Partner Sales Enablement Guide

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Providing your customers with a financing option at the beginning of

every purchase conversation can help you to meet their business needs

while helping them to make a smarter acquisition. Leveraging financing

can also help you increase the deal size, build a deeper customer

relationship, secure future sales and preserve discount levels.

Grow your business with financing from Cisco Capital

Use this guide to learn why you should care about financing, how to sell financing to

your customers, what it means to your customers, and how to leverage Cisco Capital

to grow your business as part of a complete Cisco solution sale.

To understand the fundamentals of IT financing please refer to the information and

sales resources available at www.ciscocapital.com/partner/apjc

“83% of Australian firms are open to financing.”

IDC Customer Financing Survey 2010

Chinese customers use financing to remain competitive, preserve cash,

immediately acquire and match payments to solution benefits.

Partner

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With financing you can:

Broaden and enhance customer

relationships

Financing helps to align your customer’s IT needs with their financial objectives, allowing you to expand the sales conversation beyond the CIO and Technical Decision Makers (TDMs) to the Financial Decision Makers (FDMs) and CFOs. This enables you to establish a deeper, more strategic, relationship with the customer.

Build creative financing

structures

Flexible and efficient financing structures provide customers with acquisition alternatives that can overcome budget and investment hurdles. When positioned properly, flexible financing from Cisco Capital can also help you to preserve discount.

Grow the size of

your opportunities

Financing gives customers the flexibility to leverage current and future budgets, creating immediate purchasing power. This allows you to upsell the solution and bring future deals forward.

Own the financial

footprint

Your account control increases

significantly when your customers begin financing equipment and services with Cisco Capital. Equipment that is financed

comes with an automatic decision point at the end of the financing term, which gives you the opportunity to proactively propose upgrade and replacement strategies that can accelerate equipment refresh cycles.

Outperform the competition

Nearly four out of five companies use financing for IT acquisitions. Cisco Capital provides the most competitive financing terms and the most flexibility for the financing of Cisco equipment, software and services. Partners gain a distinct competitive advantage over their competitors when they propose the financing rates and residual values Cisco Capital can offer, but many other financiers cannot match, to their customers.

Overcome common

sales objections

Financing can help you overcome two of the most common sales objections: affordability and lack of budget. By presenting a proposal that details a periodic payment plan, you focus the conversation on the technology, not the upfront cost of the solution. And by showing your customer how they can afford to acquire a solution immediately with financing from Cisco Capital, you actually help them cut expenses by retiring obsolete equipment (and the higher maintenance costs on the same) sooner.

“ The value of IT equipment

lies in its usage, not it’s

ownership.”

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Why you should care

Periodic payments are more attractive than

an upfront cash outlay

Focusing the discussion on a lower monthly or quarterly expense instead of a large immediate cash outlay can have remarkable effects on your ability to close the sale. In addition to negating discount pressure, the financing discussion may get your customer thinking about acquiring with an OpEx budget (easier to gain internal approval) instead of a CapEx budget.

Without financing, you could be closing

fewer deals than you should close

You’ve done a great job of explaining the technology capabilities and benefits. Your customer is excited about the solution, but standing between them and the equipment is the price and the financial approval to proceed. If the primary customer objection is a financial objection (price, budget availability, internal finance approval, etc.), speak with Cisco Capital about how to position the cost of the Cisco solution differently so that the deal is not lost.

Financing can be more profitable for you

A number of studies have shown that equipment that is financed refreshes sooner than equipment that is purchased for cash - so your next sale with your existing customer is likely to occur earlier if the deal is financed. Promoting a lifecycle approach to equipment acquisition that includes financing will lead to larger deal sizes, earlier refreshes, and more profit for you.

Financing enables a more strategic sales

approach

When you introduce financing in the early stages of the sales cycle, you are able to determine your customer’s business and financial needs and present solutions that address both their technology and their investment requirements.

