Managed.IT - issue 53

30 MANAGED.IT 01732 759725 PURCHASING Today, few of us own our mobile phones, opting instead for monthly contracts that include the price of the device; we stream unlimited music and movies via subscriptions to Amazon Prime, Netflix and Spotify; and we procure products/ services from companies like JustEat, Uber and AirBnB, as and when we need them. Inevitably, this cultural change is impacting the business world too. “Previously businesses had to buy everything they needed outright: they’d buy a printer, then pay for toner; buy a laptop and then have to buy a Microsoft Office licence; or buy a smartphone and pay for data and calls,” explained Carlo Longhi, Xerox director and general manager of indirect channels UK and Ireland. “Nowadays, they want to procure on a usage basis, billed as a per user quantity, without the need to own the asset outright. This involves a per user model inclusive of printed pages, mobile data and online storage, which allows for modular or scalable variation, expanding or decreasing based on workforce size or even adding/removing components on a per needs basis by department/team/location.” Easy in, easy out For many years, copiers and printers have been acquired on leases with monthly repayments for hardware and usage-based charges for consumables, so there is nothing intrinsically new about subscriptions and monthly payments. What has changed, according to UTAX (UK) Managing Director Shaun Wilkinson is a move away from traditional three- and five-year contracts to ‘easy in, easy out’ monthly contracts. Darren Bird, head of technology at managed print services provider Xeretec, argues that this transition is partly a consequence of the rapid pace of technological change, pointing out that businesses that have spent a lot of money on new equipment often find their investment close to obsolete and near worthless after just 24 months. “No business wants – or can afford – to be lumbered with expensive and inefficient technology, given that the digital economy has intensified competition and cyber criminals are becoming ever more sophisticated in their attempts to sabotage businesses or steal their data,” he explained. “The everything-as-a-service (XaaS) model doesn’t so much introduce a new method of paying for products, but a better model for procuring new products and services on a more regular and timely basis. That’s why this model has generated so much interest from our customers. Transparent monthly payments make financial forecasting even easier for them. In short, it makes the latest print products and related services much more accessible for our customers, which boosts their efficiency, while lowering their overall print costs. I believe that the XaaS model will become the norm.” Improved service levels For Alastair Adams, director of Commercial Group, the ‘as a service’ model make it much easier for customers to implement new technologies and could lead to higher service levels. “The rules around ownership are changing. Avoiding the need for large, upfront capital investments and taking advantage of infrastructure based in the cloud make adopting a new service easier, as well as making it easier to connect additional services in the future,” he said. “As consumers we expect to be able to have what we want, when we want it. Therefore, the nature of contracts could change. An interesting point is whether a subscription service could mean a shorter and/or more flexible contract that gives the customer more control. This raises questions around funding but would really refocus suppliers’ attention on service levels.” Adams added: “Our focus, and our success, depends on our ability to understand our customers’ business requirements, rather than being just about products. Selling a product has no value on its own: the advice and service we provide need to be recognised by our clients as valuable. Otherwise they may well feel they just need to go online and purchase products independently.” Changing business demands Jeremy Spencer, marketing director at Toshiba Tec UK, points out that giving customers greater flexibility and agility and not tieing them into lengthy contracts should have benefits for manufacturers too. “We recognise customers’ requirements and have changed the way we take products and solutions to market. Purchasing services by monthly fee is impacting the way we deliver software particularly, as a lot of software can be cloud- based, which allows it to be available on a subscription basis. Process optimisation and business efficiencies are a key part of this, all of which can be offered on- premise or as a cloud solution and purchased on a subscription model. It means our customers can easily scale up or scale down on a month- by-month basis, according to their requirements. This, in turn, helps to promote long-lasting relationships based on trust,” he said Another benefit of subscription- based services, according to Xeretec’s Bird, is more regular communication with customers. “The product refresh rate is determined by the agreement customers have signed up to. That ensures there’s a more regular Subscription-based pricing models are gaining traction across all sectors, as businesses steer clear of buying products and services outright Buying IT – is ownership over? Carlo Longhi, Xerox Darren Bird, Xeretec