Software leasing may be a relatively new concept in the country, but it will give price sensitive companies--particularly small and midsize businesses (SMBs)--a viable option to finally adopt technology into their business operations.

Germany-based SAP is one of several vendors offering software leasing options in the Philippines. As part of the company's aggressive push to market its otherwise expensive software to small companies in the country, SAP in March signed a partnership deal with ORIX Metro, to provide a financing service for its software. ORIX is a leasing and financial services provider that is backed by Japanese group ORIX and the Metrobank Group, one of the biggest banks in the Philippines.

It is the first time a leasing company has extended its services to include software products, moving beyond traditional offerings that typically encompass tangible assets such as real estate, hardware equipment, among others.

According to Philippine-based research company XMG, businesses in the country can reap significant benefits from software leasing.

In an e-mail interview, XMG senior analyst Benedict Ferrer said the prospects of software leasing in the Philippines "looks positive".

"This move by SAP will be a great opportunity for SMBs to satisfy their software requirements," Ferrer said, noting that software leasing is not a new concept in the global marketplace.

The analyst said software leasing can also impact the business of other global vendors in the Philippines.

Ferrer anticipates that major software vendors will likely "join the bandwagon in software leasing as long as [doing so] doesn't cannibalize their current market, particularly large corporation [customer accounts]".

SAP and ORIX are also optimistic that businesses in the Philippines will warm up to the idea of leasing software, and are targeting companies that are not particularly keen to invest millions of pesos on financing, human resources and CRM applications--markets that SAP plays in.

The software vendors said under this initiative, small companies can have more control over their IT budgets since they will be paying for a pre-determined amount or a fixed--for example, monthly--rate.

SAP said the leasing program will encompass the software licenses as well as training and maintenance services, and customers start paying once the SAP application goes "live".

The software vendor added that the Philippines is now the third country in Asia to have SAP's leasing program, following similar rollouts in Malaysia and Thailand.

According to Bernadette Astudillo, senior vice president and account management chief at ORIX Metro, said the company will offer leasing programs for software under similar terms as any tangible asset. Assessment and credit evaluation of prospective customers will also be conducted in the same way.

In an earlier interview, Astudillo had disclosed that the amount which can be made available to a company can range from half a million peso (US$10,850) to 220 million peso (US$4.8 million). The leasing customer can choose to pay for the software within one to four years, and the turnaround for the loaned amount can range from three to 15 days, she said.

Although the figures are still high from a Philippine SMB prospective, Astudillo said a company will no longer need to invest a huge amount upfront and can spread the cost over a period of time.

Krish Datta, managing director of SAP Philippines, said in a recent interview, that SAP and ORIX Metro are going on a roadshow to promote the new software leasing service to other cities beyond Metro Manila.

The two partners declined to say which customers have been signed on, citing confidentiality reasons, but hinted that some manufacturing companies and a leading oil company, are slated to become part of the clientele.

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