This week Lenovo announced it is making IT infrastructure for the data center via a subscription service based on a consumption model as part of an effort to make it easier for IT organizations to cost justify investments in IT.
Available direct through Lenovo or channel partners, Lenovo Truescale Infrastructure Services makes use of metering tools to determine how much to monthly charge customers that sign up for a Lenovo subscription, says Ben Martin, executive director, and general manager of professional services and XaaS for Lenovo Data Center Group.
In the age of the cloud organizations of all sizes have made it clear that in many instances they would prefer to pay for IT as it gets consumed rather than paying up front to acquire a server, says Martin.
“People only want to pay for what they use,” says Martin.
A subscription also provides the added benefit of reducing the risks associated with upgrading any system as part of the overall subscription, adds Martin. In contrast, organizations that rely on capital budgets to fund IT might not upgrade a server for anywhere from five to 10 years, notes Martin.
A subscription model also makes it easier for channel partners to transition to a business model based on recurring revenues, says Martin. However, systems deployed under the program are managed by Lenovo as part of a managed service included as part of the subscription, which may require channel partners to find another way to add value on top of those Lenovo managed services.
Lenovo is not the first IT infrastructure vendor to make infrastructure available as a subscription. It’s not clear to what degree customers will gravitate to this approach. Many organizations would like to free up the capital budget for other projects by treating IT as an operational expense. Other organizations, however, still prefer to leverage capital budgets to fund their IT spending.
Regardless of the path chosen, most channel partners will have to navigate both approaches going forward. The issue, of course, is that while recurring revenues tend to be more predictable, they arrive in smaller increments that can make being a solution provider more financially challenging than it already is.
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