Financing Your
Lifecycle Management
Presenter Name
Date
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© 2006 Cisco Systems, Inc. All rights reserved.
Cisco Confidential
1
Agenda
The Cisco Capital Difference
Equipment Lifespan
Equipment Lifecycle Management
Financing and Cisco Capital Improve
Lifecycle Management
Summary
Presentation_ID
© 2006 Cisco Systems, Inc. All rights reserved.
Cisco Confidential
2
The Cisco Capital Difference
Wholly-owned Cisco subsidiary
since 1996
The captive and leader in Cisco
end-to-end financial services
Integrated with the Cisco
business strategy
Our Vision
To enable Cisco customers
to acquire, deploy, protect
and refresh technology
investments with creative
and competitive financing
solutions that help maximise
cash flow and profitability.
Aligned with Cisco technology innovation
Shared sense of urgency, flexibility
Alignment of economic objectives
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© 2006 Cisco Systems, Inc. All rights reserved.
Cisco Confidential
3
Market Trend
Lifespan of Networking Equipment
The industry standard lifespan of network equipment is 3 - 5 years
– Yankee Group
Forrester poll of 441 organisations with 100+ employees:
- 87% refreshed performance network equipment between 1 - 4 years
- 76% replaced transport equipment in that same time span
Organisations that established 3-year lifecycles and dynamic
management models realised lower average deployment and retirement
costs – IDC
Gartner modelling suggests optimal refresh lies between 3½ - 4½ years,
versus the average 5 - 7 years, to maximise depreciation, price erosion
and functionality
Shorter IT equipment lifecycles combined with disciplined technology
management practices can reduce IT operating expenses by 20.5% –
IDC
Presentation_ID
C97-473889_00
© 2008
2006 Cisco Systems, Inc. All rights reserved.
Cisco Confidential
4
Factors Affecting Equipment Purchase

Changing business dynamics require more functionality
Markets, customer needs, competition

Replace existing equipment
Age, reliability, interoperability, costly to maintain
Optimal refresh is most likely between
three to four years
Year 8
Year 7
Year 6
Optimal Refresh Point
Year 5
Timing of Optimal Refresh
Year 4
Year 3
Year 2
Depreciation
3 Yrs
Period (Yrs)
4 Yrs
5 Yrs
Baseline Price Erosion and Conservative
(Zero) Functionality Impact
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© 2006 Cisco Systems, Inc. All rights reserved.
Cisco Confidential
Aggressive Price Erosion and
Aggressive Functionality Impact
5
Equipment Lifecycle
Continuous Cycle Required to Meet
Business Needs
Mandatory
Complexityupgrades
of
Acquiring
Gettingwith
technology
your newwith
increase
decommissioning
Managing
and
to
solution
meet business
uplengths
andneeds
deployment
disposal
compliant
to
servicing
equipment…
and
running
stay
innovative
and
environment
business
and
needs
continue
privacy regulations
or change
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© 2006 Cisco Systems, Inc. All rights reserved.
Cisco Confidential
6
Shorter Lifecycles & Proactive Management
Lowers Costs and Improves Productivity
Leading analysts confirm:
“Organisations that established 3-year lifecycles…realised lower
average deployment and retirement costs.”
“A tightly managed IT environment with consistent life-cycle
analysis that supports a disciplined equipment renewal process
will produce better and more consistent IT functionality at lower
total cost across multiple generations of IT equipment.”
“IT leaders strive to balance the ‘capital / labour’ dilemma and risk
a ‘buy once, fix forever’ model that wastes skills and resources
that could be applied to higher-return initiatives.”
“Shorter IT equipment lifecycles combined with disciplined
technology management practices can reduce IT operating
expenses by 20.5%.”
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© 2006 Cisco Systems, Inc. All rights reserved.
Cisco Confidential
7
Adopting the Latest Technology can
Lower Capital Expenses (CAPEX)
Integrated Services Router
Overlay Appliances
Router
Switch
Wireless LAN
WAN/App Optimisation
v
Security Appliance
Voice Appliance
Cisco ISR 3845 with integrated
Security, Voice, Wireless, Video,
WAN Optimisation and Switch
CAPEX savings between 5 - 30%
→ Buying individual projects
$50k
Device 7
$40k
$30k
$20k
$10k
CISCO 3845
NM-ESW
IOS FW
CME
NM-WLC
NM-WAAS
Integrated
Presentation_ID
drives up initial outlays
by 5-30%
$1500
→ Multiple deployment costs
$1000
Device 6
Device 5
Device 4
Device 3
Device 2
Device 1
Appliance
© 2006 Cisco Systems, Inc. All rights reserved.
for additional technology
→ Lengthy recertification for
new products
Cisco Confidential
$500
ISR
Deployment
Integrated
Installation
Four
Installation
Three
Installation
Two
Installation
One
Appliance
8
Impact of Ongoing Maintenance & Ops
Costs for Equipment
Total Cost of Ownership (TCO) analysis on previous ISR scenario
$80,000
$70,000
Direct & Indirect Costs
Revenue Loss
$60,000
Employee Productivity
Over 70%
OPEX
Reduction!
