1. February 2010 Kay Stephenson Financial Client Executive
Selling to the CFO
February 2010
Kay Stephenson
Financial Client Executive

2. Agenda Financial Markets & the Impact on I/T Selling
Financial Selling as part of the Total Solution
Addressing CFO Priorities
IBM Global Financing Toolkit for Business Partners

3. Changes in the financial markets
Sub-prime meltdown
$Ts global asset write-downs
Loss of liquidity, credit markets conserving cash
Bank/Financial institution failures and acquisitions
Increased corporate defaults especially speculative grades
Increasing default rates on multiple asset classes
Increased number of bankruptcies
Cutbacks in personal & corporate spending
Increased unemployment
Weakened US economy

4. Tightening credit markets
Impact to our clients
Access to capital shrinking
Less credit available in the market, and more restrictions
Costs of external capital rising
Credit lines needed to support core business needs
Pressure on spending
CFO involved in decision-making
Near-term investments must have strong business case
Economic uncertainty
Tightening credit markets
Stock market turmoil
What has not changed:
The future success of any client is still dependent on their ability to invest in meeting their customers’ needs and improving their competitive position

5. What does this mean to I/T sellers?
Understand health of client’s business
Annual reports, analyst reports, company website
Utilize online tools (i.e. Yahoo! Finance, Google Finance,
Not every client is creditworthy
Understand industry dynamics and their position in industry
Validate opportunity with finance team/CFO in addition to the sponsor/line of business exec, know current approval process
Incorporate financial justification (business case) in proposals
Focus on payback and timing of ROI
Translate I/T costs into business value
Helps your sponsor sell internally
Financial Selling is key to providing the TOTAL SOLUTION Selling
Positions you as a trusted business advisor

6. Financial Selling 101 Leading with a Financial Selling Approach
How Financial Selling Changes the Game
Leading with a Financial Selling Approach
What is Financial Selling?
Using financial values, metrics & approaches as a part of the sales process
Relating financial metrics to the client’s business objectives to support your solution
Demonstrating to the client that you understand their business
Helps YOU align I/T costs with BUSINESS VALUE
Allows YOU to discuss the true TOTAL COST of OWNERSHIP of the solution
Enables YOU to overcome client objections and CLOSE THE DEAL
Elevates YOU up the client decision chain
Understand client requirements and funding sources
Engage IGF early
Create a VISION for the potential VALUE
Make TCO the client’s evaluation criteria
Enhance the
Include a monthly payment option in all your proposals
As you move towards a financial selling approach, IGF can work with you to present a value driven proposal. This begins first by understanding what Financial Selling is. In its simplest terms, it is about using financial values and metrics as part of the sales process and relating them to the customer, to show them that you know their business.
Financial selling can help you tie the IT costs to specific business value; using Total Cost of Ownership and ROI analysis which in turn elevates you up the customer decision chain.
How IGF can help – its important to engage IGF early in the sales process. Working with the IGF seller to understand the customer requirements and funding sources and In turn make TCO the customer’s evaluation criteria.
Here are some terms that you will hear during this presentation. Let’s take a moment to become familiar with them:
Return on Investment (ROI)
Calculates expense and quantifies the strategic value of the IT initiative
demonstrates how technology can help an organization achieve it’s objectives
Investment Decision Values include:
Net Present Value (NPV)
Internal Rate of Return (IRR)
Payback/Break-Even (BE)
compares the relative value of competing uses for funds
Total Cost of Ownership (TCO)
Limited to the expense implications of an Information Technology (IT) investment
Primary method used by enterprises try to align IT investment with organizational strategy
Treats technology as a cost center rather than a source of strategic value to the company
Does not compare IT initiatives against other capital expenditures
There are additional terms in the appendix of the presentation that you can reference as well.

