Learning a new dance

Learning a new dance - consumption-based pricing

There are new moves coming from customers running mainframes. They are increasingly switching away from outright technology purchases to a new pricing model based on usage – says Rupert Lehner, Head of Enterprise Platform Services.

Did you ever imagine that the well-established, ordered world of the mainframe would start to look more and more like a cool cloud environment? Well, that’s what’s happening as customers, who have learned to appreciate, trust and prefer the new dance offered by as-a-service models, are increasingly taking the decision to move to consumption-based pricing for mainframe usage, rather than conventional outright acquisition.

I was discussing this recently with one of the top industry analysts, who acknowledged Fujitsu’s success with this trend and pointed to one factor in particular driving it: that customers really don’t like the notion of paying a big upgrade fee every couple of years. The consumption-based model eliminates that and the associated investment peaks for innovations, upgrade and new installations.

There are other reasons why customers are moving in this direction, too. On the balance sheet there is no cash withdrawal to invest in hardware, with technology costs moved from capital expenditure (Capex) to operational expenditure (Opex), a switch that is likely to be favourably reviewed by your colleagues in the finance department.

From the perspective of business growth, you are not locked in to a finite amount of processing capacity. Quite the opposite, in fact. The consumption-based model gives you a growth reserve that you can call on as needed, let’s call it Capacity on demand, giving you the flexibility to respond to business peaks, without any need to undertake a new, time-critical (or possibly crisis-driven) investment cycle.

There’s something we have all learnt to appreciate from cloud as-a-service offerings. In the case of increasing capacity demands, you can avoid the whole process of adapting maintenance, backup and upgrades. All those time-consuming, potentially disruptive processes now are fully automated and therefore essentially invisible to the user.

And we are all aware that there is a growing challenge when it comes to mainframe skills availability. Such innovative approaches for delivering mainframe class services are also relieving from the growing headache of sustaining the necessary skills for classic mainframe work. Pay-as-you-consume reduces these efforts significantly, ensures that resources can be managed effectively within your company and leaves you confident about the long-term stability of these ultra-high-performance mainframe platforms.

The advantages are many and clear. What has changed is the way we look at purchasing. Not that long ago, most people would have assumed that a rental model had to be more expensive than purchase and acted accordingly. The reality is that there are advantages on both sides – suppliers such as Fujitsu benefit from the contractual certainty that consumption-based pricing brings and can offset costs so that the total cost to the customer is actually lower than with an outright purchase.

It has taken a decade or so of experience with as-a-service models for suspicions to dissipate. Practical experience has taught us a new dance. We have come to understand that the as-a-service combination of efficiency, innovation and total cost savings has so many advantages that it is an easy decision, perhaps the natural decision to take.

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