How to take a stake in the subscription economy

By JIM HOLLAND, country head at Lenovo Data Centre Group (DCG) South Africa

Remember the days when you owned records, DVDs, cars, property? For many today in their personal lives, real ownership is such a distant concept it’s almost viewed with a sense of nostalgia. In the current subscription economy, consumers only want to pay for what they use – and it’s no different in the world of IT.

As new technology and innovations continue to transform our world – seemingly making everything simpler, more personalised and faster – significant disruptions occur in virtually every aspect of our lives. Ever since the Cloud drifted into the IT skies, expectations of how critical infrastructure can be accessed and consumed has shifted.

Public cloud has enabled more choice, lowered risk and increased flexibility for end users. But in this new landscape, service providers are seeking new ways to maintain their rapidly diminishing margins and apply the pillars of the subscription economy to their IT solutions.

If IT were public transport…

Let’s look at IT needs through the lens of public transport. Big city dwellers likely rely more on mass transportation to get to and from work every day, compared to suburban or small-town workers. Chances are they don’t have (or simply don’t use) a car on a daily basis, but instead rely on subways, buses and trains to get around the city or rental cars for longer trips. In this situation, owning a car – and paying for fuel, parking, insurance and maintenance for a vehicle that sits in the garage – just doesn’t make sense. Conversely, public transport options, while potentially more cost-effective, leave commuters subject to overcrowding, unforeseen delays, and cleanliness.

And for years, those were the options. Own a car and deal with the implications, or rely on public transport and deal with the implications. That was until car-sharing and ride-sharing apps became pervasive. Now, people could have a viable alternative to owning a car and relying on public transport that yielded the best of both worlds.

With more options available than ever before, the “city dweller” IT customer with occasional or fluctuating needs doesn’t want to invest up front in IT hardware that they may not immediately capitalise on. They only want to pay for what they consume – and not a megabyte more.

Join the subscription-based IT revolution

These consumption patterns are shifting in all industries all over the world, from the music industry becoming reliant on streaming services like Spotify to Porsche offering monthly subscriptions that allow the user access to any Porsche they want to drive on any given day.

But this subscription-based model that permeates our personal lives has yet to be truly applied it to a business environment. Some vendors have offerings claim to be Hardware-as-a-Service (HaaS) but are really just modified leasing constructs with high minimum capacity commitments, extended terms and heavy services requirements. Some of these offerings only apply to a select portion of the product portfolio.

That all changes with the launch of Lenovo TruScale Infrastructure Services, which provides our partners – resellers, VARs and distributors – with a ‘pay-for-what-you-use data centre’ service. Customers use and pay for hardware, software solutions and services on-premise or at a customer-preferred location without having to purchase the equipment.

This versatile, flexible, simple take on procuring IT resources via a consumption-based, subscription model ensures customers never take capital ownership of hardware or other IT assets, and only pay for what they use each month as part of their operating expenses. Monthly pricing structures are simple and all-inclusive of associated services, such as maintenance, support, remote monitoring, and system health, in one bill.

Infrastructure-as-a-Service (IaaS) conventionally refers to public cloud offerings. But Lenovo TruScale, which is unique in being a true consumption-based model with no required minimum capacity commitment, offers end users the pricing flexibility of public cloud services, while getting the benefit of all assets, including data, remaining on-premises. The offering can be applied to any configuration that meets the customer’s needs – whether storage-rich, server-heavy, hyperconverged or high-performance compute – and can be scaled as business dictates.

Businesses can, therefore, take full control of their environment and security policy, while enjoying optimal levels of data integrity and sovereignty, data being encrypted and safeguarded according to their defined policies, and lightning-fast speed data transfers.

Open channels of communication

Lenovo TruScale provides our partners with an excellent opportunity to win new accounts, while the evolving nature of the offering keeps communication channels open throughout the entire contract. This will help partners to foster stronger relationships with the end user, ensuring they’re doing everything they can to meet that customer’s specific needs and become invaluable to the organisation.

They can now offer customers a consumption-based subscription offering without needing to craft their own technical solution, back-office system investment, hold title to the Assets, or take on any incremental financial risk. Partners can position Lenovo TruScale whenever there is a stated need or desire by the end customer, while also continuing to position traditional CapEx offerings.

At Lenovo, we understand that the world is on its way towards a widespread subscription economy and believe it’s time to begin applying this to businesses’ IT approach. As organisations increasingly embrace a subscription business model we’ll see them owning less and borrowing more. The industry needs to prioritise services that enable customers to reap the benefits of this changing world, rather than sticking to convention for the sole reason that “it’s always been done that way.”

Ownership needs to disappear when it is no longer the most suitable option. We see this thinking taking off in other industries, and we strongly believe that it makes sense here too.