$50,000
$40,000
$30,000
Unplanned Downtime Losses
Planned Downtime Losses
Maintenance Contracts
$20,000
Facilities (Space,
Power, Cooling)
Implementation Costs
$10,000
NMS Costs
$0
Competitive Overlay Appliances
Cisco Integrated Services Router
For modern IT platforms 30% of total cost is acquiring the equipment, 70% is for labour and
services to configure, maintain, upgrade, reconfigure and, ultimately, decommission - IDC
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© 2006 Cisco Systems, Inc. All rights reserved.
Cisco Confidential
Chart Source: Cisco 9
Market Trend
Use of Financing to Acquire and Manage
Technology Lifecycles
The most important consideration in evaluating leasing and
financing options is that they provide flexibility in establishing a
lifecycle management plan. – IDC
Financing is used to achieve a 3-4 year equipment refresh lifecycle
instead of being locked into a 5-year depreciation schedule that is
longer than the equipment’s useful life. – IDC
4 out of 5 US companies use financing to acquire equipment. – ELFA
Financing provides options for funding equipment acquisition and
as a means to systematically renew technology assets and
maintain predictable budgets. – IDC
By not integrating operational cost/ performance data with lifecycle
replacement planning and lease-v-buy capital analysis, organisations
may be incurring 20.5% higher annual costs than necessary to
acquire, manage and decommission their IT equipment. – IDC
Presentation_ID
C97-473889_00
© 2008
2006 Cisco Systems, Inc. All rights reserved.
Cisco Confidential
10
Financing Technology Can Alleviate
Many CxO Concerns
Align IT priorities with business
initiatives
Maximise constrained budgets
Assure the success of IT projects
Allow for operating flexibility and
technology refresh
Proactively manage equipment
lifecycles
Effectively acquire technology and
support business goals
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© 2006 Cisco Systems, Inc. All rights reserved.
Cisco Confidential
11
Financing With Cisco Capital
Can Make a Difference
 Improve and proactively manage equipment
lifecycles
 Customise for best economics and useful life
scenario
 End-to-end financing
 Flexible terms and options
 Aligned with Cisco innovation and technology
lifecycle
 Lower the total solution cost
The decision is not only
Presentation_ID
© 2006 Cisco Systems, Inc. All rights reserved.
Cisco Confidential
what to buy,
but how to buy.
12
Financing with Cisco Capital Improves
Management of Equipment Lifecycles
-Align
costservices
with
useful
-Maximise
budgets
-Combine
-Proper
-Flexibledisposal
refresh
equipment
life into
-Conserve
and
-Save
costscash
of
andequipment
upgrade
-Payment
options
to
-Preserve
credit
lines
one
lease
decommission
options
maximise
business
-Meet
business
needs
-Lock
in
pricing
for
-Reduction
of landfills
-Adapt
as
needs
benefits
(deferral,
now
multiple
-Simplicity
of return
changeyears
seasonal, etc.)
Presentation_ID
© 2006 Cisco Systems, Inc. All rights reserved.
Cisco Confidential
13
Total Solution
For One Low, Predictable Payment
Cisco Capital combines product, maintenance, professional
services and complimentary third party products into one lease.
Cisco Hardware/ Software
3-5 Year Lease
All Cisco HW/ SW
Cisco Maintenance
(HW, SW)
3-yrs of Maintenance
Single
Lease
Payment
Professional Service
Professional Services
(via VAR)
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© 2006 Cisco Systems, Inc. All rights reserved.
Cisco Confidential
Third Party Products
14
The smarter way to acquire your technology solution
Finance your Cisco solution
and benefit from:
Finance with Cisco Capital
and benefit from:
Cash flow conservation
Spread costs over time, preserve
credit and avoid the need for cash
investment
Lower costs
Take advantage of competitive rates
and residual values which reduce total
cost of ownership
Business focus
Remove the burden of equipment
ownership and disposal
Equipment lifecycle management
Gain from flexible upgrade and
migration options and easy equipment
disposal
One solution, predictable
payments
Combine hardware, software and
services into one financial
framework.
More Cisco expertise.
More competitive financing.
Maximum flexibility
Choose payment terms, lengths and
End of Lease options including return
or outright purchase.
Find out how Cisco Capital can help you maximise
the benefits of your financing solution, visit our
website:
www.cisco.com/go/capital_europe.com
*Usual
Cisco Terms ©and
Conditions
apply,
subject
to credit approval,
not available in all countries.
Presentation_ID
2006
Cisco Systems,
Inc. All
rights reserved.
Cisco Confidential
15
Summary
Optimal refresh = shorter lifespan
Proactive lifecycle management reduces total cost of
ownership and OPEX
Successful lifecycle management keeps technology
current and can reduce CAPEX
Financing can better balance capital and expense
budgets
Financing provides flexibility required to establish a
successful lifecycle management process
Cisco Capital offers the most competitive financing for
Cisco solutions
Thank you
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© 2006 Cisco Systems, Inc. All rights reserved.
Cisco Confidential
16
To find out how Cisco Capital can help you maximise
the benefits of your financing solution, visit our
website: www.cisco.com/go/capital_europe
More Cisco expertise.
More competitive financing.
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