Subscription has become a way of life — we see it with the massive success of ridesharing, media streaming and even in our daily necessities, such as electricity plans. In parallel, the business world is waking up to a new reality: People want to rent rather than own.
So why aren’t we already subscribing to flexible, agile and efficient IT? Today’s business landscape is surely prime for this shift.
In Singapore, business sentiments for the next quarter have risen — particularly in the finance, manufacturing, and wholesale sectors — and IT is playing a critical role in that. In fact, IT is now a strategic priority for every organisation. It has influenced how organisations pivoted and enabled mass remote working within the first weeks of global lockdowns and informed growth strategies paving the way for rebounding.
Most notably, in a bid to enhance business continuity, the crisis galvanised businesses into further shifting investments to cloud infrastructure. This has in turn accelerated the shift in demand to subscription-based business models. Just as how office tenants are seeking short-term lease renewals in the face of business uncertainty to offset underutilised office spaces, the appetite for traditional, large capitalised IT spend is similarly being replaced by flexible licences.
As organisations adopt hybrid models to adapt and drive business success, the traditional approach to longer-term vendor contracts is simply becoming a thing of the past.
Keeping one’s powder dry
We now live in a world of ever-changing requirements. True competitive and economic advantage is increasingly drawn from the ability to quickly readjust investments while funding innovations. A subscription model is ideal as it allows you to pay for what you use to suit the current climate. Subscription and fractional consumption allow companies to reduce their expenditure at the given moment, freeing up capital.
In “keeping one’s powder dry”, the freed-up capital serves as strategic investments that can propel the business forward as a disruptor or to respond rapidly to disruption. They can use it to fund innovation, projects or to keep it as a reserve in the face of uncertainty.
Nutanix’s recent Enterprise Cloud Index report confirms that companies running hybrid cloud environments are more likely to enhance the agility of their organisations and seek ways to become more competitive as a result of Covid-19, compared to those using other deployment models.
SEE: Why the subscription economy is increasing in value
What a subscription model allows you to do is focus on business outcomes without being burdened by the ownership of a product or service that can weigh down your business. If you do not have to invest time and resources into managing ‘stuff’ then you have freed up valuable capacity to become more service-oriented.
Subscribing to the age of experience
For some companies, subscription consumption translates to big advantages. Malaysian-based money services business (MSB), MaxMoney, took a hybrid approach to reduce complexity whilst gaining speed and flexibility. Cost was a major consideration in their search for a new system to improve customer service across regions and secure data. By subscribing to a licensed package, MaxMoney was able to meet its objectives of dramatically reducing response time to customers while saving costs, and ultimately, delivering enhanced customer experiences.
We have entered the age of experience. It is clear that business and consumers need choice and freedom and expect their purchases to follow their lead and adapt as they grow. Beyond products, people want services that are frictionless and easy, providing them with the agility and resilience to navigate unplanned shocks.
This is summed up perfectly in the book Antifragile, where Nassim Nicholas Taleb wrote “antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same: the antifragile gets better”. Businesses need to be prepared for the next disruption. They need to move fast but also be resilient to rapidly adapt and respond to business disruptions, all while maintaining continuous business operations. A subscription-based model will enable them to do that.
Ho Chye Soon is the Singapore country manager of Nutanix
Photo: Bloomberg
