The world of IT has been through a lot of changes lately.
Going back in time, an IT purchase resulted in a shipment of a box. Looking at our business today, a large majority of our deliveries is a right to use a software or hardware asset.
The business is also transforming from a Capex to an Opex model.
The Capex model is based on a one time large sell, followed by a number of renewal or maintenance sales. In best case there will be an upgrade or resale of new functionality after some years, but one fact is clear…. Due to the pressure on margins, the competition and budget restrictions, it will be a significant smaller sale, with smaller renewal or maintenance sales following.
Furthermore it can be assumed that you as a business partner will face again competition as the user will seek for different offers.
In the Opex model, or the pay-as-you use model, you do a small sale each month. Several benefits present themselves:
- Smaller sales cycle for the provider,… this is also enabled by the ‘Try before you buy’ model.
- Faster or even no need for ROI… there’s practically no investment to be done.
- Predictable revenue streams benefit to Cashflow & Credit line administration.
- Reduction on administration cost by taking benefit of tools like ArrowSphere, the cost is significantly reduced to an automated billing process.
- Reduction on support cost as all the different customers run from 1 site, there are less sites to administer.
On top of these benefits, you can expect for the revenue stream to continue for longer !
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