Dec 1, 2021
Over the past decade, organizations and consumers witnessed a rapid adoption and advancement of technology. Some examples include significant advances in network infrastructure, security systems, teleconferencing, AI (artificial intelligence), VR (virtual reality), and IoT (internet of things). The research and development budgets of technology manufacturers also continue to grow each year. Consumers crave faster and better technology, ensuring this rapid adoption will continue to accelerate over the next decade. As technological solutions continue to evolve, the way consumers and organizations prefer to pay for those solutions is also changing.
Today, the value a business gets from technology assets doesn’t typically come from its possession. Success in IT isn’t about building and managing technological systems anymore. Ownership of technological resources once felt like it empowered the purchaser with control. Today, buying equipment outright can deplete precious capital. Cloud computing and other technological innovations have made on-premises physical hardware or software no longer necessary. Purchasing technology can also lock the owner into an equipment solution which is detrimental for numerous reasons. Technology can become rapidly obsolete due to the heavy investment in R&D. There are also a lot of non-recoverable costs and margins in the purchase price. Owning technology is an expensive investment where the cost is not always justifiable.
As a result, we have seen the rapid adoption of service models with subscription payments adopted by more customers. PYMNTS’ research shows that retail subscriptions have increased by 99% since 2020, and digital subscriptions have increased 92% since 2020. This trend extends beyond consumer-specific services to commercial companies, government organizations, educational facilities, and non-profit organizations. Netflix, Amazon Prime, Salesforce, HelloFresh, and Microsoft Azure are a few examples of this subscription service solution. In addition, there are many benefits to a subscription model for customers, such as access to the latest content and technology, unlimited access to this technology, and sometimes access to professional services or customer service as part of the service model. In these cases, a subscription provides more value than owning the content outright because of the extra benefits included in the service model.
While ownership may be more affordable and flexible for some companies, there are quite a few reasons why the subscription approach is more financially viable for many companies in today’s marketplace. The economics of ownership isn’t always in your favor depending on your business needs. Here are a few reasons why you should consider not making an outright cash purchase to buy new technology:
- Technology solutions are usually non-revenue generating assets. Most of the time, technology solutions help enable your business and do not directly generate revenue. Capital expenditure assets should typically function as an investment. These assets should produce interest, revenue, or they should appreciate. But many times, technology assets do not provide these benefits. Instead, these technology solutions are typically depreciating assets on companies’ books.
- Technology solutions have a lot of non-recoverable costs. Non-recoverable costs are pieces of the purchase price that depreciate immediately. They include installation, training, design service, and various margins such as manufacturer, distributor, and vendor margins. It is a very similar concept to driving a new car off the lot. This portion of the service price disappears immediately after installation. While the cost of the goods and physical components still have a recoverable cost, almost 50% of the purchase price of technology assets includes non-recoverable costs. Purchasing your hardware, software, licenses, and cabling is likely only half of what you paid. This is unavoidable regardless of the service or service provider.
- Technology services often become rapidly obsolete. Companies spend billions of dollars each year on research and development. Over the past five years, the advancement of technology has skyrocketed. What is bought & sold today will be obsolete in 2 – 4 years due to R&D. With a subscription approach, companies can upgrade to the latest technology without paying for the entire investment upfront.
- The Cost-value equation is often in favor of the subscription model. There are a few reasons why the value ends up being higher in subscription-based models:
- There is a lower cost to entry because companies don’t need to pay for the full cost upfront to gain access to the technology. Often, companies will pay less with a subscription approach than purchasing outright.
- Gain increased flexibility of upgrading to new technology. If the technology no longer meets customers' needs or becomes obsolete, they can upgrade to new solutions that better meet their needs. This benefit gives an added layer of flexibility that isn't available when purchasing outright.
- Unlimited access to continuous servicing and updates. If something happens to your equipment, subscription approaches typically include ongoing maintenance and support whereas maintenance would typically be an added expense when owning the equipment.
- Inclusion of value-added services in the cost of the monthly subscription. Companies aren’t just paying for the cost of the equipment over time with a subscription model, they are subscribing to a unique mix of services included in the price. These value-added services vary between providers but you can see examples of Omni Data’s exclusive service benefits below.
As you can see, technology as a service removes all of the pitfalls of owning your technological assets and adds many benefits. Omni Data’s Hardware-as-a-Service program allows companies to bundle equipment and support services into one low monthly subscription payment. This solution provides your organization with more freedom, control, and flexibility than any other payment option available, including cash purchases or traditional leasing. In addition, the subscription option allows companies to remain at the forefront of technology to stay competitive, preserve precious capital, and never worry about obsolete technology.
Here are some additional exclusive benefits of using Omni Data’s Hardware-as-a-Service Program:
- Solution Replacement Guarantee: protects your technology from becoming inefficient or obsolete. If your current technology no longer meets your needs or becomes obsolete, you are guaranteed a new system without a financial penalty, hidden costs, or rollover balance during your term.
- Accident coverage: in the event of a natural disaster, Omni Data will cover your out-of-pocket deductible so you don’t have to worry about the worst-case scenario expenses.
- Bundled Maintenance & Support: ongoing unlimited maintenance and support is included in the subscription. This gives you protection without the additional financial burden. This ensures the budget becomes fixed as opposed to having to plan for unexpected variable expenses.
Interested in learning more about hardware-as-a-service? Give us a call at 203-387-6664 or reach out via email at email@example.com
Omni Data LLC
West Haven, Connecticut
T: 203-387-6664 | W: www.myomnidata.com