7. Addressing the CFO’s priorities
Cash Flow Improvements
Preserve cash
Reduce spending
Risk Avoidance
Operational
Investment
Short-term returns
Shorter payback periods
Realize ROI < 12 months

8. Cash Flow: Preserve Cash
Every source of cash has a cost
Bond placements (underwriting costs, settlement fees)
Stock placements (EPS dilution)
Bank facilities/lines of credit (origination fees, indexed rates, covenants)
Retained earnings (opportunity cost – business growth)
In the current economic environment,
do not assume that your client still wants to pay cash.

9. Cash Flow: Preserve Cash
Most clients are interested in….
Additional source of credit that does not impact current credit lines
Access to low-cost funds, even if they are not interested in leasing
Better terms and greater flexibility than current bank facilities
IBM Global Financing offers credit qualified clients an alternative source of cash at competitive rates,
often below market, with flexible terms
Large Upfront Expenditure
Affordable monthly payments

10. Cash Flow: Reduce Spending
New monthly payment is 5% lower than original lease payment
Est. monthly payment ($)
Lease Term (Months)
Initial 36mo Lease 12 48 36
POWER5+ 570
$6,079 / month* 24 60
Technology Upgrade
New Base Lease
36mo
POWER6 570 MES Upgrade
$6,378 / month*
$271,774
$225,634 $0
$50K
$100K
$150K
$200K
$250K
$300K
POWER6 570
Purchase
Lease
17% savings over purchase
Based on 36 month FMV lease at Best Credit rates
FMV leasing lowers total cost of ownership
Reduces upfront cash investment
Lowest monthly payments
Pay for portion of asset used (IGF takes residual value position)
IGF assumes costs of disposal
Facilitates cost-effective technology upgrades
Mid-lease or End of Lease
Holds or reduces monthly payment
Reduce potential for book losses
Gives I/T Management more control over technology upgrades & refreshes

11. Cash Flow: Reduce Spending Focus on Total Cost of Ownership
Consider price performance & total operating costs
TCO Review usually favors a shorter refresh cycle
FMV Leasing can lower IT acquisition costs by 10-20% over outright purchase
Optimize price performance improvements
Residual value position by lessor
Transfer risk of obsolescence to lessor
Transfer cost for Disposal of Asset
Avoid higher maintenance costs on older equipment
An IT investment discussion that includes TCO can help you get the discussion beyond the initial acquisition costs or away from just delivering the best price. What is the total picture of this investment beyond acquisition? As you may know, acquisition costs represent less than half of the overall total cost of ownership. Here is what some of the leading analysts say:
IDC: “for modern IT platforms, 30% of the total cost is the cost of acquiring the equipment. The balance is for IT labor/services to configure, maintain, upgrade, reconfigure, and ultimately decommission the equipment.”
Forrester: “IT organizations are spending from 70-80% of their total IT budgets on maintenance and ongoing operations”
For clients who typically purchase their IT assets, they have a view of longer useful life for that asset, beyond three years. It is after three years that operating and support costs begin to dramatically increase, actually increasing the total cost of ownership compared to a three year refresh cycle. With FMV leasing, clients pay for the use of the asset, thereby incurring less ongoing cost compared to an owned asset. The three year refresh programmtically gives the client the IBM advances achieved in price performance, power, cooling and space. So, what is the next step in working with clients who view IT assets with a long useful life?
Target Customers:
Stagnant Clients waiting for 5 Yr hardware Useful Life to end
Clients w/in 3-4 Yrs of 5 Yr hardware Useful Life
Questions to Ask Your Client:
Have you considered viewing your assets over a shorter life?
What does your TOTAL COST OF OWNERSHIP look like?
We’d like to discuss refreshing and minimizing the cost to refresh
Potential Objections:
5 Year Depreciation can dictate 5 Year Refresh
Earlier Refresh can cause ‘budget/book loss’ implications with cash clients
How IGF can help
TCO/Lease discussion designed to move client off these objections
Compare monthly lease costs to current maintenance payment on older equipment
Compare “book loss” implications against TCO savings over lease cycle
Propose Sale leaseback and equity upgrades for owned assets
Compare monthly lease costs to current maintenance payment on older assets

