Published on 07-Mar-2013
"I appreciated the fact IGF made it easy for us to present our business plan to them. The process didn’t feel the same as it did when we tried to apply for bank loans – it felt more like a partnering arrangement. IGF has been very transparent in its operations with us – it’s an organisation we can trust." - Dennis Muscat, CEO, Telarus
TELARUS-Australia & New Zealand
IGF, IGF: IT Financing - IBM HW, IGF: IT Financing - IBM SW
Telarus is a managed network, security and cloud service provider. Founded in 2001, it employs 21 people in its Melbourne headquarters. The company’s customers are located around Australia and New Zealand, and consist of small and medium-sized, multi-site businesses in the healthcare, professional services and retail industries. Telarus owns and manages its own network and leases space in data centres near to where its customers are located.
To offer the best possible service to its customers, Telarus must regularly upgrade its core hardware and software. The company needed greater investment in its storage and networking capacity to maintain optimal service levels and expand its operations. However, it was unable to secure a bank loan to finance its plan.
Telarus partnered with IBM® Global Financing and received financing for new storage area network (SAN) infrastructure from IBM and Juniper Networks. With the new SAN infrastructure in place, the company updated its existing infrastructure and introduced a new range of private cloud services
By scaling up its operations and introducing a new range of private cloud offerings, Telarus maintained its competitive advantage. The company has already recovered the cost of its investment and expects to achieve a strong return on investment within three years.
Expanding the business as an IT-intensive company, Telarus must regularly upgrade its core hardware and software infrastructure to offer the best possible service to itscustomers.“A key success factor of our business is mitigating the level of customer churn,”explains Dennis Muscat, CEO, Telarus.“If our customers are happy they’llstay with us – if not, they’ll go to our competition. That’s why it’s crucial for us tocontinuously innovate and expand our service offerings.”In 2010 Telarus got serious about expanding its business. The companyalready offered customers managed network and security services but waskeen to expand its product range.“We wanted to offer customers a more complete range of services, includinginfrastructure-as-a-service (IaaS), online backup and disaster recovery,”says Muscat.“We wanted to have a stronger presence in Sydney and attract more business nationally.”The company developed a three-year business plan and realised it needed greater investment in its storage and networking capacity to provide it with more power and scope. However, Telarus was unable to secure a bank loan to finance its plan.“We spoke to a number of banks and other financiers and didn’t get anywhere,” says Muscat.“The banks weren’t interested in us because we are a privately owned, medium-sized IT business and represented too great a risk. “We also found that they didn’t have a great understanding of the IT industry – one banker didn’t even ask to look at our business plan. I spoke with a trusted broking contact who suggested we speak to IBM Global Financing.”
A financier that understands IT In mid-2011 Telarus partnered with IBM Global Financing (IGF) and received financing for new storage area network (SAN) infrastructure from IBM and routers from Juniper Networks. The three-year, lease-to- own structure fitted with Telarus’s business plan and enables the company to own the equipment at the end of the lease. “Our IGF adviser sat down with us and talked through our business plan,” says Muscat. “They asked questions and we had an intelligent conversation about the technology involved and where the managed services market was heading. IGF was aware of the potential for managed cloud services and understood how we would use the funding.” With the new SAN infrastructure in place, in late 2011 Telarus introduced a new range of private cloud services to its customers including IaaS, online backup and disaster recovery. In mid-2012 Telarus received the second tranche of financing from IGF. The company used it to bolster its managed service offering by installing additional server and networking equipment. “We added more server capacity in our Sydney data centres to strengthen our security and cloud services,” adds Muscat. “The rest was spent on improving data centre capacity for existing customers in Adelaide, Auckland, Brisbane and Perth.”
Increased competitiveness Partnering with IGF allowed Telarus to quickly scale up and meet the growth targets in its three-year business plan. By doing so, the company maintained its competitive advantage. “We’re keeping customers happy and have successfully mitigated our customer churn rate,” says Muscat. “We couldn’t have done that without the additional investment in infrastructure.” Seizing new business opportunities By getting its infrastructure in place so quickly, the sales team could immediately get out and start selling the company’s new cloud services. “We can now engage in deeper conversations with prospective customers about improving their productivity and reducing their risk profile,” explains Muscat. “For example, we have a customer in the building maintenance services industry that provides its customers with licensed software. Once our private cloud services were in place, we suggested they consider selling their software as a service, which they could host on our private cloud platform. They did this and it has been a tremendous success.” Single source of financing Financing with IGF means Telarus benefits from simplified loan management, with one contract and one invoice. “We have a predictable monthly payment plan that has allowed us to match the cost of our investment to the expected benefits,” says Muscat. “Over three years we expect to achieve a strong return on our investment.”Flexible partnership for growth Telarus is very satisfied with the collaboration between its managementteam and IGF. “IGF has been very transparent in its operations with us – it’s an organisation wecan trust,”says Muscat.“I appreciated the fact they made it easy for us to presentour business plan to them. The process didn’t feel the same as it did when we tried to apply for bank loans – it felt more like a partnering arrangement.”
Products and services used
IBM products and services that were used in this case study.
Storage: SAN Multiprotocol Routers, Storage: SAN04B-R
Footnotes and legal information
For more information
To learn more about IBM Global Financing, contact your IBM Global Financing representative or IBM Business Partner or visit:ibm.com/financing/au/
To learn more about products, services and solutions from Telarus, visit: telarus.com.au
© Copyright IBM Australia Limited 2013. ABN 79 000 024 733. © Copyright IBM New Zealand Limited 2013. © Copyright IBM Corporation 2013. All Rights Reserved. IBM, the IBM logo and ibm.com are trademarks of IBM Corporation, registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the Web at www.ibm.com/legal/copytrade.shtml. This customer story is based on information provided by Telarus and illustrates how one organisation uses IBM products. Many factors have contributed to the results and benefits described; IBM does not guarantee comparable results elsewhere. GL_14774