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Cloud spending on the rise

According to a recent report published by the International Data Corporation (IDC), cloud spending represented nearly 30% of overall IT infrastructure spend during Q1 2015, rising from 26.4% during Q1 2014.

The market research firm found that vendor sales of private and public cloud infrastructure – including storage, servers and Ethernet switches – grew by a staggering 25.1% year-on-year during Q1 to reach almost $6.3bn (£4.02bn), CRN news reports.

Private cloud spending grew 24.4% to $2.4bn during Q1, while public cloud spending increased by 25.5% to $3.9bn. Kuba Stolarski, research manager of server, virtualization and workload research at IDC said the rise in cloud spending suggests that “customers are open to a broad array of hybrid deployment scenarios as they modernise their IT for the third platform, begin to deploy next-generation software solutions, and embrace modern management processes that enable agile, flexible, and extensible cloud platforms.”

In its Worldwide Quarterly Cloud Infrastructure Tracker report, IDC predicts that overall cloud infrastructure spend will rise by 26.4% this year, reaching £33.4bn and representing one third of overall IT spend. In particular, public cloud spend will grow by 32.2% year-on-year to $21.7bn, while private cloud spend will increase by 16.8% to $11.7bn.

IDC forecasts that cloud spending will rocket over the next five years and will account for nearly half (46.5%) of all IT infrastructure spending by 2019, reaching $54.5bn.

Meanwhile, according to Computerworld’s annual forecast survey, 43% of firms plan to increase their overall IT budgets this year, by an average of 13%. A total of 194 IT professionals were polled for the survey, with 40% stating that cloud computing will take the lion’s share of their budget increase, closely followed by software as a service (SaaS).

Cloud computing was rated as the most important consideration among IT departments this year, cited by 16%. Firms which have already adopted cloud strategies will this year seek to streamline services and improve functionality in order to reap the full benefits of the cloud.

Syscap can provide flexible finance plans for businesses looking to invest in new technologies, and can fund a number of aspects in one comprehensive payment plan including hardware, software, cloud based and subscriptions as well as training, installation and maintenance. To find out more about how Syscap can help to support your business’ technology ambitions, click here or contact us today.

A Look Back: How SME Funding For IT Has Evolved

There is no underestimating the importance of small and medium-sized enterprises (SME) for the UK: the market is a key driver of economic growth and contributes greatly to the GDP. Statistics released by the Department for Business, Innovation & Skills (BIS) last year found that 99.9% of the 5.2 million private sector businesses are SMEs, which together represent an annual turnover of £1.6 trillion. SMEs dominate the industrial market and account for 60% of private sector employment.

Needless to say, supporting SMEs is vital for economic stability and growth; something which has been addressed by all key political parties in the run-up to May’s general election. For our part, we have been committed to this market since our inception in 1990, helping business to acquire the finance they to need in order to succeed and grow.

Obviously, the financing climate has changed a lot since our business venture began. Here, we take a look at how funding for SMEs has evolved over the past 25 years:

A brief history

At the start of 1990, and indeed through to the start of the millennium, businesses like our own were experiencing significant growth. In a recent article, Dr Khaled Sofani, Senior Teaching Faculty member in Finance at the University of Cambridge, attributes this growth to a range of factors: the end of the Cold War, the removing of financial regulations, and China gaining significant economic power.

There were also two more reasons. The first, of course, was the rise of the internet. The world wide web helped facilitate business-consumer engagement and for the very first time, businesses could reach customers across the globe without having to establish a physical presence in those countries. The second reason was that it was relatively simple for SMEs to acquire funding at the time which, as Dr Sofani states, was due to the fact that private equity funds and venture capitalists were both able to seek funding from financial organisations with ease.

During this time, the banking market was overcrowded with companies wanting market share. And, with credit being easily accessible for SMEs, they were able to grow and succeed, creating more job opportunities and boosting economic confidence.

Then everything changed

But then, the financial crisis hit and everything changed. Many banks and financial organisations went bust, or at the very least found themselves facing severe solvency and liquidity issues. Banks and other funding houses were forced to become far stricter in their lending terms; they became much more constrained and risk averse, making it increasingly difficult for business to acquire the funding they needed. According to BIS statistics, bank lending peaked during 2009 and since then, it has been declining year-on-year.