Early-stage financing discussions can lead to the involvement of financial decision makers who, when convinced early of the superior ROI of the financed Cisco solution, can be instrumental in gaining future approval for the acquisition.

Financing helps you overcome sales

objections

For specific recommendations on how to use financing to overcome customer objections please see page 7 of this guide.

“ 75% of Indian firms intend to utilize

financing for technology acquisition

over the next 12 months.”

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Financing provides both budget and technology management benefits

to customers, including:

What financing means to your customer

Cash preservation

When a customer decides to finance their IT equipment and services, they avoid making large cash (capital) investments. By spreading the costs over time, they free up capital for other business priorities and investment opportunities.

Budget flexibility

Flexible financing allows customers to leverage current and future budgets and to align payments to either business cash flows or asset usage/benefits.

Operating vs Capital expense

Customers can elect to acquire using on- or off-balance sheet financing. With off– balance sheet financing (FMV or operating leases), the customer pays for the use of the equipment, but the responsibility for the depreciation and disposal of the asset remain with Cisco Capital. Because Cisco Capital makes a residual investment in the Cisco equipment under an operating lease, the monthly cost to the customer is generally lowest with this form of financing. The internal approval process required for operating expenses is often less rigorous than that for capital expenditures.

Accelerated technology adoption

Financing frees customers from their budget barriers enabling them to accelerate the implementation of IT projects - getting what they need sooner - to run their business most effectively. With this freedom they can often

accelerate IT projects that may have been planned to occur over several quarters into the current quarter, and realize the complete technology solution they require now.

Protection against obsolescence

Customers can establish a lifecycle management strategy through financing. Financing agreements can be structured to allow customers to easily upgrade and refresh equipment as needed. This means customers can continuously keep their networks and communications equipment up to date without large spikes in their annual budgets.

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The sale is not just about the technology, it’s about what the technology

can do for the business. All IT investment, whether you are aware of it

or not, requires approval from the CFO organization and your customer

cares about what their CFO cares about. A recent analyst study

highlighted the following as the top CFO concerns:

Customer and CFO care abouts

Effective cost and benefit

management

CFOs want to avoid significant IT investment spikes, improve the ROI/ payback period on technology investment, and reduce expenses.

Budget stability and planning

CFOs want to manage expense spikes and budget gaps and secure predictable costs that are fixed for the contract duration and hedge against inflation and interest rate movements.

Managing cash

CFOs seek to conserve cash and credit lines and to more effectively leverage budgets.

Improvement in financial

performance indicators

CFOs are often measured on Return on Assets (ROA) and are interested in using off-balance sheet financing to improve this and other key financial metrics.

Tax advantages

CFOs want to hear how financing might help to lower their tax burdens.

Earning the trust of the CFO organization requires the ability to provide acquisition options that alleviate risk, improve earnings or financial ratios, avoid book losses, and increase flexibility. Cisco Capital Financial Solutions Managers can help you to speak to and engage with your customer’s financial decision makers to improve the probability of closing the sale.

“ More IT organizations (42%) report to the CFO than the CEO or

any other executive.”

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Financing often provides more benefits to a customer than using cash

to purchase Cisco equipment and services.

The value of ‘Lease over Buy’

Cash purchase 48-Month FMV Lease

Product Price (includes partner margin): $1,000,000 $1,000,000

Monthly Depreciation for 48-months: $20,833 $0 $0

Average Cost-of-Carry per Month: $2,651 $0

Total Monthly Cost: $23,485 $20,408

Effective Total Cost (PV): $1,000,000 $869,000

Savings: $0 $131,000 (13.1%)

You show your customer how they can save a total of $131,000 - or 13% - off the purchase price by choosing to lease with Cisco Capital. In addition, you explain to the customer that the monthly lease payment of $20,408 is considered an operating expense and provides additional balance sheet benefits. At the end of the lease term your customer has several options: return the equipment, buy out the equipment at FMV, keep the equipment and extend the lease or upgrade the equipment on a new lease.

