On It Financing: Paula L. Summa, Vice President, Finance, IBM Global Financing.

• Author: Heffes, Ellen M.
• Position: CFO Interview

Using OPM -- or "other people's money" -- generally makes a lot of sense. When financing information technology, OPM makes even more sense, especially since organizations get the benefits of cash flow, protection from technology obsolescence and improved asset management. And, for financing in uncertain economic times, the benefits increase even more, In this exclusive interview, IBM's top-ranking woman financial executive, Paula L Summa discusses the industry, IBM's business and her role in driving the $40 billion Global Financing division.

Q. Let's talk about the financing and leasing business, First; who's doing this; and is it growing in popularity because it's smart business?

Summa: Leasing is a form of financing for customers. At IBM Global Financing, we run the gamut of both large and smaller customers, and our leasing customers tend to be from IBM's traditional customer base -- the largest, 'household-name,' predominantly investment-grade companies. Leasing information technology equipment is a very attractive proposition for customers, not only for cash flow purposes; but also because of technology obsolescence, which is really what they're trying to protect against; as well as [providing] asset management.

Summa: IBM Global Financing is the largest IT financing company in the world. With its many divisions, GE Capital [Corp.] is probably the world's largest financing company, and finances things from jet airplanes to consumer products, as well as other categories of assets.

Q. Talk about IBM Global Financing's competitive position.

Ours is the business of financing IT purchases, and we finance both IBM and non-IBM products. If a customer wants to buy servers, PCs, software and services -- the fastest-growing area of the technology business -- we put a value proposition before them.

Competition comes from other technology companies, such as Dell Financial with whom we compete for purchases of the hardware. We've expanded, and will finance Dell, or Sun [or other vendor] products as well, and this may be unique. Other companies, such as Hewlett-Packard Co., finance [primarily] more of their own products.

Q. Is financing other vendors' products a ma]or shift for IBM? Is it 'planning ahead," in case you don't stay in certain businesses -- as you said, "software and services are the largest growth areas?"

Summa: It's not from the standpoint of we get out of the business; but it's similar to our services business, IBM Global Services. If a different manufacturer's product or software works better to solve a customer's problem, Global Services will integrate that into the overall solution.

It's not a reflection of IBM's direction to be or not be in a particular segment of hardware or software; it's that we have an expertise in financing technology and we think we should broaden that to bring value to our shareholders by including other manufacturers' equipment.

Q. Since starting in your senior financial position in this division in 1999, what kind of growth are you seeing?

Summa: Growing our business on a double-digit basis has been our strategy, and we've been doing that both within the IBM space and outside, financing some other types of...