Software on a subscription basis … useful?

You may be able to remember that, in the past, you had to make an annual payment for certain insurances or taxes. For many that was a horrible month; the money had already left your account before your wages arrived and this was quite a sizeable amount too. There was sometimes an opportunity to stagger the cost, but that often incurred additional costs; despite the fact that this was in the form of a subscription, every year this felt like an annual investment. Fortunately, insurance companies are starting to realise that people receive their money monthly and that, for many people, it is difficult to put aside money every month to pay this annual bill. Why shouldn’t you pay those costs monthly? The customer then doesn’t have to create a fund for this, after all, the money is deducted every month. The result is that this makes the customer’s life easier. What actually happens is that the customer does not have to make an annual investment, but that the insurance is included in the household (i.e. operational) costs.

We see increasing numbers of public processes entering the business world. For example, the retail trade. Whereas in the past the supplier determined where you purchased your goods, the opening times and under which conditions, we now see that the customer decides when, what and how he wants goods delivered to him. This is a considerable mind shift. A comparable transition can be seen in the need for IT in companies. This is known as ‘consumerisation of IT‘. Companies sometimes shrink from the sizeable investments in IT projects. A lot of this investment is often for the licences. These are purchased in advance and annual maintenance is paid for these, plus implementation costs. After a few years, expectations are that this investment will have been repaid (often exaggerated). Money has to be released for investments, which may or may not have to be borrowed. Why should we approach this investment differently? For example, paying monthly for the use of software, except the licence costs could then be more expensive in the longer term. However, the huge difference is that you would no longer be making a one-off investment, but this would be included in your monthly operational costs. This also takes away any worries if you also include the infrastructure and services. This also means that it is easier to identify and manage the costs on the management side of things. I don’t believe that any manufacturing or wholesale distribution companies primarily earn money from managing their own IT landscape. Quite logically, this isn’t their core business, so why would we make sizeable investments in this? Food for thought??

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