You have succeeded in showing deeper relevance by freeing up budget for your customer to drive additional business needs while addressing their current and future technology requirements.

Why Cisco Capital

As a wholly-owned subsidiary of Cisco, Cisco Capital is in a position to leverage Cisco’s size, efficiency in managing IT assets, and strong balance sheet. This gives your customers greater access to capital and competitive financing rates on Cisco equipment, software and services. Your customers benefit through: competitive residual investments, financing offers that are matched to Cisco’s technology roadmap, and flexibility to structure financing proposals that other financiers would have difficulty in matching. Financing through Cisco Capital allows you to assist your customers in acquiring Cisco equipment in the most cost-effective manner.

56% of Indian firms prefer to

finance with their technology

solution provider.

To look at this in detail, let’s assume a customer is evaluating the acquisition of a Cisco Unified Communications solution. The total price with the customer’s discount is $1M. You are looking to show more strategic relevance to your customer, and gain account control. You encourage the customer to consider financing and compare the benefits of a 48-month FMV lease with Cisco Capital to a cash purchase.

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Including financing as an option in your deals offers many sales and

customer benefits. Cisco Capital will work with you to build flexible and

custom financing structures. Use these steps to help your customers

understand the benefits of financing.

How to sell financing

STEP 1: Timing

Financing can be applied in many different ways to bring additional savings and customer benefits to most deals. It is critical to introduce financing to your customer early in the sales cycle; this gives you the opportunity to learn about the customer’s acquisition process and identify goals and obstacles. This early approach allows you to tailor a custom financing solution to meet the customer’s specific financial metrics and shows that you are taking a strategic approach to their IT acquisition strategy. Leverage financing offers from Cisco Capital to create customer interest (see Cisco Capital offers on page 11).

STEP 2: Qualify: Identify your customer’s

care abouts

There are two main care abouts customers have when evaluating a major technology investment; budget (they either have none, need to stay within current budget, or have profitability goals, etc.) and equipment lifecycle management (frequent upgrades, avoiding obsolescence, etc.).

Determine early in the sales conversation what your customer is trying to achieve with the desired Cisco equipment or service, or both:

+ What are their desired outcomes for the acquisition? + Do they hope to drive savings, create revenue

opportunities or improve their competitive position? + What is the budget for technology in the current year

and outlying years?

By qualifying your customer, you have the opportunity to structure a solution that solves more than just their technical issues.

Script to introduce Cisco Capital:

Did you know you could finance Cisco equipment, software and services through Cisco Capital? Did you know as a captive of Cisco, they can provide the most competitive financing terms and often lower the cost of your overall investment? In fact, as a wholly-owned subsidiary of Cisco, Cisco Capital is uniquely positioned to help you maximize your budgets and make the most efficient use of your capital. A major differentiator for Cisco Capital is that they are not solely measured on profit, like other firms. And being part of the Cisco family they have direct access to Cisco’s products and services as well as a complete understanding of their technology.

This combination allows them to take maximum risk and provide you a more competitive and flexible financing solution. They customize financing that marries your technological and financial goals, helping you to achieve immediate and long term benefits.

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How to sell financing

STEP 3: Position the benefits

Now that you understand whether your customer is concerned about budget, equipment lifecycle management, or both, use the questions below to guide them towards financing as a solution.

Guiding questions — Budget Barrier

+ Mr. Customer, do you finance any equipment? How about your laptops, phones or servers?

+ How much of the equipment has been awarded budget approval?

+ What are the implications of the technology solution not being delivered on time?

+ What is your process to gain budget approvals from finance?

+ What if I showed you how to deploy this technology now without any payments until you are up and running and seeing the benefits?

+ What additional investments would you make if today’s budget restrictions were lifted? + Who should our team work with in your finance

group?

