Pay as you go
Over the past few decades hardware and software acquisitions have occurred via traditional capital expense cost models. This approach has required organizations to pay large amounts of up-front fees for the use of long-term assets. The return on investment has never proven to be positive for a majority of these capital expenditures. Organizations continue to buy these critical business resources on “trust” that the value and benefit will be realized.
Software as a Service (SaaS) offered the potential to reduce risk and headache while moving to a simpler subscription model for “renting” software and application licenses. It requires the payment of a regular fee for the right to utilize software and services even though it may not be fully used over the contracted period. For instance, a per user model accrues charges even if the software is not being accessed, or the user is absent for an extended period. SaaS is a move in the right direction, but not far enough.
A key business benefit to customers and a key disruptor to traditional hardware and software expenditures is cloud computing’s pay-as-you-go or pay-as-you-use model. Organizations pay only for what is used and no more. For example, it might be highly beneficial to a company if a brand new high powered server farm could be obtained for the introduction of a new web based market offering with zero upfront capital. This high performance, ‘cloud on demand’ computing is available with only minutes of configuration on per use business terms with costs for only what is consumed.
cloud computing services enable organizations to acquire extended hardware resources, whole application platforms and component business services, and pay only for those external resources that are used. This approach, cloud on demand, is revolutionizing the way organizations buy and measure success with information technology expenditures. This impacts the aggressive over selling techniques of traditional IT vendors and provides companies with a more transparent way to manage and monitor vendor relationships. The consumer is in control of the value chain and determines how to transparently compare use and value to the incurred costs.
One important consideration is the internal procurement process of the cloud consumer organization. It will be necessary to revisit your traditional procurement procedures and business case development to adapt to this new ‘just-enough just-in-time’ approach. It would be a waste to embark on a cloud initiative only to be blocked by legacy procurement procedures or the misunderstanding of changed business case proposals.
The senseTM solutions family is firmly based on these pay-as-you-use cloud principles. sense provides the maximum business control for cloud technology operations expenditures by offering pay-as-you-use licensing and allowing use of business criteria (policies, KPIs, SLAs) for resource allocation to high value business applications in real time.
If you are interested in discussing how sense pay-as-you-use can work for you, please contact us here.
