February 2010 Kay Stephenson Financial Client Executive

1. 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. 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 Stock market turmoil Tightening credit markets 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, www.cfo.com) • 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 theTOTAL 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 What is Financial Selling? • 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 • 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

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. 17% savings over purchase $300K New monthly payment is 5% lower than original lease payment $271,774 $225,634 $250K $200K $6,378 / month* $6,079 / month* $150K Technology Upgrade $100K POWER6 570 MES Upgrade $50K Est. monthly payment ($) POWER5+ 570 $0 POWER6 570 Purchase POWER6 570 Lease Initial 36mo Lease New Base Lease 36mo 12 24 36 48 60 Lease Term (Months) Cash Flow: Reduce Spending • 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 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

11. Cash Flow: Reduce SpendingFocus 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

12. Project Benefits Project Costs Financed Payments 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 Use of deferral can further reduce risk

13. 100% 80% 60% 40% 20% 0% 0 1 2 3 4 5 Risk Avoidance: Investment Risk Book Value • FMV Leasing transfersrisk of obsolescence • Rapidly changing technologydriving 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 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 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 3 Year 1 Year 2 Year 2 Year 3 Year 1 Year 2 Phases I - III Years Years Years Term Financing example BAU IBM Project FinancingTM example

17. IGF IGF Increase your odds of winning with IBM Global Financing! 125% higher odds with IGF working with small clients (<1000 employees) 36% higher odds with IGF for opportunities over $100K owned by BPs IBM’s Odds of Winning 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 • 2008 IBM Market Intelligence study of STG opportunities found thatIGF 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 isGreenwith 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. Distributor Reseller IBM Global Financing 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 2. Ships Product 4. Pays Invoice 1. Issues PO 3. InvoicesIBM 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