IT equipment: trends and challenges
3 questions to Christophe de Vasselot, Vendor Relationship Director, Societe Generale Equipment Finance, in charge of Technology sector
What are the trends you observe in the technology sector?
We can observe three significant trends in the IT sector. Obviously, Cloud and Digital Transformation is the first significant trend which is really impacting all companies in the world and their “go to market approach”. We are now in a data driven world and one of the main challenges for the companies is to manage data treatment in order to stay competitive. According to IDC (International Data Corporation), corporates expect 30 to 40% data growth annually, and by 2023 more than 40% of the world’s data will be stored in hyperscale/cloud data centers. Digital transformation is accelerating in all sectors. A lot of companies are moving part of their data from on premise to cloud offerings (public, private, Hybrid, Multi cloud). By 2027 more than 50% of corporates will use industry cloud platforms to accelerate their business initiatives (source: Gartner).
Circular economy is also a significant trend to mention. As you may know, sustainability is a key initiative for our customers and our Circular Economy approach is the right answer. The Ellen Mc Artur foundation has been founded in 2010 to accelerate the transition between linear economy (meaning we manufacture, we use, we throw away) to circular economy (we manufacture, we use, we refurbish, we reuse). This foundation is influencing a lot of international companies in their sustainability approach. There are 3 main tenets to the Circular Economy, as described by the Ellen McArthur Foundation:
1) Design out waste and pollution. This means creating products that work and last longer and that are designed for the environment, including more easily reused and recycled. 2) Keep Products and Materials in use longer. Extend the life of products. Repurposed them for other uses. And when done with them, put them back into the economy elsewhere so that they can be used again.
3) Regenerate Natural Systems. This is about things like sustainable farming, fishing, timber management, and where possible, regenerating the resources that are taken and used.
The last significant trend we observe, that does not impact only the technology sector, is that we are leaving in an uncertain world due to “External factors” that we are not able to forecast: Supply chain challenges and shortage issues, rising inflation, interest rate increase, Covid 19 and China lockdown, territorial conflicts…All these factors forced us to revise IT investment & projects forecasts.
What are the challenges faced by the industry?
This new trend - Cloud and Digital Transformation - impacts business of all kinds of companies in their respective go to market strategy (it is a cross sectorial challenge). Today, to stay competitive, you have to be digital, deliver quicker, provide agility, scalability and flexibility in a “hyper secured” environment and at lower cost (at middle term). The IT industry is at the heart of these challenges. Consequently, it is extremely important to face these changes and adapt ourselves to new market trends. The IT ecosystem is constantly evolving at very high speed, the competitive landscape is changing, and we see some new key players like Cloud providers, Global System Integrators, Service providers, Value Added Resellers (VAR) which are playing a key strategic role to support companies to face these challenges. Furthermore, we are experiencing an “As A Service world”: the way of consuming IT is moving from capex to opex offerings. Corporates don’t want to own their infrastructure and manage it anymore. Today, they want to get access to a service, to pay for what they use (pay-per-use) or to get into a subscription model with no term commitment. All that could be delivered as part of a AAS (“As a Service”) contract: IAAS, DAAS offerings including some Service Level Agreement). We also see more and more KPIs related to sustainability. Circular Economy policy must be at the heart of companies’ development and their IT decisions. It is extremely important to demonstrate that, whatever your IT investment is, you MUST participate in the carbon footprint reduction.
What can SGEF bring to this sector?
At SGEF, we have observed these market trends for a while and anticipated these challenges. We adapt and fit our customers’ needs and requirements. We aim to be the global market leader in structuring and supporting our vendor partners with their Go To Market AAS offerings and sustainable approach. Historically, we used to deal with the main international software editors, hardware manufacturers, distributors and lessors. Most of Software editors are moving their customers from “On Premise (on customer site)” to “Cloud offerings” (hosted in software editors’ Datacenters), which are based upon subscription or Pay-Per-use consumption models. Consequently, it impacts our way of doing business with them. SGEF as a key and strategic partner continues to adapt and support them in that journey.
SGEF ambition is to become a strategic player in this AAS world. Circular Economy is also at the heart of SGEF strategy. We can support and bring value to our partners in that area. We already play a significant role on the second pilar of the Circular Economy which is “KEEP PRODUCTS AND MATERIALS LONGER”. Indeed, when a customer is renting some assets, at the end of the lease term, they have the possibility to return the assets in the Technology Reconditioning Center of our IT Asset Disposal partners. The asset usage is either extended for a while or refurbished and remarketed on the secondhand markets. This illustrates well SGEF contribution to the Circular Economy.
SGEF has a real expertise in dealing with Corporates, SMEs (Small and Medium Enterprises) and Public companies. Through our network (we operate in more than 35 countries), we can bring international and local Vendors value and offer tailor made solutions which are based on a wide product portfolio like renting, assignment of receivables, loan, etc. SGEF has the capability to adapt to new market trends and work with the existing and evolving ecosystem including IT manufacturers, software editors, service providers, value added resellers, distributors and end customers themselves. Across all our geographies (EMEA, APAC, AMERICA), we support our vendors in their complex and huge transactions but also in their day-to-day activities.