Rethinking Technology Purchases
Technology-as-a-service opens the door to think about technology purchases differently, to question how we have managed technology needs in the past, and to realize a better way to move forward.
This section presents some thought provoking facts about ownership and use of technology solutions to help your organization determine how to best address your ongoing technology needs.
The cost of ownership does not stop after an initial cash purchase.
After an initial cash purchase, some additional costs are more difficult to quantify than others, but there are many that ensure the price tag of ownership is not static. Some of those additional costs include:
- Replacement parts.
- Vendor visits for repair and trouble shooting.
- Vendor visits to reconfigure solution.
- Internal resources (personnel, time, capital) required to operate, monitor, maintain solutions.
- Down time costs – lost sales, poor performance, bad customer experience.
- Solution performance that creates real or perceived, unfavorable comparison by customers to your competitors.
When your organization last replaced a technology solution, did it own the solution being replaced? Was the replacement solution purchased with the intent to own it as well? Do you see the endless cycle?
Many customers we have worked with over the years did in fact own the solution they were replacing. Unfortunately, they did so several times, experienced the financial pain of a large capital expenditure each time, and realized that cycle was not going to stop. Furthermore, the pace of technology change is increasing the speed of that cycle.
Given the fast-paced evolution of technology, it makes sense to explore whether there is a better way to pay for and manage technology needs.
A use-based subscription program that makes solution upgrades and migration easy with a manageable monthly payment has been a welcomed alternative for many organizations.
Organizations use software as a service (SaaS) applications, cloud storage, and other forms of technology subscription services and they like those solutions from both a financial and technology perspective.
Many organizations don’t realize this same type of subscription approach can be applied to hardware intensive technology solutions as well, including:
- Access Control
- Digital Antennae Systems (DAS)
- Emergency Management Systems
- Surveillance Systems
- Video Conferencing
- Audio Video Systems
- Digital Signage
- Network Infrastructure
- Nurse Call Systems
- WiFi
- Control Room Solutions
- E911
- Security Systems
- Video Walls
Although their numbers are shrinking, there are still people that believe the old, historic mindset that ownership of technology solutions provides some element of control, or has lower costs, or is in some undefinable way desirable.
In reality, ownership is very rigid . . . you have one solution to work with regardless of how the economy, technology, your processes, or any number of factors may change around you.
Hard costs never stop after an initial purchase and costs can appear in other ways as well, including internal performance, lost sales, and customer satisfaction.
Organizations have realized that paying for the use of technology solutions actually provides greater control, a better cost profile, and has clearly identified benefits that do not exist through ownership.
It’s not about budget.
When a technology-as-a-service subscription program is first brought up, the initial reaction of some people is that they can see how it can be helpful in circumstances where budget is an issue. The reality is they are confusing traditional leasing with an as-a-service program.
Leasing results in ownership and does tend to be used when there are capital budget constraints. However, although budget can be a factor, it is one of the least cited and most inconsequential factors in customer decisions to use technology-as-a-service subscription solutions.
The foundational appeal of technology-as-a-service stems from the many layers of benefits of use over ownership. And it turns out most organizations using as-a-service have plenty of capital – they just don’t see owning technology equipment as a good use of that capital.
Technology-as-a-service subscription programs appeal to all layers of an organization.
Leadership
Why do owners, principals, and executive leadership like technology-as-a-service subscriptions?
Leadership team members are concerned with the big picture and strategic purpose of their organizations.
The challenges of approving large capital expenditures, the concerns over the right technology, and the inevitable issues of working with dated solutions are just some of the technology ownership distractions that pull energy and focus away from an organization’s people at every level.
Leaders appreciate that technology-as-a-service subscription solutions allow their people to use technology to remain focused on the strategic mission and not the technology needed to do so.
Financial Decision Makers
Why do CFOs, controllers, and financial decision-makers like technology-as-a-service subscriptions?
The financial decision-makers find TAMCO’s Technology-As-A-Service attractive because it has a favorable financial profile in comparison to a cash purchase or traditional lease arrangements.
No large capital expenditure. No need to be prepared and able to absorb another such large capital expenditure in the future when replacement solutions are necessary.
Just a manageable monthly payment for the current solution, or replacement solution.
No unexpected expenses are associated with part failures, maintenance, support, or monitoring.
Again all desired warranties and services are included in the monthly subscription payment.
IT Management
Why does IT Management like technology-as-a-service subscriptions?
IT management personnel love TAMCO’s Technology-As-A-Service subscription program for the peace of mind. They know with a comprehensive fully managed solution, any issue is easily resolved. Part failure, covered. Maintenance and support, provided. Monitoring services, keeping watch. They can be confident in the solution and have freed up time and energy to address other needs.
In addition, even in the absence of technical issues, they know it can be time for a needed solution change or upgrade. That can be a difficult conversation if an organization purchases to own technology systems. Fortunately, IT management no longer has to duct tape old solutions while fighting for budget just to get a partial upgrade. With a technology-as-a-service subscription it is a much easier discussion to get the new solution needed. There is no large capital expenditure. The monthly subscription payment simply adjusts accordingly.
Technology Solution Users
Why do Users like technology-as-a-service subscriptions?
Users like technology-as-a-service solutions because they tend to be the latest or best fit technology and solutions are designed to provide a comprehensive, fully managed experience. So training, fixes, maintenance, support are built into the solution. Users feel confident in solution uptime and usability, and know technology issues will not be a factor that prevents them from meeting performance metrics.
Furthermore, users appreciate that when new or different technology can allow them to do their jobs better, the organization is not hand cuffed to the existing solution the way most are when they purchase to own. The subscription solution allows for a nimbleness in having the best solution in place at all times.