What is Driving New Tech Consumption Models?
Even before the pandemic, investment in cloud, security and IoT was on the rise and in the last 18 months, that growth has been exponential. For many organizations, starting up a new next-gen practice is a completely new endeavor, one that can be incredibly challenging and complex. There are thousands of cloud, IoT and security vendors available in the market, and choosing the right one(s), equipping your staff to support those technologies and then being able to maintain and grow those solutions is something most organizations struggle to do on their own. Today, IT distributors fill that role as a solutions aggregator, with next-gen expertise and enablement programs to make it easier for channel partners to implement modern solutions into their organizations.
One of the adjustments that organizations are making is in the way they finance the technology that they utilize. Historically, channel partners would pay (either upfront or through financing) for the hardware, software licenses and the services that were expected to fill their need for the next one to five years, and then adding on as subscriptions or contracts expired. As a result, there were enormous amounts of either underutilized overhead costs or the inability to meet growing demand because of maximized tech capacity.
In other words…
Think about the energy bill at your home and rather than paying by how much energy you actually use, they need you to predict how much energy you’ll consume in the next year. More than likely, you would look at past trends to forecast what the next year will look like, but what happens when you’re away from home much of the year and the climate remains mild? You likely will have grossly overpaid for the energy you didn’t even use. On the other hand, what if brutally cold winters or extremely hot summers have used all of your energy allotment by month ten? Both scenarios are exactly what organizations faced with traditional IT financing.
That’s where the concept of consumption-based financing has taken hold of the tech world. You might see the consumption-based model referred to as pay-as-you-go, technology/everything-as-a-service, flexible consumption or subscription-based financing, but most of these terms apply to organizations that only pay for the technology, solutions and services that they use with little to no long-term commitment.
What’s causing the rise in flexible, consumption-based financing?
For years, we heard the phrase “disrupt so you’re not disrupted.” Well, now there is a significant amount of disruption and companies are at different levels of digital transformation sophistication. In “these unprecedented times,” (don’t worry, I’ll put a quarter in the swear jar) flexibility is a requirement. With everything. The pandemic has played one of the largest roles in the rapid adoption of consumption-based financing, simply based on the factor of the unknown. For more than a year and a half, workforces have moved to a remote environment, a massive undertaking for businesses who had to make a more extreme adaptation than others; businesses have both struggled and thrived at various points, causing fluctuation in both revenues and expenditures. Other factors include:
- Ransomware mitigation through security in the cloud — With the rise in cybersecurity attacks since the pandemic started, security vendors are playing a key role in providing a defined platform to assess threats, protect from attacks and then recover quickly without any downtime in the event of an attack.
- Connected device policies — Organizations are quickly realizing that BYOD policies and processes are essential for this blurred world of work and home life. Having the right protection in place for co-workers who connect their personal devices to work accounts is critical to keeping proprietary information and data secure. Adoption of BYOD can vary greatly depending on the sophistication of the organization and until trends can solidify, flexible financing allows the leniency for different levels of connected devices.
- Digitization — Digital transformation is one of the reasons why it’s great to be in tech right now, but that opportunity for growth also means brand new endeavors for organizations that are catching up to remote workforce solutions.
Now that we’ve laid the foundation of flexible, consumption-based financing, we want to share the top three benefits of shifting to this model:
1. Flexibility, Agility, Innovation
A primary reason for making the shift to consumption-based financing is the decreased risk in over- or under-forecasting future spend. There’s a lot more comfort in flexibility and predictability when it comes to knowing how much you’ll be spending. Services such as TD SYNNEX StreamOne gives valuable insights reports for more visibility on what you’re spending and what you’ll need to leverage in the future.
Our channel partners know that customers need innovative solutions that ensure no downtime for the business while increasing the business outcome opportunity moving forward. Business continuity is one of, if not the key factor in an IT decision-maker’s thoughts when pursuing new equipment and services, so by increasing the flexibility and agility, the risk of downtime decreases.
2. Simplifying the Complex
One of the key selling points for consumption models is accelerated speed when it comes to time-to-market. One of the biggest barriers to high-speed deployment is the complicated nature of deploying enterprise-level cloud platforms. Many channel partners are simply not fully equipped to embrace the modern hybrid cloud model, but consumption-based usage allows these organizations to ease into a platform until fully available to deploy to their end user customers.
Today, tech companies are developing solutions for outcomes we never thought about, and it requires collaboration across IoT, security, cloud, data and connected devices. Knowing that it’s much easier said than done, TD SYNNEX has actively rolled out a series of ready-to-deploy Click to Run™ solutions that allow channel partners to launch fully-vetted next-gen solutions in minutes, rather than days or weeks of configuration, design, testing and installation.
3. Scaling Across Next-gen
Today, it’s impossible to have the cloud conversation without also having the IoT conversation without also having the edge solutions conversation without also having the security conversation. Next-gen technologies are intimately intertwined and are driving one another. For example, the Internet of Things allows for devices to be connected, while cloud simplifies the data adoption. All of the output from these connections, such as data processing and storage requires layers of security, so it turns into an entire end-to-end solution.
Having the know-how to deploy solutions for end user clients in all of these areas can easily set you apart from your competitors. Consumption models allow partners to accelerate their tech adoption without heavily investing in significant amounts of infrastructure or unnecessary technology that may not even support high-growth areas.
Above all, consumption-based models have allowed organizations to add value to a typically transactional sale, something highly coveted in the tech channel. Additionally, once your sales and support staff have worked with TD SYNNEX to utilize consumption-based conversations, your customers look at you as the trusted advisor to put everything together moving forward. Many of TD SYNNEX’s vendors offer versions of consumption-based financing, such as HPE’s GreenLake or IBM’s flexible infrastructure, and TD SYNNEX offers our own TaaS offering through Tech Data Capital. Talk to your TD SYNNEX account representative today to learn more about your ideal financing options.