Guiding questions — Lifecycle Management

+ Mr. Customer, do you finance any equipment? How about your laptops, phones or servers? Why? Why not?

+ Think of all your technology, how much of it do you want to keep for 3+ years?

+ How will your network infrastructure evolve over the next 3 to 5 years?

+ What if you could match the useful life of your equipment to a financial repayment plan?

+ What if I showed you how to deploy this technology now without any payment until you are up and running and seeing the benefits?

+ Who should our team work with in your finance group?

Guiding questions — for Finance Contacts

+ How do potential net book losses affect your ability to upgrade your network?

+ What financial ratios do you use to evaluate performance?

+ What advantages do you gain by using operating budget rather than capital budget for IT equipment acquisition?

+ How will the proposed project help you achieve overall organizational goals like reducing costs and increasing revenue?

+ How will unplanned investments required within this fiscal year be affected by budget approvals already in place for this fiscal year?

+ What criteria do you consider when judging the validity of a proposal from a vendor with external financing?

Introduce financing with Cisco Capital as the solution to their concerns and goals around budget, business objectives and proactively managing equipment lifecycle.

STEP 4: If you haven’t already, bring in Cisco

Capital

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How to sell financing

STEP 5: Handle objections

Customers may have many departments influence a large IT investment, all with different concerns and objections to financing.

Leverage the answers below to gain your customer’s approval. Once you’ve addressed objections, return with some of the leading questions outlined in the previous pages to reiterate the value financing can provide.

“Our cost of funds is lower than Cisco Capital’s.” Perhaps, but financing and taking risk in IT equipment and services is not your core competency. Cisco Capital is an industry leader and as a wholly-owned subsidiary of Cisco they provide aggressive residuals, allowing them to drive down the cost of Cisco equipment and services to benefit their customers beyond a cost of funds comparison.

“We really can’t manage our assets.” -or- “We need, or may need, to keep our assets for a longer period of time.”

If you finance your Cisco solution you receive detailed records to help you manage and track assets. Cisco Capital may be able to offer lease terms of up to 60 months and can provide flexible terms that allow for partial returns and upgrades, which can help avoid interruptions at the end of the financing term. “We own our assets, we don’t finance or lease.” In most organizations a financial analysis is being made at some level, request to bring in your Cisco Capital representative for a meeting with the customer financial decision maker to explain the effectiveness of financing, the broader business benefits they could realize and the overall savings financing can provide.

“We are cash rich and have no need to lease.” Many cash rich customers finance their technology assets because they can generate higher returns on that cash by investing it in other areas, either inside or outside of their businesses, than they can by buying their technology equipment outright.

“Leasing is too expensive.”

Some customers have the perception that leasing is expensive. What are you comparing leasing to? Cisco Capital customers, including multinational banking organizations, choose to lease IT equipment. They’ve done the analysis and have found that leasing can be the lowest cost acquisition option - particularly if they don’t need to own their technology assets and if they follow a lifecycle approach to technology management. “Only a small % of the project is Cisco so I don’t think you can help.”

Cisco Capital finances the entire solution including hardware, software, services, and maintenance. As they also finance non-Cisco equipment up to certain limits, it is best to speak with a Financial Solutions Manager to see if they can accommodate your particular requirements.

“We don’t have the budget for the project.” -or- “I am waiting to receive the budget.”

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How to sell financing

“I don’t want to be tied into a leasing facility for too long.”

We help ensure that the financing structure and term meet, and possibly exceed, your business needs and goals.

Cisco Capital offers terms from 12 to 60 months. What strategic upgrades do you have planned for the next 12–36 months?

“I am considering using my own financier.” Does your financier have the technology expertise to maximize your network investment? Do they employ Cisco networking equipment financing experts, or are they generalists? Typically independent leasing companies make money on the financing only. Cisco Capital’s sole purpose is to support Cisco Systems by driving forward with product sales, assisting the reseller channel and providing you, the customer, with the very best expert advice via a flexible and highly competitive financing solution.

