The SAP Financing Program
by: Jerry Liao
For most Filipinos, financing is a popular way of owning things – popular in owning cars, houses, furniture, gadgets, entertainment systems and others. And if you go to most of the malls, car dealers and appliance stores, you will notice that not only do they offer financing services but they also offer it with zero interest rates. It’s an attractive way to own things combined with easy payment schemes.
We are very used to financing tangible things, but what if we finance something that is intangible – like software and services?
Just recently, SAP Philippines in partnership with Orix Metro launched a program called SAP Financing. SAP Financing offers companies of all sizes an affordable, all-inclusive, and predictable financing option. With SAP Financing, you can plan the overall cost of your IT investment up to four years – enabling you to simplify your budgeting process and lower your TCO.
The new financial services are tailored to meet the specific cash-flow requirements of the customer and conveniently cover the costs of software, hardware, internal and external implementation services and maintenance during project installation for SAP solutions. As a result, you benefit from: competitive finance rates; manageable, fixed monthly payments that cover your entire IT solution; optimized cash flow; more capital available for other strategic investments; accelerated return on your investment; and you get a wide range of innovative products and reliable, customer-driven service from SAP with both financial and technological expertise. With SAP Financing, you gain complete financial transparency in your SAP solution, predictable costs throughout the solution life cycle, and a low-risk option for leveraging the solutions you need for success.
According to Bernadette Astudillo, Senior Vice-President of Orix Metro, clients can avail of a loan starting from as low as Five Hundred Thousand Pesos (P 500,000.00) to as high as Two Hundred Twenty Million pesos (P 220,000,000.00) payable in 12 months to 48 months.
After the presentation, my very first question to Ms. Astudillo was what will happen if the client defaulted. Ms. Astudillo said that regardless of what happens, the company should finish its obligation since it’s an outright loan.
Since SAP described the financing program as a predictable I.T. cost solution, I asked Mr. Patrick Tan, channels manager for SAP Philippines this question: “How predictable is predictable?”
Mr. Tan said that it is hard for them to give a definite amount since application development involves a lot of process including services. That was the answer I was hoping I won’t hear that day but I did. The predictability SAP was referring to was the monthly amortization, and they are exactly right because I.T. cost is very unpredictable because of the very reason given by Mr. Tan.
Now there are three players in this game: the client, SAP and Orix Metro. The clear winner here is SAP since Orix Metro will pay SAP upfront. Orix Metro will shoulder all the risk and will run after the client if in case the client fails to pay. That is why Ms. Astudillo said they will be very careful in approving client applications.
And the most important player is the client. The client will definitely benefit from this program since they don’t need to shell out a big investment.
Problem is, we are talking about software here. Software is an intangible thing. And as software vendors are saying: “your software should grow with your company.” In other words, the real cost of your software will be difficult to determine.
Plus the idea that I have to pay for my software even if am already out of business is frightening. Not that I don’t want to fulfill my obligations but the fact that I went bankrupt despite using your software only means one thing – the software didn’t help my business grow.
I think the real strategy of SAP here is to provide their clients or would be clients another option of buying their software. Yes, anyone can avail of their software through financing but this will give SAP a great opportunity to sell their products “in cash”. SAP will be able to show their clients the savings they will get if in case they opt to pay for the software outright. I may be wrong about this but the mere fact that SAP will be paid in cash by Orix Metro goes to show that the important thing is for SAP to sell their products in cash.
I would dare say that the SAP Financing fits the bigger enterprise but not the Small-Medium Enterprise (SMEs). My philosophy here is if you cannot afford to buy SAP outright, then go and look for something cheaper without sacrificing quality.
Let me just share with you what a friend of mine once told me; he said and I quote “If you have the money to buy a luxury car, I advise you not to buy it. If you really want to own a luxury car, make sure you have the money to buy three (3) luxury cars.” The same can be applied to high-cost software.