• Chris Labrey, Managing Director UK & Ireland at Econocom


• 20.05.2019 11:45 am
Tech

Businesses have invested £22bn less in the last two and a half years as a result of the uncertainty caused by Brexit, according to data from the Office of National Statistics, While this may make financial sense, it could negatively impact the business’ ability to operate as usual and maintain a competitive edge within a global market.

Often, technology underpins these activities. It plays a crucial role in supporting staff, operations and customer interactions, as well as improving business agility and responsiveness to changing market conditions.

Unpredictable Events

Unfortunately, organisations can’t always prepare for these changing conditions. One high profile example of this in the past year is the Gatwick Airport drone incident which resulted in the 33-hour closure of the UK’s second biggest airport. The episode in December 2018 caused about 1,000 flights to be cancelled or delayed and affected around 140,000 passengers.

While drones have the ability to impact major airports, computer viruses are far less selective about which industry they target and can destroy entire IT estates within organisations. For example, a ransomware attack at Government offices in two municipalities in Alaska took down everything - from email to the electronic door key card network. Consequently, the entire system had to be shut down and staff resorted to using typewriters and manually writing receipts. A more extreme case came in the form of the Stuxnet computer virus which sought out the software which controlled the centrifuges at Iran’s Natanz nuclear plant, destroying 20% of them and causing Uranium enrichment at the facility to stop.

Not only were these events unprecedented, but they also resulted in the organisations involved having to invest in technology with funds outside of their budget. Research from Econocom reveals that this isn’t uncommon - 67% of finance directors have had to make an unexpected large technology purchase in the last 12 months with 60% of these purchases financed by diverting budget from other services.

However, while being able to react to unexpected challenges and remain agile is vital, organisations do not have endless budgets. So how can they respond to challenges while also protecting the bottom line?

Adopting subscription or as-a-service models

By adopting a subscription or as-a-service model, businesses are able to ease the burden of any upfront technology investments, whether it is needed for business-critical reasons or not.

This approach can balance the investment by relieving the burden on capex. At the same time it delivers on the business’ objectives and relieves the organisation of the burden of diverting funds away from other services and technology to remain operational and agile. Additionally, this type of model will be familiar to most organisations due to their use in gaining funding for large purchases, such as cars.

Financing technology in this way streamlines the payment process, therefore protecting organisations from unpredictable business-critical technological financial outlay and protecting funds already allocated to other projects.

Total cost of ownership (TCO) for any new technology is also something which needs to be accounted for on the balance sheet - this is not always as straightforward as it seems. Managing lifecycle costs such as warranty, storage, running and disposal - in line with GDPR regulations - may be difficult to account for and they could have a dramatic impact on the bottom line if managed incorrectly. Subscription or as-a-service funding models can incorporate these costs into the contract, therefore transferring the burden to opex and protecting the bottom line.

Futureproofing technology

While the incidents in Iran and at Gatwick aren’t everyday occurrences, most organisations will at some point be faced with an unforeseen situation that requires the urgent implementation of business-critical technology which has not budgeted for. By using a subscription or as-a-service model, businesses can manage these unpredictable technology requirements while continuing to operate as usual and remaining agile.

Nobody knows what challenges may lie ahead, but whatever they are, organisations will not be able to remain agile and responsive with old and outdated technology. Subscription or as-a-service models provide an excellent way to respond to challenges, changes in market conditions and the needs of both employees and customers in a risk-free manner.