“Leasing is too complicated.”

Many people have the misconception that financing IT investments complicates the sale and deployment. Let’s talk to Cisco Capital, I’m sure they can address your concerns and show you the process and the benefits that you can obtain from financing your equipment and service.

“Used leasing before, never again. I had a bad experience.”

Some customers have had a poor experience with financing in the past. However, Cisco Capital is different. Cisco Capital is not in business to make money on the financing transaction, but to enable the sale of Cisco product and services; our contracts and processes are designed for this objective.

As a wholly-owned subsidiary of Cisco, they are aligned to the technology development and urgency. The success of our customers is Cisco Capital’s primary goal; achieved by helping customers get the technology they need, when they need it, in a manner that drives the most business benefits.

Now that you have addressed objections, return with the key leading questions outlined in previous pages to reinforce the value Cisco Capital can provide.

Confirm a meeting with Cisco Capital and the customer’s financial decision maker.

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Cisco Capital periodically provides time-limited financing offers that you

can use to initiate financing discussions with your customers.

Financing offers

0% Progress Payments For UC

Offer

Preserve cash - customers make no payments and pay no interest for up to 120 days while their UC solution is being deployed.

Description

Customers can defer payments and incur no interest during the deployment period of their Cisco UC solution - up to 120 days. Cisco Capital pays the systems integration partner on behalf of the customer. Minimum order value of US$50,000 for the UC or Telepresence portion applies. Orders must be placed with a Cisco AT certified partner.

Available

Through FY12, ending July 30, 2012. Eligible

Asia Pacific (not available in Vietnam, Indonesia and the Philippines).

Partner Benefit

You can receive up to 80% of the invoice amount prior to final customer acceptance.

Payment Deferral

Offer

Buy now, pay later - customers can enjoy a 6-month payment deferral on all Cisco technologies.

Description

Customers can defer payments for up to 6 months (with the interest costs for the deferral period rolled into the financing structure). This offer allows customers to acquire immediately, instead of delaying because of corporate purchasing cycles. Minimum deal size varies based on the country of purchase.

Available

Partner Benefit

Provides your customers immediate purchasing power and the flexibility of deferred payments.

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Financing offers

0% Financing For Cisco Multi-Year Services

Offers

Minimize financial risk - Cisco Capital offers 0% financing for Cisco-delivered multi-year services. Description

Available for TS, AS, CTS and CBR. Ineligible Services

Shared support, Professional Services and non-Cisco services.

Available

Partner Benefit

Provides a customer incentive to drive multi-year contracts, attach services at the point of sale, and drive deal value higher.

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Operating Lease (FMV)

An operating, or Fair Market Value (FMV), lease is designed for customers that seek access to the latest technology without the burden and risks of ownership. An aggressive projected residual value is deducted upfront from the solution cost, thereby lowering monthly repayments and total deployment cost.

At the end of the initial term, customers have the option to return the equipment or upgrade in whole, or in part, to newer technology. Customers may also extend the lease or buy the equipment at Fair Market Value. Operating leases shift the risk of technology obsolescence and the burden of end-of-life equipment disposals away from the customer.

Finance Lease

A finance lease allows customers to combine some of the benefits of leasing with those of ownership.

Financing products

At the end of the lease term customers have the right to purchase the equipment, usually for a fixed nominal sum. For tax and accounting purposes, customers own the equipment from day one of the lease term. Although such leases do not address the risk of technology obsolescence, they do provide customers with an easy tool for cash flow and budget management.

Sale and Leaseback

A Sale and Leaseback (SLB) transaction can help businesses seeking to migrate to Cisco technology while avoiding the write-off of legacy solutions.

With an SLB, Cisco Capital may be able to purchase a customer’s equipment and then lease that equipment back to them. Businesses may also choose this option for balance sheet management, cash flow considerations, or when outsourcing to a service provider.