In the years that followed the financial crisis, there was huge uncertainty in the market. Aware of this, SMEs were holding off investment plans: in the six months leading up to February 2011, there was a 19% reduction in application value for small businesses applying for new term loans and overdrafts. A total 3% of SMEs at that time admitted to delaying borrowing because of the climate.

At times of economic instability, SMEs are at a significant disadvantage. Whereas larger companies are able to cut costs by doing things like limiting their services, losing employees or restructuring, this is virtually impossible for smaller businesses with little space to manoeuvre. Plus, cuts to alternative finance solutions during these times leaves small businesses increasingly vulnerable, as they often rely on short-term credit, loans and overdrafts for their day-to-day operations.

Today

Yet now, years on from the financial crisis, the economic climate has significantly improved, and confidence in the market is returning. SMEs have the tools they need to grow and succeed, and individuals that were perhaps apprehensive before now feel encouraged to begin their own business ventures. In fact, the number of SMEs has increased by 1.8 million since 2001, up 51%. And these businesses aren’t just confident in the market but in lending, too, with the government’s latest SME Business Barometer report showing that 77% of SMEs seeking finance last year thought they would be successful.

Despite the numerous challenges, the SME market soldiers on relentlessly. What is needed going forward is assurance by the government, banks and financial providers like ourselves that we are able to continue supporting this market in any way we can. SMEs are the lifeblood of the UK economy and we must ensure that their needs, both financial and other, are met.

Syscap is a leading provider of finance solutions to this market. If you are a small or medium-sized business, we are able to offer short-term business loans, finance for your new assets, and provide finance for your IT needs. Contact us today.

Funding for IT investment jumps 9% in a year

IT leasing bucking overall trend of asset finance industry

IT investment through leasing in the past year totaled £1.5 billion, up 9% on £1.37 billion in the previous year*. Many businesses cut back sharply on IT spending following the credit crunch, leaving Britain’s business IT infrastructure crumbling.

The growth in asset finance for IT investment halts the overall trend of business investment through asset finance, which contracted by 1.7% over the same period, going from £22 billion to £21.7 billion. This is partly due to the withdrawal of ING from the UK asset finance market in November 2012.

The main reasons for  the rise in IT investment by businesses is the boom in the use of cloud storage, the increasing number of companies supplying tablet computers to their employees, and even businesses switching to Windows 8.

Investment in IT has impact on economic growth

Philip White, CEO of Syscap, comments: “Investment in IT by British businesses can be a huge catalyst for economic growth. It has a massive impact on how efficient and globally competitive UK plc can be.”

“Cloud computing has completely changed the landscape of data storage globally. Businesses around the world have moved hundreds of thousands of terabytes of data out of in-house storage to the cloud over the past few years.”

“That has driven a huge increase in demand for storage at third-party data centres. A lot of these cloud providers are investing heavily in storage, networking and security, as their clients become more comfortable with the notion of remote storage, and more willing to put sensitive data in the hands of third party providers.”

“The penetration of tablets into the workplace has also been a major factor in the increase in IT investment. A massive number of employees across financial services, professional services and the technology sector are now given tablets by their employers to aid their productivity. This comes with a cost that some businesses are choosing to meet through asset finance.”

“Even Windows 8, despite a difficult first year in the market, has provided some impetus for businesses to invest in new IT equipment.”

Asset finance to invest in IT has grown in popularity

The use of asset finance to invest in IT hardware and software continues to grow in popularity as many banks remain unwilling to write business loans to fund IT investment.

Explains Philip White: “A lot of banks lack the specialist knowledge to assess the long-term value of IT assets, meaning they are often reluctant to write loans to fund them. This means a lot of businesses have found that asset finance is a much better fit for their programmes of investment, as the specialists in the sector have a much keener understanding of how to assess the risk in lending against IT hardware and software.”

“Leasing allows businesses to bring their IT equipment up to date without impacting on cash flow, or adding to the level of debt they carry on their balance sheets. This frees up cash for the other vital investments businesses will need to make as the economic recovery gathers pace.”

Asset finance for IT investment by UK business, last two years*

Asset finance for IT investment by UK business, last two years*

* Year end October 31. Source: FLA