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Shark Tank for Cloud Transformation Funding?

TerenceNgai

 

The challenges for most organizations looking to transform their business to cloud are all about how technology is acquired, paid for and used to drive business outcomes.   Do you need to get on “Shark Tank” to get the funding you need to drive your cloud business?  Are there other options that allow you to match your investment with actual business demand?

1-20120201_HP_DIVE_LAPB9749.jpgI assume most of you have seen or heard of the ‘Shark Tank’ TV series where aspiring entrepreneur contestants make business presentations to a panel of “shark” investors, who then decide if they want to invest based on certain terms and conditions. Often times, the entrepreneur would typically ask for a certain amount of money in exchange for a percentage of their company equity stake. Entrepreneurs go to the Shark Tank for many reasons:  the TV exposure to drive awareness for their products or an expeditious way to get funding along with some help or advice from the “shark” investors.  However, most business executives charged with offering cloud services to their employees or customers, or solution providers who want to enhance their portfolio of services with cloud-enabled technologies, might not be in a position to offer equity stake for the much needed funding.

 

Challenges of Funding Cloud Transformation

Cloud transformation is not an inexpensive proposition.  Building out a cloud environment requires upfront capital investment for the hardware, software and people before you might see the first customer payment.   And you have to make quite a few decisions about what to build: how much capacity do you build out in the beginning? And then over time?  You run the risk of having excess capacity if the usage you expected does not materialize.  And suppose you have more demand than available capacity, you run the risk of losing potential revenue or having unhappy users.  

Driving cloud transformation is tough from both technology and financial perspectives. Many CEOs and CFOs are evaluating various options to finance the journey - from equipment leasing, deferral payments, or purchasing pre-owned equipment. But are they the best way to fund your cloud transformation?

 

Key Learnings on Innovative Funding Options

I have learned by working hands-on with customers and partners who are currently transforming their business model from reselling commodity IT products to subscription-based cloud services.  Our enterprise customers and service provider partners want to tie their cloud investments to usage and business results.  For this reason, they truly value the following innovative funding options from HPE Financial Services:

  • Pre-provisioning - IT assets are shipped, configured and activated for business based on a pre-determined schedule. This will avoid delays in procurement and payment will begin upon activation. This is the best option for service providers that need access to increasing capacity based on the forecasted capacity demand.
  • Flexible Capacity – Best for spiky demand as scalable capacity can be added in minutes, not months. Pay only for the servers, storage, networking capacity, software licenses, support, and services that customers actually used each month. To properly determine how much base capacity and buffer to set up, you need to conduct an upfront assessment to ‘right size’ the proper environment. Customers and partners can commit to only 80% of the forecasted capacity based on the upfront sizing.  The remaining 20% capacity is variable and billed based on actual usage.
  • Subscription – Choose a turnkey solution, including best-in-class hardware, software, and services, delivered in a per-unit model for a monthly subscription fee. Simple billing and easy to manage procurement from a trusted partner.

 

No Need for ‘Sharks’

Managing financial risks and not over investing upfront is a good path to profitability. The ability to map an investment strategy to a technology strategy can pay dividends by providing an extra degree of flexibility needed to adapt to uncertain demands. The bottom line is that you don’t have to be fooled by Mr. Wonderful’s (Kevin O’Leary) royalty proposal or having to give up valuable equity to the ‘shark’ investors.  You can partner with HPE Financial Services on the right funding model to power and finance your cloud transformation.  For more information, visit www.hpe.com/hpefinancialservices

 

  • HPE Cloud
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About the Author

TerenceNgai

cloud SaaS hybrid IT

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