Posted on: May 25, 2016
IT as a Service is a Welcome Change
Posted by: Phil Stalnaker
Over the weekend, I was conversing with some friends during a relaxing Saturday morning and discussing the state of the housing market. One of the gentlemen in our conversation had recently purchased a home while myself and the third in our talk have been renting for the last few years. Last year I spent six months looking for a home in our area to purchase, but had a hard time finding something in our price range that included what we needed. Seeking to buy a home is a natural, human concept and one most every person does at some point in their life. It is a natural assumption that it is ultimately cheaper to buy than to rent. I found myself on that side of the coin until I had such a hard time finding a house to buy. A story I heard on Saturday only pushed that thought further.
I was told of a number of families that were at that same place – ready to buy a house. However, instead of buying, they rented and took any money that would have been spent extra on the house (insurance, taxes, home improvement projects) and put that into a bank account that earned a higher interest rate than the current purchase rate. The examples show that renting, while seemingly more expensive, actually allowed them a higher return than had they used that money to purchase a home. Is it possible it could be more profitable to rent than to buy?
During my recent Cisco class, we talked a lot about IT as a Service (ITaaS). It is a concept that is designed to remove IT from the capital expenditures line of a company’s budget, and bring it down to a more manageable line item inside the operational expenditures. This is advantageous for both parties, ultimately, because for the company it lowers their investment risk of technology while ensuring closer connection and communication with their IT outsourcer. For the IT outsourcer, it provides a fixed billing income that can be relied on month-to-month.
Data seems to show that it is generally a good idea for a business to move to IT as a Service, yet there is still some push back from those that still hold to some specific questions about it. This push back is basically the same attitude toward IT as a Service as it is toward the real estate market. Let’s take a look at some of these natural objections and see if it is really better to hold onto the past.
Why continually pay for something that has previously been a one-time purchase?
The question of whether to buy or lease is one that has to be determined both residentially and commercially. It could be for your home (as mentioned previously), car, furniture, electronics, or even employees (temp vs full hire), software, tech hardware, etc…
When it comes to IT as a Service, the goal (from the customer perspective) is to reach their business goals in the most profitable way possible. Technology, both hardware and software has a shelf life. I have heard too many stories of businesses investing in technology and spending tens of thousands of dollars on upgrades only to find that their finite purchase no longer fits their needs three or four years later.
The progression of technology moves at such a fast pace, it is becoming more and more profitable to lease equipment that allows for scalability and flexibility as you work on growing your business. While a recurring expense is never fun to have, these become much lower, budget-able operational expenses instead of high-level capital expenditures that often create significant cash flow problems. Plus, it allows you to make sure you have the latest, best technology advances to help your business.
How does It as a Service fit with Software as a Service (SaaS)?
Software is moving toward that same model. One-time purchases of the past (such as Microsoft Office, Adobe, even AutoCAD and QuickBooks) are moving toward subscription models. The publishers, for security and privacy reasons, are moving to this new model which allows them to make sure everyone has the newest versions and only the people who pay for it are able to use it.
While it seems that they just figured out a new way to raise their prices, this can actually be beneficial to you as well. No longer do you need to deal with version compatibility issues in your office. Everyone will have the same version of the necessary software, which will make file sharing and communication much simpler. This model also ensures that you are always on the leading edge, as updated versions and capabilities are now free upgrades as opposed to totally new license purchases.
With the low price of subscriptions and the rate of new versions being launched, you can hardly call the different cost structure a strict rise in cost for the same thing. Not only will be getting everything that has been mentioned, but some software will allow you to activate it on multiple machines – which means that your employees (if you decide to offer this as a fringe benefit) can have the same software on their home computer and mobile devices, making it that much easier for them to do business regardless of their current location.
How does the It as a Service model handle the actual service of IT?
On the service level, IT as a Service is about giving you less stress thinking about technology, thus making your focus on your business stronger. Having a managed services company that can automatically manage and monitor your on-going tech systems will be a huge benefit to your bottom line. Take remote monitoring, for example. No more are the days when someone clicks a bad link on the computer and loses days of productivity to a down workstation. With remote monitoring, your IT service provider is immediately aware and able to respond form their current location. This saves you on downtime, labor and the cost of new hardware.
Having automated offline and online backup systems means that you don’t need to wonder if the tapes got switched and how much time it takes in a day to make a single backup. Whether it is phone service, software, managed services or technology equipment, the more you can standardize your needs and set everything on autopilot, the less your brain is encumbered, the less you have to manage it, all the while giving you more time on the important things in your business.