Why Technology as a Service

Posted by Lou Person on Jul 28, 2011 in Cloud Journey

Think fast. What do you get when you combine rapidly industrializing business models, the consumerization of IT and a global economy that’s slowly emerging from the worst recession in eight decades? In a growing number of enterprises these days, the answer is “an unprecedented opportunity.” The fact is that there has never been a better time to redefine traditional ideas about how in-house Information Technology (IT) organizations should look and work.

It’s not that these enterprises are anticipating no longer needing IT. Far from it, as these Gartner predictions [1] illustrate:

  • By 2013, 80% of businesses will support a workforce that uses tablets.
  • By 2014, 90% of organizations will support corporate applications on personal devices.
  • By 2015, information-smart businesses will increase recognized IT spending per head by 60%.

But take a quick look at current IT spending, and it’s easy to see why so many enterprises are eager for change. According to recent Gartner analysis [2], infrastructure and operations accounts for approximately:

  • 60% of IT spending worldwide.
  • 50% of the total enterprise IT headcount.

In today’s financial and competitive landscape, it makes no sense to invest so heavily in keeping the lights on. That’s why more and more IT leaders are relying on Technology as a Service to help them redirect these resources to focus more on business results and less on infrastructure. Technology as a Service is a strategic sourcing model that enables enterprises to look beyond the technology they have and provide access to the capabilities they need —scaling up and down instantly. 

Here are just three of many financial reasons Technology as a Service is an attractive alternative to IT investments for many organizations today. 

Technology as a Service:

Preserves capital and protects cash flow

  • There are no up-front costs. Payments are predictable and spread out over a predetermined time. No residual or balloon payments are required.

Reduces the risk of obsolescence

  • Regular technology refreshes are included.

Creates tax advantage

Technology as a Service is considered an operating expense and qualifies as an “off balance sheet transaction” so payments are tax deductible. Even better, when the money an organization doesn’t have to spend on technology is instead used for investment, the after-tax interest on this cash is “found money.” That said, please keep in mind to speak with a tax professional to get an up-to-the-minute perspective on any laws and regulations that may apply.

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[1] “Gartner’s Top Predictions for IT Organizations and Users, 2011 and
Beyond: IT’s Growing Transparency,” November 2010.
[2] "Ten Key Actions to Reduce IT Infrastructure and Operations Cost," Gartner White Paper, Jay Pulz, July 13, 2011.