Four key financial decisions to factor into your next IT acquisition

Maintaining your competitive advantage often requires tapping into the latest technologies. However, there’s much more involved than just determining if your technology solution will address your business goals and deliver the expected value.You’ll also need to understand the financial implications of your choice to mitigate the risks.

How do you evaluate those risks so you can be sure you’re making the right choices? Start with four decision points:

1. Return on investment. Will your new solution deliver a sufficient return on investment to pay for itself? And when can you expect to realize that return? If you’re acquiring an analytics solution so you can better understand customers and create more targeted ad campaigns, you need to gauge how quickly you’ll start seeing increased revenues.

2. CapEx versus OpEx spending. You might want to classify a new solution either as a capital expenditure or an operating expenditure for a variety of reasons. For example, in some industries, organizations need to sustain certain asset levels to qualify for government subsidies or maintain their regulatory status. Those organizations might want IT assets to be capitalized. In other fields, organizations might be trying to lighten their asset load and instead use an OpEx approach to spending. Understanding the various options for how a new solution can be consumed and paid for can help you find the right place for that solution on your balance sheet.

3. Budget utilization. Is your team paying for the new technology? And do you have sufficient budget remaining to pay for the solution in this quarter? Or this year? Even if you have the budget now, you might decide to spread out payments over several quarters so you don’t use up your entire allotment for new IT solutions.

4. Cash flow. If you pay in full for your new solution, how will it affect your cash flow for the next six months? When you’re making a significant investment, your treasury team might prefer to make payments over several years rather than restrict cash flow now. But of course, even if you decide to spread out payments, you will still need to anticipate how those payments will affect cash flow in the years to come.

Streamline financial decisions with IBM

IBM Global Financing can help you navigate these and other potentially complex decisions for your new software, hardware and services solutions. Our goal is to get your financial teams involved early in your solution evaluation process, so you can make technical decisions with all the facts at your fingertips.

We’re here to help you accelerate your financial decision-making. And we can provide customized financing solutions and consulting services, such as when you have complex solutions from multiple vendors that might span several consumption and deployment models.

There’s no doubt that technology will continue to play a key role in helping organizations stay ahead of the competition. With a thorough assessment of your financial options, you can make decisions that are right for your business goals and your bottom line.