12. Risk Avoidance: Operational Risk
Leasing/financing helps client to:
More closely align the costs to the expected benefit
Improve short-term return on investment
Accelerate break-even/payback on a project
Project Costs
Project Benefits
Financed
Payments
Use of deferral
can further
reduce risk

13. Risk Avoidance: Investment Risk0%
20%
40%
60%
80%
100% 1 2 3 4 5
FMV Leasing transfers risk of obsolescence
Rapidly changing technology driving shorter cycles
Asset value drops ~50-75% in first year of ownership
Potential for book losses
FMV leasing transfers risk of proper disposal
Growing legislation surrounding environmental issues and data destruction
IBM Global Financing has experience and expertise to ensure compliance with all environmental legislation
Book Value
Asset Value

14. Return on Investment – Break Even Analysis
ROI analysis compares the costs to the strategic value of the I/T initiative
CFO analytics for comparing the relative value of projects competing for funding
Payback/Break-Even (BE)
Net Present Value (NPV)
Internal Rate of Return (IRR)
Contact your FSE or Channel Rep for assistance on ROI calculations

15. Return on Investment – NPV analysis
Low Rate Financing and FMV leasing enhances the NPV of a project
Assumes FMV lease at Best Credit Rates on hardware, with IBM Global Financing low rate financing on hardware and software
Customer incremental borrowing costs estimated at 9%

16. Return on Investment ROI ROI ROI
ROI analysis compares the costs to the strategic value of the I/T initiative
Net Present Value (NPV)
Internal Rate of Return (IRR)
Payback/Break-Even (BE)
Allows client CFO to compare the relative value of projects competing for use of available funds
Hardware
Services
Major cost / return
mismatch $
Maintenance $ $
ROI
ROI
ROI
Year 1
Year 1
Costs more closely aligned to expected returns
Year 1
Improved cost / return alignment
Phase I
Phase II
Phase III
Year 3
Year 1
Year 2
Year 3
Year 2
Year 3
Phases I - III
Year 1
Year 2
Years
Years
Years
BAU
Term Financing example
IBM Project FinancingTM example

17. Increase your odds of winning with IBM Global Financing!
125% higher odds with IGF working with small clients (<1000 employees)
IBM’s Odds of Winning
36% higher odds with IGF for opportunities over $100K owned by BPs
IGF
37% higher odds with IGF for Power Sys deals, 36% for Storage deals
88% higher odds with IGF for deals that have very long sell cycles
Lose
Win
Study Objectives: Use rigorous statistical analysis to demonstrate that IGF involvement in pursuit of leads causes an increase in IBM’s odds to win.
Approach:
It is not sufficient to simply demonstrate that opportunities with IGF involvement are won with higher odds as compared to opportunities with no IGF involvement, because such a difference can be caused by other factors, for example:
IGF sellers are more likely to get involved in IBM opportunities that have higher odds to win to begin with.
Experienced IBM sellers may be better able to identify and pursue leads that they’ll win and may be more likely to involve IGF sellers in their deals.
Therefore, a technique was used to control the effects of other factors and estimate the “causal effect” of IGF involvement on IBM’s odds to win.
We examined STG opportunities in the USA over the period between 1/1/06 and 3/31/08 and measured their outcome as either a win or a loss.
The analysis considered nearly 600 measurable attributes in determining which opportunities to compare, and, in so doing, compensated for factors that also could have explained why the probability to win certain opportunities tends to be higher or lower than others.
Findings:
IGF involvement was found to cause an increase in IBM’s odds to win certain types of STG leads.
For large opportunities (> $8M), the increase in IBM’s odds to win was estimated at 119% (125% if the client has less than 1000 employees).
The effect tends to be smaller and less robust for smaller opportunities, but still statistically significant. For example, for SMB clients and opportunities over $800K the increase in IBM’s odds to win was estimated at 43%.
For opportunities over $100K owned by business partners the effect was estimated at 36%.
In some types of deals, while odds to win were found to be statistically significantly higher with IGF involvement, the analysis could not assure the differences were caused only by IGF involvement. For example, across all STG leads over $100K, the effect was estimated at 12% and deemed statistically significant, but very sensitive to potential effects due to unknown or un-measurable factors.
2008 IBM Market Intelligence study of STG opportunities found that IGF involvement causes an increase in IBM’s odds of winning
Odds of winning increase 36% for partner sellers
when IBM Global Financing is involved

