By Chris Labrey, managing director UK & IRL, Econocom
It’s not just businesses that are increasingly moving from a Capex to an Opex way of paying for goods and services. Consumers too are moving towards a ‘renter society’, with a popularisation in making regular incremental payments, instead of covering the total cost of a good or service in full with one large lump sum up front. Consider your own purchase history. You are unlikely to have bought either the smartphone in your pocket or the car in your drive outright. Chances are you’re probably paying for both monthly.
There are numerous benefits to the renter society. Firstly, it doesn’t burn an immediate hole in your wallet, with smaller, more regular payments generally much easier to manage. Secondly, it means that you can get your hands on the latest shiny iPhone 8 or Audi A3, easier and quicker.
With the likes of cloud computing, these renter society sensibilities are also prevalent in the world of business. Nothing short of a revolution is happening. Historically, heads of IT departments have had to deal with many obstacles when attempting to make upgrades to their IT estate. Some have struggled to gain the necessary approval from a misunderstanding board, while others have lacked the necessary staff resources to implement it. More so, there have been many that couldn’t financially afford the technology needed to ensure that their business could compete on a global footing and ensure that they were agile enough to maintain this status for years to come. But it’s not just those organisations with tight budgets that benefit from this approach; cash-rich firms use these payment-over-time models as well, because they make financial sense.
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This need for such a digital transformation has been amplified further by the increased need for businesses to employ robust cyber security measures to mitigate against the prevalence of increasingly sophisticated cyberattacks. Following a spate of high-profile breaches experienced by big businesses in the past year and the threat of large fines by the likes of the General Data Protection Regulation (GDPR) and others, IT managers are making a concerted effort to ensure their businesses remain safe and secure. However, with the problems highlighted above coupled with a lack of awareness among board members and senior leadership teams, many managers are struggling to progress as quickly as they would want.
Another struggle for IT managers today is the administrative headache that comes with working with multiple suppliers. Juggling various points of contact can be difficult for even the most competent of IT managers, and can often lead to unnecessary complications down the road.
Working alongside a trusted digital services provider to procure the equipment you require for your specific digital transformation using a payment-over-time model can alleviate all these problems. By bypassing the need for significant capital expenditure and moving towards a model where payments are made in smaller amounts over a set period of time, IT managers and digital heads of department can begin to repair and rebuild their IT estate so that they can better compete. This ‘renter society’ viewpoint is also a more attractive proposition to pitch to the board when recommending a digital transformation.
By accessing technology in this manner, businesses can enjoy unprecedented levels of agility, allowing them to operate and make decisions more proactively than ever before. The payment-over-time model means businesses can update their digital infrastructure or strengthen their security defences, instantly. Businesses don’t have to sit around for months like they did previously to ensure that they have enough money saved up.
Payment-over-time models also stop firms from paying, in one year, for digital equipment that returns on the investment over several years. For example, if you’re paying £1m up-front for an asset that’s going to return savings over five years, it seems illogical to pay cash for that sort of investment.
Additionally, some service providers can take the admin work required when working with multiple suppliers and deliver it to the business as one. This simplifies the overall admin process and minimises the amount of communication required. What’s more, by working with the service provider on a rolling contract businesses can continue to upgrade their systems and infrastructure in-line with the latest trends. This means they can remain agile and be able to respond instantly to changing market dynamics.
The shift towards a payment-over-time future is already well underway. Those IT and digital managers that can adapt quickly will be able to stay ahead of the competition and prove their value to the wider business.