To own, or not to own? [Blog]

Daisy infrastructure for on premise

Daisy’s Head of Cloud and Digital Transformation, Andy Bevan,  discusses the long and the short of pay-per-use IT infrastructure.

It might feel like pay-per-use IT has really come of age during the last 18 months, with even the most die-hard “we need to own our IT outright” companies adopting subscription-based services to maintain productivity during the pandemic. In some respects, such services are nothing new, and have been around in various forms since the 1960s—but there is no doubt that since the start of the cloud computing age, pay-per-use IT consumption, also known as consumption-based or as-a-service IT, has reached another level.

In this article, we take a quick look at how pay-per-use IT services have evolved and expanded, explore some of the challenges of public cloud consumption-based services, and then look at modern approaches to pay-per-use IT services that go beyond the public cloud.

Pay-per-use over the years

Back in the 1960s, mainframe providers offered access to computing power and database storage to companies on a shared basis for a fee. This was known as a service bureau business. Fast forward to the 1990s and the emergence of the application service provider (ASP) which provided a platform for businesses to access third party applications which the ASP hosted and managed. Typically, businesses would access their applications via a thin client each user would install on their computer and pay for on a per-use or subscription basis.

ASP evolved into software-as-a-service (SaaS) as we know it today. Alongside this, was the growth of public cloud, delivering infrastructure and platform as-a-service solutions. Again, as with the previous models, the user organisation doesn’t own or manage the IT services themselves, but instead accesses the services on an on-demand basis, over the internet.

A critical impact of the rise of the as-a-service model is that organisations have affordable access to enterprise-grade services that would typically be out of their reach thanks to cost and the skillset required to install and maintain these services. Because as-a-service providers save on the distribution and installation costs associated with owned IT services, and with economies of scale and global reach thanks to the public cloud, it is now viable to offer these enterprise services to companies of all sizes.

Pay-per-use during the pandemic

Think about the services that have become daily necessities such as productivity (Microsoft 365), collaboration (Slack), CRM (Salesforce) and video conferencing (Teams and Zoom); it’s not an understatement to say that we would not have been able to pivot as rapidly as we did to work from home without these SaaS services. Not only are these services affordable for companies of all sizes, but already stretched IT teams were able to deploy them quickly and easily – sometimes in a matter of hours or days, not weeks or months – and manage the services effectively, in many cases without specialist training.

As the pandemic proceeded, the service providers kept improving the service for a – by now – majority remote workforce, and, critically, quickly closing security gaps as they emerged. These upgrades were available instantly, and at no extra cost, to all users around the world, and with minimal or no involvement of customer IT teams.

SaaS success stories

Even before the pandemic, SaaS was very much the rising star. Two big milestones in the emergence of SaaS as a mainstream feature of the IT landscape were Microsoft and Adobe’s shift to a pay-per-use model in the 2010s.

  1. Microsoft Office 365

Remember having physical Microsoft boxes that its software was shipped in? That feels like another world, as we very rapidly became comfortable swapping our traditional Microsoft licences for subscriptions to Office 365 (now called Microsoft 365 of course, although the Office moniker seems to be difficult to shake.) Office 365 launched in 2013 as the preferred route to Microsoft Office over the typical licenced, “on-premises” version, and by 2017 subscription sales had exceeded licence sales. Office 365, with its integrated collaboration and cloud-based capabilities has certainly been one of the heroes of the pandemic.

  1. Adobe Creative Cloud

Adobe launched its SaaS option Adobe Creative Cloud in 2012, and only a year later canned its perpetual licence option, Adobe Creative Suite. The company resolved two big challenges with its SaaS service. Firstly, the lengthy product upgrade schedule of licenced software couldn’t keep up with the rapid changes in the graphic design and other creative industries. The SaaS version could easily be updated far more frequently, and customers would instantly gain the additional features and capabilities within their existing subscription. Second, it allowed a move from choppy, licenced-based income with a more regular monthly or yearly flow of subscription fees. By 2017 Adobe Creative Cloud had 12 million subscribers, and by the end of 2020, this is estimated to have grown to 22 million.

As-a-service beyond the pandemic

As we emerge from the pandemic, uncertainty and unpredictability are still key characteristics of doing business today. It has become increasingly difficult to predict too far ahead, yet the success stories from the pandemic have shown us that digitally enabled companies can thrive if they act quickly to grab opportunities.

Technology, typically powered by the cloud and acquired on a pay-per-use basis, has given these survivor businesses the data-driven insights as well as the operational flexibility to change fast, avoid pitfalls and take advantage of the opportunities that arrive. Of course, while public cloud capabilities have enabled much of this resilience and flexibility, there are also drawbacks and limitations organisations should be aware of.  Public cloud pricing may lack transparency, and the sheer size of the hyperscale vendors often makes them appear unresponsive. Many organisations are rightfully wary of losing control over their data; and finally, there are many core business apps that are neither ready nor appropriate for the journey to the cloud.

As-a-service without the public cloud

As the pay-per-use model continues to evolve, it is now possible to gain the speed and flexibility benefits of the cloud experience while also maintaining control over data and key applications, keeping them on-premises or in a service provider’s private data centre. Paying a predictable monthly fee and retaining the ability to scale up or down very quickly remains the core requirement, both to avoid missing out on opportunities and crucially, avoid paying for unused capacity. Finally, by decoupling pay-per-use from the public cloud, organisations are free to consciously evolve the hybrid cloud landscape that works for them.

Find out more about as-a-service infrastructure delivered by HPE GreenLake and Daisy. Get a cloud-like experience on premise: delivering all the benefits of lower cost and rapid service provision, while still meeting all requirements for security, compliance, and control.

Once you’ve got your infrastructure sorted, don’t forget to protect it – our security and business continuity solutions are second to none and seamlessly integrate into your as-a-service infrastructure.

About the Author

Andy Bevan is Head of Cloud and Digital Transformation at Daisy

As an experienced IT professional with 35 years’ experience, Andy has a proven track record in solution architecture, technical leadership and transformation. Andy has extensive knowledge across the technology spectrum. He has applied this knowledge and his strategic proficiency in all vertical sectors, particularly legal/professional services, finance/financial services, health, public sector organisations, ISV/SaaS and the media. At Daisy, Andy’s leadership ensures that cloud, availability, connectivity, security, and all other facets of the technology infrastructure are mapped to resilience and the future of the organisations we work with as trusted partners.