Despite estimates that software sales will
decline this year, lessors are increasingly adapting their business
models to finance this intangible asset.
Lessors at CeBIT, the international ICT
exhibition held in Hannover earlier this month, told Leasing
Life that demand for software leasing was being driven by the
rising cost of software.
Go deeper with GlobalData
“While we are seeing the relative cost of
hardware decrease, software is continuously becoming more
expensive,” said Bernd Kurzmann, sales manager at BFL Leasing, the
German lessor arm of the VR Leasing group.
As a result, said Kurzmann, BFL Leasing has
seen a hike in SMEs inquiring about financing options for
software.
IBM Global Financing, the captive lessor,
agreed that financing software is becoming more important than
ever.
Christoph Heitjans, IBM GF’s managing director
in Germany, pointed out that IBM’s business model had evolved to
reflect this – indeed, IBM’s share in hardware now accounts for
only 20 percent of sales, against 80 percent for software and
services.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataMeanwhile, Microsoft recently cut the leasing
costs of some of its software suites by 26 percent, in a bid to
retain recession-hit companies.
But in the UK, specialist ICT consultancy
Pierre Audoin Consultants forecast that investment in software and
IT services would fall by 1 percent in 2009.
Although a particularly steep decline is
expected in the retail sector, where demand is forecasted to fall
by 6 percent, the public sector is still hungry for software, with
demand expected to rise by nearly 4 percent.
Richard Holway, a partner at TechMarketView,
and one of the UK’s leading ICT analysts, said he was surprised by
the optimism.
“With customers holding on to their hardware
for longer, they are also not putting in any new software – indeed,
recent sales data shows the market is down by 2-3 percent,” he
added.
Holway also said that he expects the market to
become even more challenging for lessors, as ‘cloud computing’
takes centre stage in the coming years.
Cloud computing is a scalable service where
resources are provided as a service over the internet. Salesforce,
the CRM software, is a good example.
“Over the next 5 to 10 years, a significant
proportion of enterprise software will be delivered in the cloud,
rather than at machines,” said Holway.
Similarly, software as a service (SaaS) is
expected to grow significantly, as businesses choose to buy
pay-as-you-go subscription services, rather than one-size-fits-all
solutions.
Indeed, consultants IDC recently forecasted
that demand for SaaS would grow by up to 40 percent this year,
driven by the harsh economic climate.
“For customers, the major advantage is
scalability, as you can really manage usage levels,” Holway added.
“But for suppliers, it alters revenue models dramatically, as your
revenue becomes somewhat dependent on the fortunes of your
customers.”
