What Is Consumption-Based IT?

A consumption-based IT model refers to a pay-per-use system or pay-as-you-go. IT products/services and infrastructure are charged based on what is used rather than a subscription-based model which charges a flat fixed monthly rate. For most modern businesses the ability to adapt infrastructure quickly and affordably is an ideal system. With growing costs associated with hardware, software, and infrastructure it allows a company to scale at an accelerated rate.

OPEX vs CAPEX

Traditionally IT investment follows an upfront capital cost where businesses purchase IT and keep it for a number of years before restarting the cycle again. Recently technology has been making the shift from capital expenditure to operational expenditure. As a business sometimes “pay-per-use” is a more cost-effective model as companies can grow more quickly instead of dishing out large investments for IT hardware, software, etc.

Capex: Involves a large monetary investment. This can imply the purchase of company hardware, infrastructure, software, and property. Often this capital expenditure loses value with time and must be purchased again relying on available money upfront which can be a barrier for slow-paying departments and new companies.

OPEX: Operational expenditure or OPEX consists of weekly, bi-weekly, or monthly expenses. Basically, the expenses are measurable and consistent like a cell phone plan. Some other examples of OPEX are wages, utilities, and property taxes.

 

 Consumption-IT As a Service Models

PaaS (Platform as a Service):  Platform as a Service, or PaaS as it’s commonly abbreviated, is an option for businesses that want to develop and deploy their own applications in the cloud but don’t want to go through the hassle of purchasing the infrastructure and maintaining it themselves. PaaS services handle everything from server setup to security updates to data storage and more so that users can focus on developing software instead of dealing with the technical backend details that make these things possible. By outsourcing this kind of responsibility, PaaS gives companies flexibility in how they run their business while simultaneously saving time and money.

Common examples of PaaS include: Apache Stratos, Heroku, Google App Engine, OpenShift, Force.com, Windows Azure, and AWS Elastic Beanstalk

 

Platform as a Service

IaaS (Infrastructure as a Service): Infrastructure as a service is another form of virtualization technology that combines cloud servers, virtual networking, and computing technology on a pay-per-use basis. A business or user can run this “infrastructure” using a variety of applications, software, and operating systems without the need to maintain and create a space for physical data servers. This allocation on an on-demand basis allows companies to purchase resources as they see fit and scale accordingly.

Common examples of IaaS include: Linode, Rackspace, Amazon Web Services, Microsoft Azure, Cisco Metapod, and Google Compute Engine. 

 

Infrastructure as a Service

 

DaaS (Data as a Service):  In simple terms, DaaS provides a way for businesses to gain access to large volumes of data while maintaining a strong layer of security without having to use their own data centers. DaaS can be broken down into storage, processing, and analytics. This service uses off-site data centers over the cloud to deliver and deploy hardware servers. Often when utilized correctly it allows companies to collaborate and transfer information at a more productive rate.

Common examples of DaaS include: Oracle DaaS, SAP Hana and Snowflake.

 

DaaS (Data as a Service)

HaaS (Hardware as a Service): HaaS is a pay-as-you-go model where clients pay MSPs (Managed Service Providers) for hardware, software, and maintenance services. HaaS allows companies to gain tech assets without spending large amounts of money upfront as the cost of technology continues to increase every year.  Some common HaaS items are servers, printers, laptops, desktops, smartphones, tablets, and monitors. HaaS is popular within SMB’s as it allows businesses to scale quickly without spending large amounts of money on hardware.

HaaS (Hardware as a Service)

Benefits of Consumption-Based IT

Predictive Analytics: Predictive analytics takes a lot of data, finds patterns within it, and uses those patterns to predict future outcomes. This can be extremely powerful in certain circumstances. For example, on a very large scale, companies that do predictive analytics can predict weather patterns by looking at how wind and other weather factors have moved over time and adjust their business accordingly to ensure they are operating in optimal conditions at all times.

Customer Insights: Businesses are now relying on customer insights to help them make smarter business decisions. These insights come from data analytics, and they provide businesses with more control and a better understanding of their customers’ needs. But most businesses don’t have access to enough data to truly understand their customers. Fortunately, consumption-based IT has come along just in time to save businesses from themselves.

Revenue Growth: Organizations that are able to successfully track consumption information and analyze it will be able to see trends in customer behavior, which in turn can increase revenue. By creating a more detailed picture of how customers use your products, you’ll be able to upsell services, better assess opportunities for cross-selling, and create new products that keep your customers coming back. 

Business Continuity: While your plan to transition and transform your business might seem solid, you never know what could happen along the way. Protecting yourself with backup strategies will give you peace of mind that there’s a Plan B if something goes wrong. Most importantly, make sure you have an IT contingency plan! The days of waiting six months for an upgrade are over.

 

In Conclusion

Consumption-based IT represents a new and exciting way for companies to grow and scale on their own terms while working with a Managed Service Provider.  Only paying for what you use can expand or diminish costs based on your particular needs. This freedom simplifies your IT budget and allows you to change costly capital expenditure into a more predictable cost structure.

Maverick Gardner is a growing leader MSP (Managed Service Provider) in IT Consulting, Infrastructure. IT Services, Support and Maintenance Services, Cloud, Deployment and Procurement, Disaster Recovery, IT Outsourcing Services, and more! 

IT That thinks outside the box…

 

 

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