The way in which businesses and consumers buy IT services is changing, cloud technology has seen IT capital expenditure decline as companies move to IT software subscription services.
Cloud technology allows companies large and small to outsource their IT infrastructure and pay on a subscription basis rather than requiring an expensive upfront capital expenditure. This is changing the industry rapidly, IT providers are moving from a model where companies buy hardware and software outright, to one where IT software is sold on a subscription basis.
The adoption of the IT
Subscription model has moved beyond innovators and early adopters and into the mainstream. Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) have been growing steadily within the last five years but we may have reached a tipping point. These services are being utilized by software companies large and small. Demonstrated by a study by Gartner predicting that ‘by 2020, 80 percent of software vendors will change their business model from traditional license and maintenance to subscription.’
IT Software Subscription & The Circular Economy
The growth of IT software subscription is something we have spoken about previously in the VIP Apps Consulting blog as part of the circular economy where we look at the opportunities that the creation of a leasing society will potentially have for the finance and leasing industries.
This model incentivises organisations to maximise the lifecycle and reusability of products which increases efficiency whilst reducing the resources required creating a win-win.
SaaS and IaaS in Practice
IT subscription is becoming dominant in the consumer sector via products such as Microsoft Office365 as well as for large corporates such as finance and leasing companies using Oracle’s cloud solution to streamline processes. The main advantages being that companies only pay for the products and services that they are using, that products and services are updated automatically and that the solutions are more scalable. With uncertain economic times and the pressure on CFO’s to manage risk and capital expenditure effectively without constraining innovation, we are likely to see the drive towards IaaS and SaaS across the entire economy continue.
VIP Apps Consulting has extensive experience within the financial services industry with the knowledge capabilities and operational track, to help organisations implement the process changes, optimisation and innovation to realise the financial value in a customer driven market.
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