Cutting Risk with as-a-Service

How does an as-a-Service IT model reduce risk and free up businesses to innovate and expand?

By Sara Downey, editor of Perspectives, Research & Insights, and Ihab El Ghazzawi Regional Director, APEX Sales Enablement

It’s a common phrase: “The world changed overnight.” Except it rarely does, if ever. Yes, cataclysmic events happen, but the world doesn’t respond in unison, immediately. Although the word “revolution” has a dramatic ring to it, each industrial revolution unfolded over years. It’s common to arrive at a destination, look back and contract the many “small beginnings” into quick single events. But that’s a perception error. In reality, progress happens incrementally.

The likelihood is, the same perception will form once the vast majority of companies are running on a subscription-based model for most things, including their IT. Recently, we explained what’s propelling the shift to an on-demand economy and referred to a twilight zone (created by the usual lag between understanding and action). We can see this lag in the Data Paradox, a Forrester Consulting commissioned study conducted on behalf of Dell Technologies. Forrester discovered that only 20 percent of businesses have moved the majority of their infrastructure and applications to an as-a-Service model. Putting the benefits of an on-demand model aside, that’s not entirely surprising: everyone moves to their own drumbeat. No doubt the other four in five businesses will follow in due course. The reasons why can be read in Steve Todd and Nicole Reineke’s blogs. Here, we’ll zero in on the opportunity to cancel or spread risk.

1. Freed From Procurement Ailments

Companies have long suffered from common ailments. At one end of the spectrum, you have “fear of missing out (FOMO)” and on the other “analysis paralysis.”

With FOMO, corporates might rush in, buy the new shiny technology and then discover it’s not particularly interoperable, doesn’t do what it says on the tin, doesn’t scale, or isn’t particularly futureproof.

With analysis paralysis, corporations might presage a cocktail of risks, shop around, feel overwhelmed by the plethora of options available to them—and their mixed reviews—and then decide to wait and see until they reason that it’s better to not invest in something today that could become a dinosaur tomorrow. Would they be wrong? Yes and no.

Doing nothing could either see them shut out of the digital economy, so they don’t have a tomorrow. Or, if they do limp on, they might emerge so badly bruised and out of favor that they’ll struggle to win back trust in their brand and/or customers that deserted them during the fallow season. Whereas those companies that raced to invest might rue the day when they signed on the dotted line and bet the farm on a multi-year infrastructure project that sucked up all of their time and expense, so they couldn’t join the stampede when something better and ground-breaking swung around the corner.

The as-a-Service model is reducing IT risk so businesses don’t fall into either trap. Certain as-a-Service models can now take on the full cornucopia of risk: operational, financial, etc., so businesses can enjoy access to the latest and greatest technology, without having to find the upfront CapEx spend.

We’re seeing businesses wake up to the benefits of an as-a-Service economy. The Data Paradox study reveals that 51 percent of senior decision-makers with responsibility for data believe deploying as-a-Service would avoid “vendor lock-in” due to compatibility with diverse platforms, and automatically initiate transparent application and infrastructure updates. Meaning they wouldn’t be burdened with “outdated IT infrastructure” and “processes too manual to meet [our] needs”—two barriers to data readiness, according to the Data Paradox study.

2. Freed From Money Woes

Overspending on IT is another risk that needs to be contained. According to the Data Paradox study, IT spend increased by 77 percent over the last three years and is expected to climb a further 57 percent over the next three years. Despite hemorrhaging money, 55 percent of businesses say they still have not come close to realizing their digital transformation goals. In some cases, IT transformation has become a runaway train that needs to be brought under control–particularly in these uncertain times.

A pay-as-you-go model provides that degree of control. Consumption-based models enable businesses to only pay for what they use and slim down monthly payments where needed. The COVID-19 lockdowns may have accelerated the push to go digital, but it also demonstrated the importance of building more fail-safes into company expenditure.

Moreover, for most organizations, switching from CapEx to OpEx makes more financial sense: OpEx is tax-deductible and can be subtracted from the business revenue when working out true profits and losses. Again, business leaders are starting to see the financial benefits of moving to an as-a-Service model: 48 percent say deploying as-a-Service would provide greater financial certainty and control to drive down costs.

3. Freed From Wasted Talent

Wasting the focus and talents of your brightest IT minds can also be ameliorated with as-a-Service. This thinking is shared by the 49 percent of decision-makers who believe an on-demand IT model would lighten the load on IT departments.

For instance, it would enable an IT team at a hospital to wield technology to improve patient outcomes, rather than getting bogged down by data management. Or an oil and gas company harnessing data-as-a-Service to identify ways to reduce drilling down, instead of wasting resources just searching and assembling data.

Rather than losing their employee’s attention to mundane tasks, data-driven organizations can leverage on-demand IT to focus on work that will truly move the needle.

Competition Fit with as-a-Service

Of course, no business can fully cancel out risk, but they can mitigate it and spread it with an as-a-Service operating model. We’ve expounded upon some of the risks of running a business on a “pay-and-do-everything-yourself-upfront” model: outdated technology, punitive upfront costs, wasted talent. But the over-arching threat is not being able to compete in a fast-moving, iterative world. That’s the summation of a whole load of risk businesses need to offset quickly.