With Unilever’s acquisition of Dollar Shave Club, Blue Apron’s recent IPO and the explosive adoption of services like Amazon Prime and Netflix, it’s clear that the subscription economy is here to stay. The way customers acquire goods has changed. They are no longer investing in ownership, but customization of on-demand delivery and fresh experiences.
But the way this shift toward subscriptions is driving change is not just in the consumer world, it is impacting enterprise IT in a major way.
In fact, Gartner predicts that by 2020, more than 80% of software vendors will change their business model from traditional licenses and maintenance to subscription based. This new model will affect virtually all aspects of how business leaders and IT teams plan for, finance, acquire, and consume technology. Advancements in virtualization technologies are enabling everything from consumer- and office-oriented software tools to core data center services and hardware appliances to be deployed as utility services.
But while most organizations are aware of the financial, dollar-saving benefits of subscription IT, few are aware of how its positive impacts extend beyond the bottom line. More than cutting costs, subscription IT holds some powerful benefits for businesses in terms of bolstering cybersecurity, productivity, and efficiency. Below are three benefits your business stands to gain from embracing subscription-based IT:
1. No dollars wasted
It’s no secret that many IT departments are squeezed for budget, and, as a result, face intense pressure to reduce costs, find efficiencies, and deliver greater value per dollar. This translates into fewer and smaller new investments and hinders new technology adoption.
Perhaps one of the greatest benefits of a subscription model is that it realigns IT spending to actual usage. Organizations can deploy a capability with payment that scales with their fluctuating needs rather than wasting dollars on underutilized features year-round. For example, to accommodate seasonal or periodic peak workloads, an online retailer might invest in increased network traffic solutions only during the high-volume holiday shopping season.
Likewise, customers have the flexibility to add or remove various capability features of their service so they are more tailored to their actual needs. As turning on and off a capability is relatively inexpensive and easy and there aren’t any perpetual licenses locking you in, the risks of deploying new technology are lessened. If one solution is not a good fit, IT can relatively easily switch to another.
2. Stronger security and more innovative IT
The technology landscape is volatile and uncertain: long-term technology investments today are often quickly made outdated by new advances around the corner. Advancements and upgrades occur so rapidly that budget-driven refresh cycles struggle to keep pace. And because refresh cycles are lagging, IT and security teams struggle with the negative cybersecurity, productivity, and efficiency implications of running on outdated equipment and software. This is particularly alarming since end-of-life assets are favored gateways (or backdoors) for cyberattacks. Case in point: the devastating WannaCry attack on the UK healthcare system which successfully targeted hospitals running older, unsupported (and thus unsecure) versions of Microsoft Windows.
The great thing about technology under a subscription model is that it is always current—no more worrying about end-of-support or end-of-life assets on networks that are magnets for cyberattacks. Gone are the days of disruptive and expensive technology refresh cycles. Upgrades and updates (such as adapting the technology to new infrastructures or operating systems) are done as part of the subscription cost.
It’s win-win: Not only is IT spending trimmed down, your business’ mission-critical assets are kept safe and secure, and the flexibility ensures you’re always able to take advantage of the most current and innovative technology advances.
3. Double the power and productivity
Acquisition and maintenance of IT infrastructure not only overwhelms thinly spread budgets, but staff resources as well. Those with valuable IT skills are increasingly in short supply at many organizations -- often preoccupied with tending to infrastructure upkeep and time-consuming manual updates. Because subscription IT is generally provided as a service, strapped IT teams are freed up from having to maintain infrastructure to focus on higher-priority demands. This is particularly helpful as new IT skills constantly come into demand (security governance, big data, threat intelligence, to name a few) and existing staff can devote time to mastering these crucial new skillsets.
In addition, expenses and costs are more transparent, predictable, and stable. When organizations have a clearer picture of their IT consumption and resulting costs, they can tweak policies to create more transparent charge-back mechanisms, and drive internal efficiencies and productivity.
As subscription IT becomes the new normal, business leaders should embrace it not just for trimming budgets, but for boosting cybersecurity, productivity, and efficiency. Its core features of approaching IT as a consumption-based utility, as opposed to a large capital investment; reducing risks associated with technology adoption; scaling capacity up or down as needed; bolstering security; and bringing greater clarity to IT consumption will enable organizations to better contend with the technology uncertainties and risks they face today. In a digital landscape that is constantly evolving, business leaders can’t underestimate the importance of having the flexibility to adapt with the times.
A seasoned networking and software industry executive with a track record of building large businesses, Jesper Andersen is the leader of Infoblox, responsible for the company’s continuing growth and innovation. Prior to joining Infoblox in 2014, he served in a number of roles at Cisco Systems, including senior vice president for network management. Previously, he held senior management positions at Oracle, PeopleSoft, Pivotal Software and Computer Resources International.