Cloud-based services that are available as a subscription offer businesses a way to innovate without incurring the sticker shock that often comes with investing in on premise systems.
Buyers of new technology are often put off by sticker prices. This is especially true in the mid-market where risk aversion is high. The business owner or IT manager is often unwilling to be the “first one on the block” to get the shiny new “thing” for fear that it’s not money well spent.
After all, there are so many other pressing needs. The net result is that many small and medium size enterprises are stuck with old technology which in today’s world is an increased security risk. How can a business adopt new technology and services but without a steep capital expenditure?
Cloud computing and subscription models
Cloud computing shows the way with subscription models. Only a few years back, business had to buy, install and maintain data centers. Amazon changed this landscape dramatically with their Elastic Computing Cloud, offering computing capacity by the minute. Dropbox changed it by offering storage by the GB.
It’s now unthinkable for the modern IT department to harken back to the old days. Aside from the network evolution that makes it possible/practical to be “always on” at fast speeds, the innovation is the pricing model. It’s considered low risk and thus has a much lower barrier to entry than the traditional computing offerings. This has driven even Microsoft to adopt “cloud first” as a primary strategy.
Innovation comes to the pricing model
This same innovation has also permeated the strategy of software and solution providers and led to the rise of Software as a Service (SaaS). By avoiding a large up-front capital expenditure, it is now possible for business to adopt new services and technology with low risk.
A pay-as-you-go subscription plan (often monthly with discounts for annual pre-pay) allows you to give the service or product a try without a significant commitment. If it does not work out, for any reason, minimum expenditure has been incurred. If, on the other hand, it does work out, annual pre-paid options are usually available which offers attractive savings.
Innovation goes low risk
Low-risk subscription models are particularly convenient for startup businesses low on funds. Business owners who are trying to decide between cloud hosting and in-house solutions also welcome the chance to do extended trials before committing cap ex.
For MSPs, there is a natural alignment with the monthly billing cycle for all other services.
As business IT moves deeper into the cloud, the subscription model offers an excellent opportunity for buyers of all sizes to innovate at low risk.
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