IT decision makers have a lot to consider when choosing the right technology solution for their business needs, and chief among those concerns is how they will pay for, or consume, the technology. A recent study from Techaisle indicates that as businesses grow in size, financing becomes increasingly important in their technology acquisition decisions. Small businesses who responded to the study said financing was critical or very important 46 percent of the time, and midmarket businesses said it was critical or very important 83 percent of the time.
What’s more, almost every business in today’s technology environment is on some sort of journey to the cloud, whether it’s setting up a private on-premise solution, or utilizing one of the many off-premise public cloud services available. This more complex mix of cloud solutions, software, and hardware bundled with services requires new financing models that can provide more flexible payment options.
“The key to choosing the right solution is having conversations early with your technology vendor”
“Pay-per-use options are growing in popularity with both IaaS and traditional IT infrastructure customers, and their satisfaction levels and future requirements are beginning to crystalize,” says Susan G. Middleton, research director, Technology Financing Strategies for industry analyst firm IDC. “Our research shows that pay-per-use programs are now a key requirement when enterprises evaluate their IT infrastructure partners.”
So what are some of the key questions CIOs need to consider in choosing the right IT infrastructure partner and payment plan? Here are a few that, asked early in the process, can help uncover the best consumption model for your business:
Do I want CAPEX or OPEX? That same Techaisle study showed that 35 percent of midmarket businesses are moving more to OPEX-based agreements with an additional 21 percent looking for a mix of CAPEX and OPEX-based agreements. Shifting from a CAPEX to OPEX model when financing technology acquisitions can help you retain capital to spend on other business projects and needs.
Do I need an on-premise or off-premise solution? An on-premise solution may require additional hardware, software and services costs that can be managed through a well-structured lease with built-in technology refresh cycles. Off-premise solutions offer more flexibility, but at a premium. Often, the right solution is somewhere in the middle and the right financing option can help manage your transition to a hybrid cloud solution.
Do I want to buy my solution as a product, or do I want to consume technology as a service? A complete IT infrastructure can come with a big price tag, so you need to consider the cost of maintenance, security and operational efficiencies and decide how to meet your technology needs while preserving cash flow. Consumption-based payment options can let you scale based on demand and eliminate lengthy procurement cycles.
Can I commit to a specific product for a specific time, or do I need something more flexible? The more a business can commit to a specific understanding of what it needs, and for how long, the more likely it is to drive lower compute costs per unit. Some businesses, however, benefit from the flexibility of managing their infrastructure to changing needs. Having a clear understanding of the stability of your environment is an important step in determining which model fits best.
As these questions illustrate, there is no one-size-fits-all approach in today’s technology environment. Most businesses manage a large portfolio of workloads all with different usage profiles. Legacy applications might allow a business to accurately predict and forecast their usage patterns, while other environments–like big data and analytics–drive volatile burst capacity requirements.
The key to choosing the right solution is having conversations early with your technology vendor not only about your technical requirements, but also your financial and business objectives. This will help you align your specific usage patterns to the consumption and payment solution that’s the best fit for you, regardless of where you are on your journey to the cloud.