Consider Applying the Cloud Consumption Model to On-premises Data Center Infrastructures

Picture1-2When digital initiatives evolve in the data center, so too should your ability to choose how you consume IT resources. The desire to move to the cloud has some IT leaders intrigued, yet they continue to look into ways to maximize their existing IT investment and bridge the gap to get to the cloud. This has many IT leaders not moving to the cloud just yet but preferring to buy infrastructure via a consumption-based model such as a monthly subscription based on resource utilization for their on-premises data center.

In a recent ESG Brief titled Modernizing Data Centers with Cloud Technologies and Operating Models, 48% of IT leaders say their organizations would prefer to purchase on-premises data center infrastructure through a consumption-based model.

In the brief, you can see how data center as-a-service and the future of the on-premises data center are considered by IT leaders. This analysis amplifies the trending growth to move away from perpetual licensing models in favor of a subscription-based approach.

In addition, according to the ESG 2021 Technology Spending Intentions Survey, 48% of respondents (up from 42% a year ago) prefer a consumption-based model in which data center infrastructure is pay-per-use as a variable monthly subscription based on hardware utilization.

Infrastructure-as-a-Service (IaaS) Users Like This Approach, and Vendors Seem to as Well!

Current IaaS users are used to this model. In the 2021 TSI Survey, we see that 53% of current IaaS users prefer a consumption-based model for data center infrastructures. This is largely due to the comfort level the user has for the model. Also, the ability for the organization to shift from a CapEx to an OpEx approach makes it financially easier for the IaaS user to acquire additional data center resources.

The Future of Data Center as-a-Service

This pivot in IT spending continues to grow towards a subscription-based approach. Buying infrastructure via a consumption-based model such as a variable monthly subscription based on resource utilization is up from last year, mostly due to the rising costs of cloud infrastructure and the maximizing of existing investment of the on-premises data center. But the cost to move to the cloud not only includes the resources but also the retooling efforts needed to maximize the cloud-native resources. 

Vendors realize this too. Many vendors are pivoting away from traditional hardware sales motions and instead are providing recurring revenue models. 

Let’s Talk

Contact me and let’s talk. I would like to share my thoughts with you on data center consumption models and the impacts to organizations as they adjust and modernize their infrastructure.

Topics: Storage IT Infrastructure Converged Infrastructure Digital Transformation Application & Infrastructure Modernization