Opex- vs. capex-intensive procurement
Offering a subscription model for IT projects (i.e. monthly costs spread over the longer term rather than upfront costs) enables housing providers to invest in technology more frequently. Opex procurements also allow more flexibility and accurate annual budgeting around expenditure on IT projects.
Regularised IT spending means managers don’t need to go ‘cap in hand’ to get budget for new capabilities. At the same time, this subscription model gives IT suppliers more flexibility to incorporate new features and capabilities into their services and respond more nimbly to changes in customers’ operational demands.
Fundamentally, you only pay for you need, thereby removing or avoiding ‘shelf-life software’, so you can clearly demonstrate the value of what you’ve bought.
Innovative licensing and procurement models
Traditionally, most licensing models were based on the number of licensed ‘seats’ or named users needed, but many organisations have moved to volume-based licensing, such as size of organisation or amount of data usage, which gives more flexibility to the customer.
However, today some suppliers provide software-as-a-service (SaaS) – a subscription offer based on software bundles, with different service packages aligned to customers’ needs and budgets. With SaaS being in the cloud, it allows housing providers to access and implement software much faster, with configuration tweaking for individual customer needs rather than wholesale implementation.
Opting for a subscription model allows housing provider to further invest in technology at a fixed annual or monthly fee, removing the need to find new budgets to buy additional features or modules.
On-premise vs. cloud/hosted implementations
The factors that determine the choice of on-premise vs. cloud/hosted implementations are often operational rather than technical, for example:
- The organisation has recently invested in on-premise data centres and hasn’t yet received value or full depreciation on them;
- They’ve invested in skills and people to manage an on-premise operation;
- They may keep some particularly sensitive data systems on-premise to ringfence their security.
Other technical considerations might include existing software not being cloud-ready, integration limitations with third-party software, lack of network compatibility or having a hybrid model of on-premise back-ups from the cloud.
Better procurement and new financing models
The growth of procurement frameworks offer housing providers a credible and efficient option because each supplier provides clear service descriptions and pricing options. The commercial nature of these frameworks allows organisations to readily change and flex their solutions and helps them to spend time on choosing the right solution for their needs rather than focusing on the technicalities of procurement.
In general, using SaaS is more efficient than on-premise models. Having a monthly or annual subscription model allows IT expenditure to be accurately budgeted for. It enables customers to foresee organisational change and allow ongoing investment to be more readily budgeted for. In addition, implementing cloud software is faster, which saves significant time and money.
100% ‘per user per month’ for core applications
Housing providers could theoretically move to a fully ‘per user, per month’ model for their core business applications, and some software is already provided on this basis. However, a solution with a monthly fee (tied to the organisation’s business volume) that delivers new capabilities and continuous technology development offers greater long-term value.
Mark Holdsworth is a director at Civica.