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Buying IT – is ownership over?

Subscription-based pricing models are gaining traction across all sectors, as businesses steer clear of buying products and services outright

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 threeand five-year contracts to ‘easy in, easy out’ monthly contracts.

Darren Bird, Xeretec
Darren Bird, Xeretec

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 cloudbased, 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 onpremise 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 dialogue between vendor and customer and that that dialogue is more valuable. We can spend more time discussing mapping their business needs to new products or services, so the conversation is now based much more around business planning than just product selling. That dynamic adds more value and should foster even stronger client relations,” he said.

Although the transition to new procurement models has implications for vendors and will require a change of mindset, Toshiba’s Spencer believes it should be welcomed. He said: “Change that delivers positive results is something to be embraced and that is what the shift to on-demand services delivers. It is bringing about new and innovative platforms and delivery methods that the industry must take notice of.”

Case Study:

Technology-as-a-service: A natural progression ABC Managed Services has evolved from a managed print services provider to a company that delivers technology as a service

Headquartered in Congleton, Cheshire and with offices in Stoke Prior, Redditch and Castle Donnington, ABC serves customers nationwide. Its diverse portfolio includes content management; visual displays; print and document solutions; security and door access solutions; unified communications; and IT services.

Toni Gibiino
Toni Gibiino

In light of its expanding portfolio, ABC has now restructured its business and transformed its entire go-to-market strategy by becoming a technology-as-a-service provider.

“What we’ve done is move from the traditional siloed approach, to providing a managed print service contract, for example, largely funded as a CapEx project, to providing everything clients want and need ‘as-a-service’ – and by that I mean for a fixed monthly fee per user,” explained Marketing Director Toni Gibiino.

He added that clients can now bolt-on additional services, increase the number of users, upgrade to the latest hardware or software, or build in new equipment as and when they need to – for an additional fee. “It’s flexible, future-proof and fully scalable,” he said.

Providing technology-as-a-service wasn’t a massive step-change for ABC, as its ABC Connect offering already gave clients the ability to expand their managed print services contract with up to five additional service packs (see box).

Nor, says Gibiino, was it a cultureshock for customers with whom ABC trialled the concept prior to rolling it out company-wide.

“The proof of concept wasn’t a huge step-change for clients, because as consumers we have all bought into the subscription economy and IT professionals are already accustomed to purchasing IT services on a seat-based billing model. Extending this concept into other areas of the business makes sense and the fact that technology investments can be funded as OpEx has been really well received.”

He added: “We are a very progressive company and with this new approach, we are proactively responding to market demand.”

Customer-centric approach
As part of its new customer-centric approach, ABC is focusing on three key areas:

Workflow, covering traditional managed print services, including a full suite of software solutions to streamline, improve and secure document workflows;

Workplace, encompassing services, such as energy audits and PAT testing, as well as the supply, delivery and installation of access control and IP-based CCTV systems and AV and digital signage solutions, including room management systems and interactive touch panels; and

Workforce, covering a broad spectrum of end-to-end tailored IT services, including mail servers and file and print servers, cloud storage and Software-as-a-Service, network infrastructure provision, VOIP telephony, video conferencing and communication systems.

To communicate its new approach, ABC has launched new branding and a new website featuring blog postings and a client portal where customers can log in to access contract details, current news and information about new services.

“The new site has been months in the planning and has been crafted to clearly articulate our service offering,” explained Gibiino. “We have also rebranded as ABC Managed Services, a move that illustrates the shift away from print toward technology-as-a-service.”

ABC Connect Service Packs

ABC’s evolution into a technology-as-a-service provider was a natural move for the company, which already gives customers the ability to enhance their MPS with a choice of service packs. These include:

ABC Control – enhances the scanning, workflow and security of scanned data, helping organisations achieve seamless workflows and processes from multifunctional printers.

ABC Secure – safeguards the document and print environment and includes Standard, Plus and Premium packages.

ABC Productivity – helps organisations achieve a more flexible approach to using print devices and the data produced by them.

ABC Assist – from remote monitoring of the print estate through to restoring hard drives on printers, ABC Assist supports a client’s technical printing requirements, maximising the availability and functionality of all devices across the estate.

ABC Eco – services include energy consumption analysis, toner recycling stations and collections, through to environmental settings on print devices.

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