Tech Vendors Embrace Flexible Consumption

Arthur Cole

Amid all the changes that technology is bringing to data infrastructure, it is sometimes easy to overlook the fact that the consumption model for hardware and software is changing as well, and this is having an equally profound effect on how the enterprise adapts to the digital services era.

The overriding goal is to make deployment of data center resources as financially pain-free as going to the cloud. Consuming resources rather than buying them not only provides a means for the enterprise to maintain control over its own infrastructure but allows vendors to manage the transition from traditional purchase and licensing agreements to more flexible pay-per-use models preferred by many start-ups.

Dell EMC recently broadened its cloud-style consumption model across its hardware and services portfolio, styling it as a way to foster greater predictability in the deployment of new technologies. The Flex on Demand program is run out of Dell Financial Services (DFS) to simplify the introduction of new technologies and provide greater sync between resource consumption and fluctuation data demands and business needs. Key areas for flexible consumption include the company’s emerging suite of hyperconverged infrastructure (HCI) products, as well as PC as a Service (PCaaS) and virtual desktop infrastructure (VDI). In addition, the company has launched a Transformation License Agreement that provides customized licensing and maintenance contracts for popular software.

Private cloud platform developers are also pushing flexible consumption models in conjunction with leading hardware providers. Nutanix recently announced that its Enterprise Cloud Platform is now available as a term-based license for deployment on systems like the HPE ProLiant and the Cisco USB B-series blade server. The software was previously available on UCS C-series machines as well as commodity appliances from Dell and Lenovo. As the new licensing program evolves, organizations will have the option to transfer software entitlements to additional platforms while at the same time flexibly scaling resource consumption under the new Nutanix Go program that enables cloud provisioning as an operational expense rather than an up-front capital cost.


The OpenStack community is also looking to leverage flexible consumption as a means to make private clouds more affordable for small and mid-sized enterprises. At the recent OpenStack summit in Boston, multiple providers like Mirantis, Platform9 and IBM were touting remotely managed private cloud services that some are billing as the “second generation” of private cloud infrastructure, says Datacenter Dynamics’ Max Smolaks. Among the benefits are the power and scale of cloud computing coupled with long-term cost savings and the ability to customize resources without requiring a lot of in-house management expertise.

One area of concern, however, is how these new consumption models will affect channel providers. Clearly, traditional revenue-sharing approaches will take a big hit if the enterprise is no longer shelling out big bucks for hardware. But in Dell’s case at least, there appears to be a workaround. As VxRail product marketing head Colin Gallagher explained to Channel Buzz, the company is offering a finder’s fee equivalent to 60 percent of a standard commission, which is bumped to 100 percent if the customer keeps the system for four years and 120 percent if they complete a full five-year licensing term. In this way, the customer gets a lower annual cost for infrastructure, channel providers get an attractive fee upfront, and a potentially more lucrative return over time, and Dell gets a steady, ongoing revenue stream.

The fact that data center infrastructure is evolving from a product to be purchased and managed to a service that is consumed is in keeping with the myriad other ways that digitization is altering the way we work and live. In a sharing economy, where everything from hotel rooms to transportation is contracted through a mobile app, the burdens of ownership are proving to be too costly and inflexible for growing numbers of people.

By purchasing and using only what you need when you need it, both consumers and providers can leverage economies of scale in a highly granular fashion to achieve unheard-of levels of efficiency and productivity – all without risking the budget on ideas that might or might not work out in the end.

Arthur Cole writes about infrastructure for IT Business Edge. Cole has been covering the high-tech media and computing industries for more than 20 years, having served as editor of TV Technology, Video Technology News, Internet News and Multimedia Weekly. His contributions have appeared in Communications Today and Enterprise Networking Planet and as web content for numerous high-tech clients like TwinStrata and Carpathia. Follow Art on Twitter @acole602.


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