OREANDA-NEWS. Companies that design information technology (IT) solutions for commercial customers are facing significant changes to their business model as they adapt to the growing interest in cloud computing, according to GE Capital, Commercial Distribution Finance (CDF), a major provider of financing to IT solution providers.

At the same time, technology manufacturers are searching for simplified ways of providing financial support on a global basis to the companies that install their IT products and services for commercial customers.

Solution providers once focused primarily on reselling hardware and software to businesses. Today, due to rapidly growing interest in cloud computing, they’re shifting to providing services and related products that are necessary to help customers take advantage of the cloud.

“Instead of making large sales related to one-time projects, solution providers are now offering long-term contracts for shared cloud services,” said Mike Marcolina, senior managing director of CDF’s technology, electronics and appliances business. “That shift to recurring revenue streams is having a major impact on the way solution providers address a range of issues, from working capital management to employee compensation to capital allocation.”

“To keep pace,” he added, “it’s important that lenders provide flexible financing options as solution providers transition from product-centric to service-centric offerings.”

IT manufacturers often make arrangements with finance companies such as CDF to support the solution providers that sell their products to end-users. Some manufacturers may have thousands of affiliated solution providers globally. To simplify their financing programs, manufacturers are searching for companies that can offer global solutions.

“There’s a growing preference to have a limited number of financing arrangements as manufacturers continue to expand overseas,” said Marcolina. “Since late 2012, we’ve expanded global programs with Dell and Polycom and we’re working on potential programs with several other global manufacturers.”

CDF provided more than USD 18 billion in financing to more than 1,300 IT solution providers globally in 2013, up from USD 15 billion in 2012 — a 19% increase.

New Staff Additions

CDF has added two new senior commercial team members to accommodate increased financing business in the solution provider channel.

Chris Pagano, based in Norwalk, CT, returned to GE Capital as senior vice president of enterprise sales. He’s focused on helping enterprise accounts on the East Coast develop finance solutions to grow their businesses. He was a senior relationship manager at TD Bank. For the 14 years before that, he held various roles at GE Capital. He has an MBA from Pepperdine University and a B.S. from Colorado State University.

David Laurence is a senior vice president charged with helping customers on the West Coast and in the Midwest leverage GE Capital’s global capabilities. He’s based at GE Capital's Scottsdale, AZ office. An 11-year veteran of CDF, Laurence was most recently vice president and national sales manager. Previously, Laurence was a regional sales manager with Deutsche Financial Services, affiliated with Deutsche Bank. He holds a B.S. degree in finance from Arizona State University.