The rise of cloud subscription services
Senior IT managers across the UK are increasingly looking to purchase business applications via a subscription model according to a survey from a cloud applications supplier, CloudSense. Carried out by research specialists Vanson Bourne, the survey polled 100 senior IT managers in UK enterprises (minimum 1000 employees) on their thoughts about purchasing business applications via subscription rather than through capital investments. The survey highlighted that 75 percent of UK businesses have either deployed, or are in the process of deploying, a subscription-based purchasing model for some or all of their business applications.
“The survey results back up what we have observed in the market,” comments Richard Britton, managing director of CloudSense. “We are currently seeing the rise of a subscription economy where consumers buy goods and services via subscription, rather than as one off capital expenditures. The popularity of services such as Spotify, Zipcars and even the ‘Boris bikes’ underlines this trend. This is largely driven by the greater choice, reduced cost and flexibility that subscription services can provide to consumers. The subscription economy is growing fast and those businesses that cannot react quickly enough to take advantage of it will be left behind. A new consumer purchasing model, however, requires a new approach to back office systems in order to provide the flexibility and scalability required. Here businesses should look to implement subscription-based business applications that mirror the consumer purchasing model. For the first time we are here seeing businesses taking the lead from the consumer environment.”
The survey demonstrated that IT managers are aware of the benefits that moving to a subscription-based purchasing model will afford. For the respondents, the key benefits of the subscription model include more tightly controlled costs (59 percent), faster speed of implementation (50 percent) and avoiding costly infrastructure so they can focus on innovation and value added IT (50 percent). The survey also revealed a high degree of optimism about the extent of cost savings that such a purchasing model can bring about, with 71 percent of respondents envisioning annual savings of £10,000 or more (24 percent thought that savings could, in fact, exceed £100,000 per year).
“This reflects what we have been telling businesses for some time,” claims Britton. “IT decision makers should look to model their approach to ordering process on the subscription economy itself. By reflecting the way in which consumers buy services, businesses will find they have a much more efficient, powerful and productive back office stack. In this approach, businesses will subscribe to a set of cloud-based services that would be able to address the key areas of pricing, quoting and ordering while integrating all cloud applications and infrastructures and being flexible enough to deliver rapid change. Businesses will gain the benefits of the subscription economy currently enjoyed by consumers – bundling of products and services, a rapid upgrade path as new services and devices emerge as well as the ability to build long term relationships with their customers.”
The research also revealed that a key reason why businesses believe the subscription model will deliver such strong cost savings is that it allows them to integrate their technology solutions to a greater degree. When asked whether, from their own experiences within their organisations, they believed a lack of integration in technology solutions can lead to increased operational cost of IT management, the respondents were quick to agree. In fact, 95 percent of the senior IT managers polled agreed that lack of integration is responsible for increased operational costs for their businesses.
