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  SOP 97-2 has been replaced by IFRS 15 and ASC 985–606.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

(more…)

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.”

(more…)

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
(more…)
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.

(more…)

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…)

July 30, 2018

Breaking down the Silo Mentality

In retrospect, as a result of working in tandem with many enterprise software vendors (large & small, private & public) across a tenure of more than twenty years, I have found certain unmissable similarities among my clients.  These trends, whether intentional or unintentional, can have a direct effect on bottom line results and specifically on an organization’s ability to be effective.  Often it takes the perspective of an outsider or third party consultant to point out such trends that sometimes become corporate culture.  I find that a company’s ability to quickly identify which trends are accretive to corporate goals as well as trending activities that can break down effectiveness often can be the difference between success and complacency.

For example, how does a silo mentality affect an organization’s ability to execute in a sales capacity? (more…)

June 1, 2018

What? You’re Not Giving Me Your Business After All I’ve Done for You?

How many of us have lost a deal and felt this way? You spent months working on the deal and didn’t get it. You felt like the time you poured into the negotiation should account for something, right? WRONG!

I recently was on a business trip. I was traveling with two women who also work in financial sales.

One of our group members, we will call her Mary, was knee deep in a transaction. She still needed several items from her client including a statement from his accountant and a credit card number for the bank appraisal fee. Mary thought the deal was in the bag. She was already counting her commission dollars. Thursday, Friday and Saturday she spoke to the customer reminding him repeatedly of the documents she needed; however, he was dragging his feet.

On Sunday night Mary received a call from her client. While on speakerphone, she rattled off the information she needed to submit his application. By this time, we all knew what he needed to send. The client interrupted her and said “STOP.” Now, Felicia and I knew from experience what was about to happen. Mary’s client told her he was going with another lender who already approved him. (more…)