By Jim Moschos
Artificial intelligence in its many evolving forms will be the most important area of technology in coming years, according to a global survey recently taken of chief technology officers and IT directors. The AI infrastructure market, which was valued at $23.5 billion in 2021, is expected to soar to an astounding $309.4 billion by 2031, growing at a compound annual growth rate (CAGR) of 29.8 percent from 2022 to 2031.
Advanced AI applications are already optimizing data, automating complex tasks, and facilitating decision-making, according to the study findings. And not surprisingly, organizations of all sizes are increasingly recognizing the need to invest in AI models in order to stay competitive. However, integrating AI, whether this is done by leveraging cloud-based platforms, API-driven architectures, or on-premises installations, comes with considerable challenges. In fact, 90 percent of IT leaders in a large survey said that difficulty in integrating AI is holding their companies back.
AI algorithms and models require significant computational power, leading to infrastructure and skilled staffing demands that many organizations are not able to meet. Being able to access massive amounts of quality data is also paramount for companies since AI models learn based on insights generated from large data sets. AI integration therefore requires efficient data storage, processing, and retrieval systems. Ultimately, streamlined, high-quality data allows for companies to spend less time on data management and more time analyzing the insights generated from AI.
How AI Drives the Need for Scalable Finance Options
With the rise of AI driving the need for increasingly sophisticated cloud-based capabilities, companies are forced to evaluate their tech stack to determine if it is holding the organization back. Historically, organizations have leveraged the cloud to address the limitations of their on-premise infrastructure and have used the cloud to add or expand applications in their tech stack. But AI’s huge data storage requirements are forcing companies to re-assess their cloud-computing bandwidth.
It is becoming clear that both the opportunities and the challenges that come with AI necessitate significant investments in new infrastructure, solutions and skills. Companies need scalable financing options to deal with this rapidly evolving tech landscape. To avoid being hindered by outdated solutions or saddled with debt that could prevent them from innovating, more organizations are therefore seeking new financing solutions that will allow them to grow their infrastructure capabilities and their business without liquidity constraints or the need for added capital.
This is especially true for solution providers, including technology resellers, telecom providers, logistics service providers, diversity-owned businesses, and many others serving the technology industry. For example, value-added resellers (VARs) that provide additional hardware, installation services, consulting, troubleshooting, or other related products or services on top of core products, need flexible financing options to manage their entire supply chain from start to finish.
New Differentiated Solutions Support Business Growth
To meet these needs, cost-effective, vendor-neutral approaches are now emerging to provide financing models that are supportive of both solution providers and vendors. Compared to traditional lending institutions, which provide credit support based on the credit worthiness of the solution provider, these differentiated solutions can provide credit support based on the credit worthiness of the end customer. With these types of customized solutions, organizations across industries can leverage lease and loan options that enable them to finance IT products, from computers and servers to software, to address a company’s unique situation and need.
Assignment financing is another option that enables customers to improve their cash flow by monetizing existing contracts. This process, which can work within an OEM’s or vendor’s existing contract set, pays for products and services upfront, without disrupting existing selling processes. Customers can then enjoy seamless user experiences, with no need for additional contract documents.
As AI rapidly transforms industries, companies will need flexible and tailored financing options that help end-users acquire the latest in hardware, software and services at manageable costs. Creative financing models will enable companies to accelerate the development of innovative projects. End-user customers, as well as OEMs, dealers and value-added resellers will benefit from having these innovative new financing solutions as they look to improve their business performance.
Jim Moschos is Director of Technology Finance at Mitsubishi HC Capital Canada.
Related Posts