18. Smarter Financing Toolkit
Low Rate Financing on IBM Hardware & Services
As Low as 0% Software Financing
Deferral Programs
IBM Certified Pre-Owned Equipment

19. Low Rate Financing for IBM Hardware & Services
Below market rates offered to credit qualified clients on IBM products
Financing rates as low as 2.20% in the United States or 0.50% in Canada for eligible hardware
As low as 2.80% in the United States or 2.60% in Canada on eligible Global Business Services
Minimum transaction sizes as low as $5,000
Almost every IBM brand qualifies, from powerful IBM systems and storage to IBM services

20. As Low as 0% Software Financing
Zero percent financing offer for multi-year licensing deals of Lotus Software
IGF Low Rate Software Financing on all IBM SW deals less than $1.5M provides qualified clients with an attractive financing alternative
Assumptions:
Purchase Price = $200,000
Quarterly Payments in Advance
First of the month billing option
Based on 4Q acceptance
Rates will vary based on customer credit rating
Ask your IGF Channel Rep about the Software Cheat Sheet!

21. Deferral Programs
Payment deferrals up to 90 days for Qualified clients
IBM Hardware, including IBM Certified Pre-Owned Equipment
IBM Software and Services
Fair Market Value and Full Payout leases/loans
1-3 month no payments, followed by 36 monthly payments
“No charge” 6 month deferral on select Power systems
Fair Market Value only
7037, 7047, 9111, 9116, 9131 and 9133 only
36 monthly payments following deferral
$25K - $1M deal size
Subject to credit approval

22. IBM Certified Pre-owned Equipment
Fully refurbished and tested to IBM standards
IBM maintenance qualified
90-day quality satisfaction guarantee
With IBM maintenance contract
Wide range of equipment available
Off the shelf or custom-configured
Systems and features at a fraction of the original price
Less stringent credit requirements for purchase or financing
The Future is Green with IBM

23. Reseller Financing Inventory Financing Accounts Receivable Financing
Large Sale Financing
Asset Based Loans
Revolving Credit Lines
45 days free on x Series Products

24. Inventory Financing with IBM Global Financing
Reseller Benefits
Increased Credit Capacity
45 Days free financing on x-Series (paid by IBM)
100% Advance Rates
Online Account Management
Ease of business – credit line available for all suppliers
Flexible Structures – match repayment terms to Accounts Receivable turns
Distributor
2. Ships Product
4. Pays Invoice
1. Issues PO
3. Invoices IBM
Reseller
IBM Global Financing
5. Invoices Reseller
6. Pays Invoice

25. IGF Top Value Propositions in Today’s Economy
Provides alternative source of cash/capital/funding
Provides lower costs of hardware acquisition
Reduces client operational, investment & supplier risks
Improves short-term return on I/T investments
Accelerates the implementation of technology
Leverage IGF

26. Additional Resources

27. Links to more information
IBM Global Financing Offerings
IBM Global Financing Speed Sheet
Financial Selling Education Modules
Planning Rate On-line Calculator
Rapid Online Financing Tool
Winning with Financing Flipbook
C-Suite Selling with IGF Just Got Simpler
Analyst Reports, White Papers & Case Studies