Today’s technology leaders grapple with a paradox.
They must do more with less while facilitating the work required to transform the business. That requires investing in digital capabilities that lead to desired business outcomes.
Data suggests IT leaders will spend despite a challenging macroeconomic environment that includes inflation, snarls in the supply chain and other financial pressures. Fifty-two percent of enterprises expect to increase spending on IT products and services in 2023, according to an ESG survey of senior IT professionals1.
Investing in IT without busting the budget is no mean feat, for even the most well-heeled organizations. But with costs soaring worldwide, it’s incumbent upon IT departments to focus on solutions that accelerate the business while creating cost efficiencies.
The Public Cloud’s Greatest Gift is Still OpEx
Some relief may be found in the playbook created by the public cloud market. In addition to rapid innovation, the public cloud helps startups and stable businesses alike scale up while navigating short-term financial challenges.
But like Father Time, the law of diminishing returns remains undefeated. As has been widely reported, the public cloud can also cost more than originally anticipated on a long enough timeline—and produce execution pitfalls and unwelcome regulatory surprises.
Yet the public cloud’s flexible financial model remains attractive to enterprises leery of large CapEx investments. Budget-conscious organizations are increasingly turning to pay-per-use subscriptions billed as OpEx.
Leveraging such a consumption-based model, IT departments can reduce overprovisioning by 42% and support costs by up to 70%, as well as realize a 65% reduction in unplanned downtime events, according to IDC research commissioned by Dell2.
Such consumption-based models, paired with flexible infrastructure, provide a cloud experience without the headaches associated with data locality and security rules. And such solutions appeal to organizations seeking to spread out payments while continuing to run and grow their business.
The Business Cases for Cost-based Consumption
Organizations that have embraced the shift attest to the benefits of flexible, pay-per-use infrastructure. For instance, switching to a consumption-based model as it replaced aging infrastructure has paid dividends for engineering and services firm NG Bailey.
In addition to greater cost control, the switch reduced the U.K. company’s IT restore time for critical business systems from 8 hours to just 30 minutes and decreased support calls related to infrastructure by 75%, freeing up IT staff to focus on other business priorities.
Such efficiencies dovetail with market research, which found that a consumption-based model can make organizations 38% more efficient overall, thanks to reductions in time decommissioning and retiring hardware, automated patching and other administrative blocking and tackling, IDC said.
Moreover, at a time when organizations are pushing for greater sustainability across their operations, the move helped NG Bailey cut its datacenter footprint in half—resulting in lower power consumption to support the company’s net-zero sustainability goals.
“For NG Bailey, it’s been transformational to know our IT costs and only pay for what we use,” said Stephen Firth, infrastructure manager for NG Bailey. “As a result, we can certainly control our costs more now. We know how much we’re paying and there are no hidden charges.”
NS Solutions, a group company of Nippon Steel Corporation, has leveraged the pay-per-use model to provide a managed cloud experience for customers who cannot migrate to the public cloud due to requirements for security and closer proximity to their data, as well as the need for low latency.
The move has helped NS Solutions cut the time to provision infrastructure from four months to two months and manage infrastructure more efficiently while reducing cost exposure from short-term cancellations.
In replacing traditional procurement with a consumption-based model, IT leaders surveyed by IDC spent on average $1.5 million per year less to run equivalent workload and application environments.
NS Solutions also removed the burden of IT management and operational tasks for its customers, freeing them up to attend to other business priorities. The company manages the entire IT environment from a single console and executes updates remotely—similar to how public clouds operate.
The Bottom Line
With cost and flexible computing benefits such as these, why isn’t everyone moving to a consumption-based operating model for IT?
Data suggests the shift is catching on, as 61% of organizations worldwide are interested in migrating to consumption-based models for IT investments, according to IDC.
With Dell APEX Flex on Demand, organizations can pick hardware and software configurations while paying only for what they use, with a single billing rate that helps them accurately predict future costs.
In a bear economy, more IT leaders will seek consistent cloud experiences that let them focus on supporting business stakeholders with digital solutions rather than focusing on managing infrastructure.
These IT systems must be tuned to deliver optimal performance, scalability, agility and control as leaders innovate to deliver optimal outcomes—and deliver business value.
Learn more about our portfolio of cloud experiences delivering simplicity, agility and control as-a-Service on-demand: Dell Technologies APEX.
12023 Technology Spending Intentions Survey, ESG, Nov. 2022
2The Business Value of Dell Technologies APEX as-a-Service Solutions, IDC, August 2021