Published on 25-Jan-2011
Validated on 04 Dec 2012
"We were happy with our original decision to lease with IBM Global Financing. It helped to reduce our costs and fitted into our budget. With hindsight we were happier still: we exploited the end of lease flexibility in our contract, and it really helped us manage a complex IT transition. They say leasing helps transfer risks, and I suppose we saw that transfer working in a very practical way." - Wayne Swallow, IT Director at Nisa-Today’s
IBM Business Partner:
Nisa-Today’s is a member-owned organisation created to provide benefits to independent retailers and wholesalers in the retail food and drink sector.
Nisa-Today’s aging IBM Power®-based servers and storage were coming to the end of their lease and needed to be replaced at a sensitive time: just at the start of a peak order period.
IBM Global Financing provided financing for new IBM Power6® servers and a System Storage® DS8000® solution, and extended the return date for the old equipment. The new Power Systems servers were installed side-by-side, to run in parallel with the older servers while the IT migration was carried out and tested.
IBM Global Financing provided the flexibility and security the Nisa-Today required at a time when availability and customer service levels were critical, and helped deliver a secure, risk-free cutover. - Decreased spend on maintenance and support-saving over £100,000 per annum. - Reduced other costs, e.g. license fees - Freed budgeted spend to be redeployed on other projects
Nisa-Today’s is a member-owned organisation created to provide benefits to independent retailers and wholesalers in the retail food and drink sector. It has to operate at a fast pace and keep costs low to help its members compete against national supermarket chains. The organisation relies on its IT infrastructure to support “just in time” supply chains, consumer marketing campaigns and a host of back-office processes such as finance and membership administration.
Founded in 1977, Nisa-Today’s employs over 195 people at its central office in Scunthorpe, North Lincolnshire. It serves some 5,000 retail stores and almost 300 wholesale depots across the UK, Northern Ireland and the Channel Islands. Recent growth has been impressive with sales up over 10 percent to £1.3 billion turnover in 2009, and healthy growth continuing in 2010.
Financing linked to business needs
Entering 2009, Nisa-Today’s IT infrastructure was based on two IBM System p® servers and storage leased from IBM. The lease was coming to an end and, with expanding business to support, Nisa-Today’s knew it needed more server and storage capacity. There were two challenges associated with the required upgrade: The company’s lease ran out just a month before one of its peak trading periods. This was in late summer when local convenience stores see a surge in business as consumers restock their larders after they return from holiday. The transition to new servers would be disruptive and perhaps too risky during this busy period.
Secondly, to keep member costs as low as possible the organisation had set itself a target to reduce total IT costs by five percent per annum for the next four years. It was going to be difficult to achieve this reduction if equipment expenditure had to rise.IBM’s Systems and Technology Group and the IBM Business Partner Logicalis designed a solution with new IBM Power Systems™ servers which offered greater capacity and speed.
IBM and Logicalis worked with Nisa-Today’s on a complete cost case. This showed that replacing their existing equipment with new IBM Power6® servers and a IBM System Storage® DS8000 solution with hardware, software and services funded on an IBM Global Financing lease would:
- Reduce their spending on maintenance and support-saving over£100,000 per annum
- Reduce other costs, e.g. Oracle license fees running in the more powerful environment
- Free budgeted spend to be redeployed on other projects
IBM Global Financing worked to resolve the budget and risk challenges Much of the financing discussion focused on how the financing solutioncould help Nisa-Today’s reach their target of five percent annual savings on IT. A fair market value lease provided the foundation of the approach:so payments only represent the value of the equipment used, saving onthe residual value that remains at the end of the lease. The warrantyperiod followed by lower maintenance costs on the new equipment madethe next contribution; finally lease payments were stepped over the life ofthe lease to offer continually reducing equipment costs.
Enabling a smooth migration
The financing solution also offered a low risk approach to the IT transition. Nisa-Today’s postponed the return date for its existing equipment, so it could continue to run while the new equipment was installed. Logicalis exploited the side-by-side installation with a technical approach that replicated application and data changes in the old and new environments. When the new system went live, there was always an option to switch back to the old hardware if the cut over did not go smoothly. Development, testing and migration took place with a minimum of disruption and risk to the business during one of its busiest trading periods.
The value and flexibility of IBM Global Financing approach was crystallized when there were delays. Nisa-Today’s asked for two further extensions in order to complete the migration using its available staff. As a specialist financier, familiar with technology projects, IBM Global Financing designs funding solutions that fit budgets and help resolve clients’ practical IT management challenges. Wayne Swallow, IT Director at Nisa Today’s summarized their experience: “We were happy with our original decision to lease with IBM Global Financing. It helped to reduce our costs and fitted into our budget. With hindsight we were happier still: we exploited the end of lease flexibility in our contract, and it really helped us manage a complex IT transition. They say leasing helps transfer risks, and I suppose we saw that transfer working in a very practical way.”
Responsible re-use or disposal
At any stage during the lease, Nisa-Today’s can upgrade to add capacity,and choose to extend the lease or increase payments. When lease ends,they have various options: simply return the equipment to IBM, pay a reduced secondary rental to continue using it, or pay a conversion charge and then sell the servers to a third party. If the servers are returned, IBM Global Asset Recovery Services (GARS) will re-sell re-use or recycle them as appropriate. Their approach increases the residual value (so lease costs are lowered) and reduces the environmental impact of disposal. For Nisa-Today’s there will be no disposal cost, and data security and environmental compliance become two more elements of risk transferred to IBM Global Financing.This financing solution went much further than making an IT acquisition affordable. IBM Global Financing phased payments to meet an annual cost reduction target. A side-by-side Power exchange took risk out of the transition. A flexible approach to end of lease dates helped manage the migration. Re-use of leased assets reduced their environmental impact.
Working around the IT life cycle IBM Global Financing provided solutions to help Nisa-Today’s manage IT and provide their users a betters service.
- IBMSystem Storage®DS8000®
- IBMGlobal Financing
IBM Business Partner
For more information
To learn more about financing solutions from IBMGlobal Financing,please contact your IBMGlobal Financing representative orIBMBusiness Partner, or visit the following website: ibm.com/financing
Products and services used
©Copyright IBM Corporation 2010 IBM United Kingdom Limited PO Box 41 North Harbour Portsmouth Hampshire PO63AU United Kingdom Produced in the United States of America December 2010 All Rights Reserved IBM, the IBM logo, ibm.com, Power Systems, Power6, and System Storage are trademarks of International Business Machines Corporation in the United States, other countries or both. Other company, product and service names may be trademarks or service marks of others. References in this publication to IBM products or services do not imply that IBM intends to make them available in all countries in which IBM operates. IBM Global Financing offerings are provided through IBM Credit LLC in the United States and other IBM subsidiaries and divisions worldwide to qualified commercial and government clients. Rates are based on a client’s credit rating, financing terms, offering type, equipment type and options, and may vary by country. Other restrictions may apply. Rates and offerings are subject to change, extension or withdrawal without notice.