With the on-going Brexit deadlock many businesses have paused their spending plans.
Indeed, analysis of data from the Office of National Statistics shows that businesses have invested £22bn less in the last two and a half years because of the uncertainty caused by Brexit.
While this might be financially prudent, businesses still need to operate as usual and maintain their competitive edge in a global market. Technology is a critical component of this — not only is it crucial in supporting staff, operations and customer interactions, it can also improve business agility and responsiveness to changing market conditions.
And these market conditions are not always predictable. For example, the Stuxnet computer virus destroyed Iran’s ability to enrich Uranium by seeking out the software which controlled its centrifuges and destroyed them. While this may be considered an extreme example, viruses have the ability to destroy IT estates within organisations — Government staff in two municipalities in Alaska had to resort to typewriters when their organisations were attacked.
Another example is the recent Gatwick Airport drone attack which resulted in UK airports implementing anti-drone technology costing millions of pounds, just to remain operating as usual.
The commonality between each of these cases is that organisations have had to invest in technology with funds outside of their budget. And this is not uncommon – Econocom’s own recent research revealed that 67% of finance directors have had to make an unexpected large technology purchase in the last 12 months.
When technology becomes business critical the funding needs to be found; 60% of these unexpected purchases were financed by diverting budget from other services. But organisations do not have endless budgets and being able to react to unexpected challenges and remain competitive and agile is vital.
So how can business meet these challenges while remaining competitive and protecting the bottom line?
Benefits of subscription and as-a-service models
A subscription or as-a-service model is one way to ease the burden of any upfront technology investment, whether it is needed for business-critical reasons or not. It can balance the investment by relieving the burden on capex while delivering on the business’s objectives.
This then frees up the business from the burden of diverting funds from other services over technology to remain operational and agile. Additionally, many organisations will be used to this type of model as they use them to provide the funding for large purchases such as cars and furniture.
Like cars, technology also needs to be managed effectively during its life cycle. So, it can make sense to finance it in the same way. Streamlining the payment process protects organisations from unpredictable business-critical technological financial outlay and protects funds already allocated to other projects.
However, the benefits of a subscription or as-a-service model can be more than responding to immediate technological challenges. Remaining agile and competitive in an unpredictable economic climate is not always easy to achieve. But, when organisations have to find the right balance between remaining cautious and embarking on business transformation, a subscription or as-a-service model could be the answer.
New technology is not only a productivity perk, but it can also offer more flexibility, providing an added incentive to motivate employees. This could mean working from home, or the use of shared mobile devices within the office, designed to facilitate collaborative working. This is something that potential staff often expect from their employers, especially in the case of millennials.
If organisations don’t invest in the latest technology, then they could be losing potential employees as well as customers. The advantage of subscription and as-a-service models is that they allow new devices or platforms to be added on to existing contracts as employee numbers and needs increase.
Total cost of ownership (TCO) for any new technology is also something which needs to be accounted for on the balance sheet and this is not always as straightforward as it seems. Managing life cycle costs such as warranty, storage, running and disposal – in line with GDPR regulations – may be difficult to account for and they could have a dramatic impact on the bottom line if managed incorrectly. Subscription or as-a-service funding models can incorporate these costs into the contract, therefore transferring the burden to opex and protecting the bottom line.
Most organisations will not be faced with a situation as dramatic as the Gatwick Airport drone incident, but, for most, the cost of replacing business-critical technology which was not budgeted for could be equally as devastating to cash flow. Using a subscription or as-a-service model can enable organisations to remain agile and manage any unpredictable technology requirements. In addition to streamlining the payment costs, this model protects capex and has the added benefit of saving costs associated with keeping the technology current and operational.
Nevertheless, although the model addresses the budgetary concerns, it doesn’t alleviate other concerns. Often replacing, upgrading or installing new technology can be time-consuming, challenging and costly. The main concerns being data privacy and security, a lack of budget and resources, and the absence of the right in-house skills and expertise.
Working with a trusted technology partner jointly with a subscription or as-a-service funding model solves many of the budgetary concerns around not only funding business-critical technology but implementing it and managing it throughout its lifecycle as well.
It’s not possible to predict the exact nature of the economic climate post-Brexit or know what challenges may lay around the corner. But whatever happens, organisations cannot remain agile and responsive with old and outdated technology. Subscription and as-a-service models provide an excellent way to respond to challenges, changes in market conditions and the needs of both employees and customers in a risk-free manner.