Soap box: Pay-as-you-go economy
‘The business world is on the cusp of a computing revolution, with organisations demanding a more flexible way to procure services’
Thursday 24 June 2010
More people these days are choosing to pay for goods and services only as and when they use them, creating a new pay-as-you-go economy. Why buy a holiday cottage to use a few weeks a year when you can save money and hassle by renting? If you live in the city, and use a car only a few days a month, why own one when you can join a car club and pay only when you drive? Even if you already own a car, you can join a new service called WhipCar which enables members to rent out their vehicles when they are not using them.
The pay-as-you-go-economy is at once creating new business opportunities and lowering the barriers to entry. If you look at the mobility solutions available today and technology such as cloud computing, it is possible to work anywhere, any time, without the need for an office. Solutions such as storage can also be bought for as little as 68p per gigabyte per month.
This approach is not only working for start-ups – the whole business world is on the cusp of a computing revolution, with organisations demanding a more flexible way |to procure and consume assets |and services.
Businesses are moving away from the old model of purchasing IT, as this equipment is often left completely idle when demand fluctuates in line with business needs. Instead, they are buying computing as a service over the internet, paying only for what they use, without the need for up-front capital investment. Companies of all sizes can benefit hugely from this pay-as-you-go approach, but start-ups and small and medium businesses (SMBs) are often the first to maximise opportunities as they have less legacy investments and bureaucracy.
One of the hottest technology topics from a pay-as-you go perspective has to be cloud computing, which allows organisations dramatically to push down the cost of business computing through the on-demand use of technology. Cloud computing, which is one flavour of computing as a service, enables businesses to use pooled resources to achieve savings of 30 to 40 per cent or more, when compared to the cost of in-house computing. The other flavour is managed hosting, where the customer’s computing is performed on equipment owned by the vendor but dedicated to the customer, ensuring top-notch security and easy compliance with financial and privacy regulations. You might think of managed hosting as a rental apartment, and cloud hosting as a hotel.
Many start-ups today are relying entirely on cloud hosting. Established companies with more complex needs often use a combination of cloud and managed hosting to maximise savings and performance for each application and workload.
One SMB that is reaping the benefits of this pay-as-you-go approach is business accounting firm KashFlow, based in London. The company has outsourced its IT requirements to the cloud, including the hosting of its blog and microsite, to enable more time and money to be spent on innovation and business growth.
When moving to a pay-as-you go approach, it is essential to select a provider with a strong reputation in customer service. Just because you haven’t paid an upfront capital investment or signed a contract, this doesn’t mean you shouldn’t settle for second best in terms of service.
In fact, you should demand more. In a highly competitive market, those who offer on-demand products work harder to retain their customers. Consider the online world we live in with discussion forums and comparison sites. As a provider today, there is nowhere to hide.
Some of the key questions to ask when moving to a pay-as-you-go approach include:
* How long has the company been offering its services? Is it profitable? If so, for how long has it been so?
* Does the company provide a reliable and secure service?
* Does it provide 24/7 customer service? Are there additional costs associated with the support provided?
* What is the service level agreement associated with the service?
* Does the company require a minimum monthly spend?
* Is there a free trial period offered with the service?
Businesses that take advantage of the opportunities a pay-as-you-go Britain offers will, I predict, weather today’s tough economic conditions and emerge as stars.
Graham Weston is Chairman of Rackspace Hosting
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