Cisco wants you to buy now, pay later

Cisco today announced a new finance program that encourages customers to buy products and services now without having to start paying for them till 2024.

Specifically the Cisco Capital Business Acceleration Program will let customers purchasing Cisco products before July 29, 2023, and defer all payments until 2024. Payments deferred until 2024 would be based on the total amount financed and contract terms, the vendor stated.

Cisco said another flexible payment option is available for its partners to let their customers buy Cisco technology today, and pay later, the vendor said in a statement.

The entirety of Cisco’s portfolio is eligible for the program, including hardware, software, and services, as well as select partner services and third-party hardware. In addition the Cisco Refresh portfolio of Cisco certified remanufactured products is also eligible for organizations that want to acquire used gear, the vendor stated.

 “Our goal is to provide payment options that allow continuous technology investment to maintain productivity and business continuity while minimizing cash outlays,” said Kristine A. Snow, SVP and President, Cisco Capital in a statement. “Customer success is our priority. The new program is designed with this in mind and will help address some of our customers’ most pressing concerns.”

The move is in part a response to keep its own sales pump primed amid industry reports that perhaps some organizations, particularly large cloud providers, are not buying as many services and systems in anticipation of potential economic headwinds later this year.

Cisco is not alone among networking vendors that have to deal with tough market conditions.

“We were still getting a lot of early orders as customers were dealing with supply constraints and extended lead times and Q1 2022. Our product orders were over $1.1 billion,” Ken Miller, CFO of Juniper Networks told financial analysts on the vendor’s April first quarter financial results call.  “Now, customers are consuming those early orders and are no longer placing orders as supply constraints have improved and lead times of shortening. This combination is resulting in a year over year decline in bookings, which we expect to moderate going forward.”

“As supply improves, we’re seeing more customers rescheduled delivery dates to better match current project timelines. This is proving to be particularly true in the cloud vertical where certain customers are digesting prior purchases, and we saw a series of projects pushed to future periods during the March quarter,” Juniper CEO Rami Rahim said in Juniper Network most recent financial analysts call. “While these delays may negatively impact our ability to grow our cloud business in the current year based on the conversations we’ve had with many of these accounts, we’re confident these delays are a function of timing and remain positive regarding our long-term growth outlook in cloud.”

Earlier this month during its Q1 financial call, Arista CFO Ita Brennan signaled a potential blip in some sales saying: “We expect some moderation in customer spending, especially with our cloud titan customers following a year of accelerated demand in 2022.”

He said that as supply chain issues get better, he expects output will be more consistent, and lead times will improve. However, reduced lead times could result in reduced visibility into future sales, as customers don’t need to make advance purchases.  

Cisco doesn’t announce its 3Q financial results until May 17.

But its not like things look bleak by any stretch. Earlier this month Gartner said Worldwide IT spending is projected to total $4.6 trillion in 2023, an increase of 5.5% from 2022. Despite continued global economic turbulence, all regions worldwide are projected to have positive IT spending growth in 2023.

“Macroeconomic headwinds are not slowing digital transformation,” said John-David Lovelock, distinguished vice president analyst at Gartner in a statement. “IT spending will remain strong, even as many countries are projected to have near-flat gross domestic product growth and high inflation in 2023. Prioritization will be critical as CIOs look to optimize spend while using digital technology to transform the company’s value proposition, revenue and client interactions.”