The Cloud Experience Everywhere
cancel
Showing results for 
Search instead for 
Did you mean: 

“As-a-Service” IT financing: The path to agile digital transformation

The first step to realizing the promise of DX transformation is updating IT infrastructure—and that's when new payment options like “as-a-service” can help.

By Susan Middleton, Research Director, Flexible Consumption and Financing Strategies for IT Infrastructure, IDC.

Susan Middleton.jpgThe promise of DX transformation is that it will enable businesses to use new technologies like AI, blockchain, and IoT to accelerate growth. As enterprise customers have embarked on this journey, they have realized that before they can become digitally transformed, there are many decisions and processes that need to be implemented. However, the first step to achieving this objective is updating IT infrastructure—and that's when new payment options like “as-a-service” can help.

One of the first potential accelerators to IT transformation is finding a way to unlock the investment in a legacy infrastructure and bridge to new, dynamic IT infrastructure. And there will be enterprises at different stages of that adoption curve. Some will have already evaluated multiple infrastructure choices and decided about the mix of on-premises versus off-premises solutions. At the other end of the spectrum, other organizations will be just beginning the evaluation process.

The one unifying goal of all: Make the transition economically and within budget. Because let’s face it, many enterprises—perhaps most—face insufficient budgets and must transform with limited funds and too little flexibility.  

Consumption based IT 2.jpg

 

When the decisions about transformation are tied to budget, enterprises must also evaluate how to finance the transition. For many organizations, the chance to reduce capital expenditures leads them to the as-a-service models that are available from most infrastructure vendors. These models deliver many of the same attributes of public clouds: on-demand capacity, scalability, and the ability to only pay for what is used.

To underscore the similarity in the mindset of enterprises evaluating public cloud versus as-a-service models, in 2018 IDC conducted a study asking customers the top reasons why they’d adopt flexible payment options. Here’s what they told us:

  1. Simplify device management
  2. Reduce IT & procurement staff workload
  3. Faster device refresh
  4. Safe & secure disposal
  5. Predictable cost model
  6. Protection from technology obsolescence

Additionally, IDC research demonstrates that customers want to work with a trusted vendor that understands not only their existing infrastructure investments, but also their overall business vertical and future IT challenges.

When faced with the challenges of digital transformation and budget constraints, businesses are relying on new payment options like flexible consumption models as an important way to support their organization’s digital transformation because the model delivers the operational flexibility and budget transparency that informs IT decisions and provides customers with a choice to use opex spending instead of capex spending.

Looking forward, IDC expects the adoption of these new models to accelerate as more enterprises look for innovative ways to acquire capacity and fund their transformations.  The continued shift to flexible consumption models will also drive the providers of these financing models to streamline the adoption process with clearer metrics about pricing, capacity, and services that will simplify the deployment of these models.

With advanced analytics and the integration of AI, IDC expects the ramp-up to as-a-service models to accelerate quickly over the next few years. In fact, by 2024, IDC predicts that more than half of datacenter infrastructure will be consumed/operated via an as-a-service model, as customers adopt these models to gain the agility and cost predictability required to compete in today's competitive business environments.

How well will your organization be positioned to compete?

To learn more about kick-starting transformation with flexible financing models, view this video:

Susan Middleton.jpgSusan Middleton, Research Director, Flexible Consumption and Financing Strategies for IT Infrastructure, IDC

Susan Middleton leads IDC's worldwide research on IT equipment, software, and services financing markets. As research director for IDC's Flexible Consumption and Financing Strategies for IT Infrastructure research, her analysis provides insight from both a supply-side and a buyers' point of view. Ms. Middleton's core research coverage includes the evolution of procurement models from purchasing, leasing and financing to the new as-a-service models, also known as flexible consumption. Based on her analysis and expertise on procurement strategies and IT equipment lifecycles, Ms. Middleton's research helps vendors and buyers understand the top drivers of the new flexible consumption models and the impact of these new buying behaviors on long-term IT equipment values and forecasts.

0 Kudos
About the Author

ServicesExperts