How the world evolved to everything as a service
From car rentals to real estate rentals, people have always been willing to pay comparatively small, regular amounts to use high-value assets. In recent years, the technology industry expanded this idea to unlock billions in latent value. Now, people consume a range of products rather than owning them. They get everything from music and movies to consumer and business software as subscription services.
Enterprise customers quickly understood the power of this model. The software-as-a-service market has experienced massive success, while McKinsey found that 82% of customers preferred subscription licenses for on-premises software to perpetual ones.
It was only a matter of time before the appeal of this model expanded to cover other technology assets. Network infrastructure is a great candidate for subscription contracts.
How does subscription-based infrastructure work?
Traditionally, enterprise customers bought their network infrastructure in its entirety. You didn't buy a managed switch or router separately from the software that you ran on it. They came as a single inseparable package.
Then, network function virtualization (NFV) changed the game, unlocking a whole new set of opportunities.
To make subscription models really work, vendors needed to separate the digital assets from the underlying physical media. We wrested music and software from CDs, and movies from DVDs, to offer them digitally. The content became a product in its own right, separate from the object.
NFV enables us to do the same with the firmware in network infrastructure. It separates the code that runs your network equipment from the underlying hardware, enabling you to run it and control it from anywhere.
Instead of only running on an expensive proprietary piece of hardware, your switching functionality, firewall or encryption function can now run on a more generic computing box that you can locate anywhere, depending on your need.
Separating these network functions into different software appliances empowers you to pay for them under a subscription model rather than buying them outright with proprietary hardware. Additionally, optimization and adoption services have been created to support and enable the SaaS journey.
You can manage this newly separated software centrally through a dashboard. This gives you the power to look after all the functions that enterprise customers have neither the time nor the expertise to handle, such as software patches, security monitoring, performance management and troubleshooting.
We have identified three broad areas of network infrastructure and the services that run on it that are excellent candidates for transition to a subscription model: SD-WAN, unified communications and collaboration (UCC), and network/endpoint security.
The benefits of subscribed infrastructure
Why would you, the enterprise customer, want this? What can it offer you beyond your existing buy-and-own infrastructure model?
One of the first benefits is infrastructure flexibility. We can scale virtualized network functions up and down quickly according to your needs, adding more VPNs or firewalls if you suddenly experience more north-south traffic due to changing working conditions, for example.
A subscription-based model for your network infrastructure also lowers your business risk. Enterprises face enormous pressure just to keep technology running smoothly, meaning that they often don't get to preventative security tasks as much as they'd like. Some service providers’ subscription agreements can include automatic software updates to keep your network running smoothly.
That risk management also extends to service availability. A provider could monitor and maintain your uptime in strict accordance with SLAs.
These technical outcomes will please IT, but there are also business outcomes that will delight line managers. Switching to subscription-based models saves valuable capital expenditure and regulates financial overhead with more predictable pricing.
Beyond this, though, subscribed virtual infrastructure is also more composable. You don't need to buy large, monolithic blocks of functionality, most of which you'll never use, simply because a vendor programmed it into the firmware.
A subscription model makes it possible to separate infrastructure features into components that you can add and remove at will. This helps to lower your overall costs.
More efficient infrastructure can also indirectly drive another valuable business outcome: more revenue. Efficiency can drive more production and reduce your time to market, both of which translate into top-line revenues. The flexible infrastructure that a subscription model brings can also serve as a platform to offer entirely new products and services that generate new revenue streams.
You don't transform your entire infrastructure procurement model every day, and you certainly won't do it overnight. This is a complex journey, with myriad contractual relationships, product life cycles and sunk investments to consider.
Orange Business Services can help you make the transition gradually, with flexible contracts that make sense for your unique situation. We can work with you to customize your operating model, taking on responsibility for your infrastructure management to varying degrees depending on your capabilities, roadmap and budget.
The journey begins by identifying the business outcomes you want and designing the combination of subscription-based services that will enable you to achieve them. For a deeper dive, read our Transition to Subscription white paper, and then contact us to change your IT department's future.
Learn about how subscription models work, the benefits and our approach to lifecycle services in this whitepaper, and discover our range of Software Lifecycle Management services available in North America.
Kyle Reese is a Software Business Development and Customer Experience/Lifecycle Services leader with over 25 years of technology and consumer product experience. He is a customer-success enthusiast most recently focused on developing software GTM and lifecycle practices with VAR and integration technology partners.