Disownership is the new normal? How the face of IT procurement is changing
There is a new breed of technology companies that are offering consumers easy access to almost any product or experience: without having to own it.
From vacation properties and private car hire to freelance marketplace, the visionaries behind Airbnb, Uber and Fiverr have transformed industries and existing business models.
Power is currently shifting to whoever can provide experiences and services conveniently and with less effort on the part of the consumer. These disruptive technologies are transforming consumption models in the consumer market, but in recent years, we've seen business follow suit with the rise of the as-a-service (AAS) economy.
It seems like overnight, AAS has changed how numerous industries are running. According to Forbes, the AAS market will grow at a compounded annual growth rate of nearly 40% from 2016 to 2020. This spurt in growth is an indication of shifting attitudes over the ownership of goods and services to the full adoption of the pay-per-use business models.
We are now in an era where disownership and disintermediation are at the forefront of business strategy. This is primarily brought on by the digital transformation and the growth of cloud-based services. Due to the speed at which technology is changing, and the burden on companies to keep up with the competition, it is now imperative to implement flexible and agile strategies in key areas of the business that will allow companies to cost effectively, change on demand.
IT is one of these areas. The cost of upgrading to the most efficient IT infrastructure is usually excessive and this often works as a deterrent for most organisations, large or small. Delayed upgrades become the norm as they continue to hold onto their legacy systems to recoup the initial capex investment. But leaders in IT know that technology is a depreciating asset that stops operating at its optimal levels with time and must constantly be refreshed.
Although every business situation is different based on end-user needs and uses, the predicted lifecycle of IT equipment is between two to five years. Desktops need to be upgraded every three to five years, including upgrading operating systems and the Office suite. The current industry lifecycle for laptops and tablets is two to three years. Standard practice is to change key physical servers every four years and storage systems should be evaluated at the five-year mark. Routers and Firewalls need to be upgraded at the end of software maintenance and network switches at end of support, which is usually five years.
To improve processes and performance and make a workplace more efficient or simply offer customers the best experience possible, there needs to be a technology lifecycle management strategy in place that ensures an organisation has up to date equipment at all times to run efficiently.
Technology lifecycles are getting shorter every year, and IT needs to be in a position to keep ahead of the technology curve. IT departments can look to leasing, which is becoming increasingly attractive again. Similar to AAS, leasing IT equipment is affordable and provides immediate accessibility.
Leasing gives the organisation the ability to maintain regular technology refresh cycles and manage cash flow with precision by using the funds originally allocated to hardware on other vital areas of the business such as innovation, marketing and business expansions.
Unlike capex that's required up front or a traditional bank loan that includes interest payments, leasing requires little if any money up front and with predictable monthly expenses, you pay for the use of the equipment as it's utilised. This pay-per-use model offers full scalability, complete flexibility, better resource management, and more agility in a constantly changing business world.
Asset leasing companies such as InnoVent have perfected the pay- per-use model through its subsidised financial offering. InnoVent can save businesses from paying the full purchase price of new equipment: without impacting on the equipment type or the usage period. By including a buyback value in the transaction, InnoVent reduces the overall total costs. You only pay for a portion of the equipment for the duration that it's used. In doing this, leasing costs reduce significantly resulting in a lower cost of finance that compares favourably to cash or a bank loan.
In addition, InnoVent's end-to-end asset management offering, which includes an asset tracking system, an asset manager, online reporting tools, and comprehensive insurance and warranties, provides businesses with a solution for each stage of an asset's lifecycle from procurement, to the eventual disposal of those assets.
Whether you're large or small, driven by technology, or just consider it a necessary evil; leasing allows you to meet your technological goals. Whatever hardware you choose, you won't be stuck with outdated equipment that you will need to either store or dispose of.
For more information on leasing, visit the InnoVent Web site.