SOP) modifications and few other acronyms, most of which are being superseded by new ASC standards.  All standards are refined and updated on an ongoing basis. (more…)

May 19, 2019

Private and White Label Vendor Finance in a Shifting Market

Significant changes in the environment have provided an opportunity for software vendors to make it easier for customers to acquire their software:

First, software license models are changing, moving from on-premises perpetual licenses to usage-based subscription models.

Vendor objectives are also changing, moving from a focus on upfront revenue recognition to recurring revenue streams.

Software accounting rules are also changing.  SOP 97-2 has been replaced by IFRS 15 and ASC 985–606.

This shifting market has had a marked impact on private label software finance.  Private label financing simply means that the vendor provides the financing directly to their end users.

Changing path
Photo by Kimi Lee at Unsplash

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April 22, 2019

More About Capitalizing Cloud Spend

We’ve received a lot of feedback on our earlier blog on OpEx vs. CapEx treatment for cloud-based technology purchases. And we continue to encounter customers who would prefer to capitalize their cloud technology investments for the reasons mentioned in the blog post (particularly those companies, or executives, who are concerned about EBITDA).  So we’ve been looking at this more closely.

AccountingOne interesting consideration is introduced by some new IFRS (International Financial Reporting Standards) guidelines that took effect at the beginning of 2019. Of particular interest are the changes related to the IFRS 16 standard which say that going forward, virtually all leases must be treated as CapEx. Why this matters has to do with the definition of a “lease.”

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March 1, 2019

New International Lease Standard Impacts Technology Selling

On January 1st, 2019 a new lease accounting standard, IFRS 16, came into effect for all companies that report under the International Financial Reporting Standard.  Under IFRS 16, virtually all leases must be shown on a company’s balance sheet.  This can have an important impact on large technology purchases and to technology vendors who hope to make it easy for customers to buy.  Let’s explain why.

In general, leases have been of two types:  finance leases and operating leases.

Accounting for IFRS (more…)

February 18, 2019

When Presenting Deal Options, Think KIS (with One S)

My colleague, Drew Wright, wrote a piece a couple of years ago invoking both the Gene Simmons novelty-rock band and a reminder that “Keep it Simple Stupid” doesn’t always apply (like when applying discount increments).

For me, when I think about keeping it simple, I remove the last S, because none of us are stupid and keeping it simple can frankly be hard. After all, simplicity can be is the ultimate sophistication.

Too many choices
Too Many Choices
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December 14, 2018

Helping Your Customer Capitalize Cloud-Based Spend

In the course of working with our technology clients and their enterprise sales teams, we’ve noticed an interesting trend in the last six to twelve months.  Increasingly, I.T. buyers are expressing a preference (or sometimes a need) to be able to acquire cloud-based technology as a capital expenditure event rather than as operating spend.  That’s right, the buyer is asking for a CapEx offer vs OpEx.

CalculatorThis is contrary to the pattern of I.T. buyer behavior we’ve seen over the last several years, which has been toward buying technology with operating budget dollars rather than CapEx.  However, a recent pivot toward a desire for spending CapEx dollars shouldn’t be entirely surprising for a number of reasons.

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October 23, 2018

Helping Your Customer Back Into Software License Compliance

We live in a world of increasing complexity. In their quest to create value, enterprise customers continuously test and embrace new technologies, which come with many labels–-digital, analytics, automation, the Internet of Things, machine learning, artificial intelligence, and so on.  Software deployments now involve public clouds, private clouds, hydrid set ups, managed service providers, and/or customers’ premises.  Software licensing metrics may involve users, seats, names servers, geographies, limited timeframes, sublicensing…

As a consequence, use-rights being applied to modern IT environments have some times evolved into complex (and potentially baffling) licensing terms which has made entitlement tracking more difficult.  The risk is now higher that even simple technology refreshes will cause an enterprise to fall out of compliance.

Lock and contract (more…)

September 21, 2018

Vendor Financing 2.0 For Energy Efficiency

Simple is better—Best Practices from the Software Industry

 

“Simplicity is the ultimate sophistication.”  Leonardo da Vinci

“Making the complex simple” is a promise built into the ethos of companies in just about every industry and business imaginable.   What are these companies trying to tell us?

Oracle taught me the benefit of making the complex simple some 20 years ago through their successful vendor financing program.  Oracle Financing had many Fortune 500 clients, who absolutely did not need “financing” from Oracle, however, these clients routinely used Oracle payment plans to enable their transactions. Why?  Because they were simple. (more…)