Transcript Slide 1

TS Marketing & Development
Recession Offering
Bob Neave
June 2009
Internal and Business Partner Use Only
© 2009 IBM Corporation
Global Technology Services, Technical Support
Recession Offering
Issue
 Customers are requesting cost reductions on their hardware maintenance and
software support in the 25 – 30% range to get them through the year
Resolution
 M&TS offers a short term recession proof play
– Finance the 3 year maintenance and/or your software support in a step
fashion
• Provide lower payments through year end to meet immediate budget pressures,
but step up payments in years 2 and 3
• We aren’t giving anything away, only restructuring payments to meet customers’
immediate needs until the economy improves
– Customers sign up for multi-year coverage
– Locks customers in, prevents future competitive threat during life of contract
– GTS recognizes the revenue prorated over the life of the contract
– Incents customers to do multi-year contract with GTS
Internal and Business Partner Use Only
Page 2
© 2009 IBM Corporation
Global Technology Services, Technical Support
IGF Credit Rating
 GRMG is IGF’s
internal credit rating
for our customer’s
– Best + GRMG 1 to 3
– Best GRMG 4
– Select GRMG 5
– Standard GRMG 6
 GRMG 6’s now
require review
 GRMG 7’s rarely get
approved
Internal and Business Partner Use Only
Page 3
© 2009 IBM Corporation
Global Technology Services, Technical Support
Financing scenario’s for GRMG < 3 customers
 3 yr annuity MA with no prepay = $3,492,000 at $97,000/month
 PPF = $3,422,160 – prepay amount; common for all scenarios
Scenario’s
Base option 1 - 36 month flat
Term
Payment
Amount
Rate/k
36
$104,170.55
30.44
Comments
$3,422,160
Option 1 – w Step Structure
payments 1-12 at 90% of flat
12
$93,767.18
27.40
payments 13-36
24
$109,851.34
32.10
$3,434,035.00
PV of payments at 6%
Option 2 – Step Structure
payments 1-12 at 80% of flat
12
$83,329.60
24.35
payments 13-36
24
$115,532.12
33.76
$3,423,489.00
PV of payments at 6%
Option – Step Structure
payments 1-12 at 75% of flat
12
$78,127.91
22.83
payments 13-36
24
$118,372.51
34.59
$3,423,404.00
Internal and Business Partner Use Only
Page 4
PV of payments at 6%
© 2009 IBM Corporation
Global Technology Services, Technical Support
Financing scenario’s for GRMG 4 customers
 3 yr annuity MA with no prepay = $3,492,000 at $97,000/month
 PPF = $3,422,160 – prepay amount; common for all scenarios
Scenario’s
Base Option 1 - 36 month flat
Term
Payment
Amount
36
$107,661.15
$3,528,926.00
Comments
PV of payments at 6%
Option 1
payments 1-12 at 90% of flat
12
$96,881.35
payments 13-36
24
$113,718.38
$3,542,398.00
PV of payments at 6%
Option 2
payments 1-12 at 80% of flat
12
$86,135.77
payments 13-36
24
$119,775.60
$3,546,265.00
PV of payments at 6%
Option 3
payments 1-12 at 75% of flat
12
$80,762.98
payments 13-36
24
$122,821.32
$3,548,570.00
Internal and Business Partner Use Only
Page 5
PV of payments at 6%
© 2009 IBM Corporation