8th September 2011
UK businesses are now predominantly purchasing applications via a subscription model, a CloudSense survey has discovered. Carried out by research specialists Vanson Bourne, the survey polled 100 Senior IT Managers in large-scale UK enterprises and revealed that around 75% of UK businesses have “either deployed, or are in the process of deploying, a subscription-based purchasing model for some or all of their business applications”.
Results of the survey further outline the global shift towards software-as-a-service products among businesses, and confirm many analyst claims that a “subscription-based economy” is likely to rule, both for the consumer and the enterprise. Richard Britton, Managing Director of CloudSense, explains:“The survey results back up what we have observed in the market, where consumers buy goods and services via subscription, rather than as one off capital expenditures.
“The popularity of services such as Spotify, Zipcars and even the ‘Boris bikes’ underlines this trend. This is largely driven by the greater choice, reduced cost and flexibility that subscription services can provide to consumers.
“A new consumer purchasing model, however, requires a new approach to back office systems in order to provide the flexibility and scalability required. Here businesses should look to implement subscription-based business applications that mirror the consumer purchasing model. For the first time we are now seeing businesses taking the lead from the consumer environment.”
The survey clearly outlines IT manager awareness of the benefits that moving to a subscription-based purchasing model will afford. For the respondents, the key pros of the subscription model include more tightly controlled costs (59%), faster speed of implementation (50%) and avoiding costly infrastructure so they can focus on innovation and value added IT (50%).
The survey also revealed a high degree of optimism about the extent of cost savings that such a purchasing model can bring about, with 71% of respondents envisioning annual savings of £10,000 or more.
“This reflects what we have been telling businesses for some time,” Richard Britton, continued.
“IT decision makers should look to model their approach to ordering process on the subscription economy itself. By reflecting the way in which consumers buy services, businesses will find they have a much more efficient, powerful and productive back office stack.
“In this approach, businesses will subscribe to a set of cloud-based services that would be able to address the key areas of pricing, quoting and ordering while integrating all cloud applications and infrastructures and being flexible enough to deliver rapid change. Businesses will gain the benefits of the subscription economy currently enjoyed by consumers – bundling of products and services, a rapid upgrade path as new services and devices emerge, as well as the ability to build long term relationships with their customers.”
Technology integration was also a key driver for recipients of the survey, with 95% of those polled agreeing that lack of integration was responsible for increased operational costs for their businesses.
To review CloudSense's report, "The Subscription Economy – a Case for Cloud Innovation" simply login to the Industry Papers section of our website here
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Tags: applications | software as a service
