By now, most people understand that the credit crisis is encouraging IT vendors or IT lessors to provide business customers additional financing options, such as trade-in credits for aging equipment. Trade-ins are popular with customers, but still not included in many IT solutions due to higher residual value risks associated with the increasing rate of IT obsolescence in x86 environments. Unfortunately, many customers may not be getting proper guidance regarding how to manage their equipment life cycles most efficiently. The good news, however, is that trade-in services help to initiate discussion around proper life cycle planning and management. By understanding IT asset life cycles, IT lessors can provide the highest trade-in credits for aging assets that, in turn, really help businesses remain competitive in their respective industries. Let me explain further.

For the most part, when customers acquire IT equipment, little thought is given to how they plan to retire the asset, say, three-to-five years down the road. Trade-in credits, however, help to initiate a discussion around smart asset retirement. From the very beginning, a business plan is structured in the lease on how to dispose of older, energy-hogging equipment. Customers also appreciate trade-in credits since they can provide a significant cash infusion to their business. This means that new technology can be acquired without major cash outlays --- so even the largest IT projects can get approved and started faster. Moreover, by installing new equipment, customers can lower costs of data center real estate, power, and cooling.

Trade-in services also help to ensure a smoother migration path to new IT environments by allowing customers to dispose of hundreds or thousands of IT assets quickly and responsibly. Many lessors’ trade-in services (like VFS’) apply to all kinds of assets, including PCs, servers, networking, and telecommunication equipment. Plus, customers can more easily initiate energy efficiency projects globally.

Trade-in services include green asset disposition and also take into consideration local regulatory laws for compliant and secure equipment removal. I know, for example, that our VFS Trade-In Program fully integrates trade-in credit and IT asset disposition services for a very compelling value proposition. VFS also includes the pick-up and transportation of IT assets in our leases, providing a tremendous convenience to customers.

Finally, there’s an “outsourcing cost advantage” gained using integrated trade-in and disposition services from IT lessors or IT vendors. The Robert Francis Group (RFG) believes, for example, that companies save 20 percent when they outsource data wiping and other disposition responsibilities to a reputable IT lessor, like VFS. This does not even consider the positive cash flow impact that trade-in credits have on a business. So the combination of both disposition and trade-in services creates a compelling value proposition as well as a smart way for customers to mitigate risks associated with IT asset retirement.

Every IT lessor uses the following adjectives to describe their leases: “creative”, “innovative”, “customized” and “flexible”. Perhaps nothing tests these claims more than the Capacity on Demand (“CoD”) computing model. This is where customers pay for compute/storage capacity incrementally based on day-to-day, or even hour-to-hour, needs. This eliminates unutilized IT resources and staff, which means considerable savings and a more sensible approach to project planning. Very large IT capital expenditures can be avoided altogether, which is particularly valuable for start-ups who have limited lines of credit or for other kinds of businesses operating in risky business climates (e.g., airlines).

CoD computing is here to stay and, increasingly, our customers are requesting financing terms to support this paradigm. The popularity of CoD computing ranges across different industry verticals, such as Application Service Providers (ASPs) and Financial Services, and businesses of all sizes, from Fortune 1000 enterprises to small-to-medium businesses (SMB). ASPs, for example, are requesting flexible lease financing terms and conditions that are congruent with a “pay-as-you-grow” IT philosophy. ASPs also add another challenge to lease finance structuring: meeting the needs for rapid IT growth and unpredictable spikes in demand for IT resources. Just to survive, Wall Street firms must be agile and responsive to unknown “market events” or other global externalities. Other large enterprises find that they must provide rapid provisioning and scalability of IT resources all around the world in order to serve their customers best. SMB customers want to focus on their core, strategic lines of business where they are most competent, and this does not typically include IT. Finally, the uncertain nature of smaller, start-up businesses lends itself well to CoD computing since IT investment risks are mitigated.

Verari Financial Services (VFS) can meet all the new financial challenges posed by CoD computing. Just recently, we proposed a lease financing solution to a premiere ASP that operates multiple data centers in the United States and the United Kingdom. We were able to craft a lease based on their current capacity utilization rate and add capacity incrementally based on their monthly growth projections over a four-year term. VFS leasing was structured granularly so that different kinds of Verari equipment could be added easily to their install base as needed. VFS provided the option to reconfigure hardware components (e.g., memory) within Verari BladeRack 2s as applications change in the future - a huge convenience. Over the next two-to-three years, VFS will provide trade-in credit for older racks so that our customer will be able to refresh (upgrade) to the most energy efficient, densest BladeRack 2 X-Series solution available - an added cost savings! During the technology refresh process, VFS will assume all asset disposition risk by accommodating safe/secure removal of older equipment, and our lease will include professional installation/de-installation services.

I think what our customer appreciated most, though, was that VFS granted credit approval for lease financing in spite of their highly leveraged financial position and today’s difficult credit market. Essentially, VFS made a thoughtful business decision to help underwrite our customer’s business risk since we’re confident that the future is bright for this ASP, and we want to be their trusted, long-term IT and financial partner.

I’m very excited to introduce Verari Financial Services (VFS) --- the new lease financing arm of Verari Systems, Inc. I hope that by offering flexible lease financing alternatives to our customers that VFS will help them to more easily cost-justify and begin the data centers and IT projects of the future! Since this is my first blog, I would like to summarize the VFS program offerings.

VFS is providing one-stop, flexible lease financing solutions for all asset classes. VFS leases, for example, can include hardware, software, and professional services, as well as other kinds of property such as data centers and buildings. VFS provides personalized asset management and asset recovery services, including technology refresh and trade-in credit programs, to help customers manage shortening technology cycles. So I want our customers to take advantage of all the integrated benefits of leasing --- everything from predictable, level monthly payments, to cash conservation, to scheduled technology refreshes, to trade-in credits for older IT assets, to the elimination of obsolescence and disposal risks.

We want to help customers meet their changing business demands by allowing for flexible terms and payment options in our leases. If customers need to keep their equipment longer than first expected, for example, VFS leases can be renewed easily with low cost extensions or purchase. Finally, VFS will dispose of equipment in an environmentally responsible and secure manner, complying with local and federal laws.

•         Very competitive lease rates

•         High residual values built into each lease for lower monthly payments

•         Technology refresh program for smoother shifts to new, more powerful and energy-efficient technology and easier disposition of old technology

–        Easy disposition of old technology

–        New technology uses less power & space and is more reliable & faster

–        Saves $ over IT life cycle; improves staff productivity

–        Greenest way to acquire and retire IT assets

•         Trade-in program that helps reduce stranded IT assets

–        Trade-in credit offered on all vendors’ equipment

–        Excellent trade-in values due to strong remarketing arm

•         Lease financing solutions for all kinds of IT projects, such as data center consolidation

•         Disciplined planning for the entire IT asset life cycle, including safe/secure equipment disposal services

•         Personalized IT asset life cycle management services for a long-term partnership

–        Equipment tracking/reporting

–        Secure/safe equipment disposal in accordance with laws