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Pay-per-use IT subscription models in demand post lockdown

Smaller companies are looking for ways to join the cloud system while managing their financial constraints and without compromising on quality and security (Michel Euler/AP)Premium
Smaller companies are looking for ways to join the cloud system while managing their financial constraints and without compromising on quality and security (Michel Euler/AP)

  • Over the past couple of years tech companies have been mobilizing opex-first models rather than capex-heavy technology offerings as they seek to target small and medium businesses in the country
  • The biggest advantage of pay-as-you-go is that it ensures the business doesn’t waste any resource they are purchasing

As the need for businesses to strengthen their technology backbone rises across sectors, many are turning to pay-per-use subscription models to access affordable information technology (IT) services. Over the past couple of years tech companies have been mobilizing opex first models rather than capex heavy technology offerings, as they seek to target small and medium businesses (SMB) in the country. With businesses seeking to go digital more than ever as the economy unlocks, this demand has only increased.

Pay-per-use is a widely used model adopted in the technology industry, especially across infrastructure as a service (IaaS), platform as a service (PaaS) and Software as a service (SaaS). The biggest advantage of pay-as-you-go is that it ensures the business doesn’t waste any resource they are purchasing. They only pay for specific services they have procured and deployed in their operations through a monthly/annual subscription.

As per IDC's 1Q20 Cloud Pulse Survey, about 44% of global applications are still on-premise and almost 95% of the organizations intend to increase their spending on cloud in the next 12 months. IDC expects this traction to be primarily driven by SaaS applications on the cloud with pay-per-use models. Solutions around customer relationship management (CRM), virtual desktop solutions, helpdesks, collaboration platforms and enterprise resource planning (ERP) are the popular ones for moving to the pay-per-use model.

“We always enable our small and medium business (SMB) customers to scale on-demand without the worry of purchasing additional resources they don't want or need. For small businesses, a pay-as-you-go model offers them the scalability for their ever-increasing, or even volatile, business demands. Cloud technology has now become a great opex-model method to scale infrastructure," said Puneet Gupta, MD, NetApp India marketing & services.

Gupta added that smaller companies are looking for ways to join the cloud system while managing their financial constraints and without compromising on quality and security. NetApp provides specialized solutions for SMBs to adopt and leverage entry level AI solutions with a flexible and scaled-out architecture to minimize costs with enterprise grade data security and improved resource usage for SMBs.

In fact, robotic process automation (RPA) has witnessed strong traction in pay-per-use services as businesses seek to work around their manpower challenges when they return to business post lockdown. UiPath helped Shree Malani Foams Pvt. Ltd, a company that manufactures polyurethane foam, to implement RPA on a pay-per-use basis, to manage functions such as e-way bill, order management and customs documentation. This helped the latter work in a command centre set up, with a central team managing seamless work-from-home experience for its employees.

“IT Automation is also a popular use case, especially for large organizations that have a setup for helpdesk operations. Because of Covid-19, having employees on ground became an issue, and this is an area we have seen a lot of uptake. Supply chain solutions is also being looked at as an important part of a company's automation journey," said Manish Bharti, President, India and South Asia at UiPath.

Sharath Srinivasamurthy, Research Director of Enterprise Solutions & ICT Practices, IDC India said that large organizations that have invested heavily in legacy software and infrastructure have been slow in moving towards the pay-per-use model. "But slowly, we see an increased demand coming from such organizations as well. Then we have the MSME segment which does not want to invest in capex and intend to adopt pay-per-use, cloud-based systems faster. Companies born in the cloud, start-ups, and small-scale organizations usually opt for a cloud-first strategy, which reduces their internal system modernization costs," said Srinivasamurthy.

On the support services side, businesses see a trend in terms of the pay-per-ticket model where organizations prefer to pay for the tickets raised rather than fixed cost for getting support services. The demand for this kind of pay-per-use models is set to increase as organizations look for a reduction in their capital expenditure to keep costs under control.

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