What’s Driving Rental for ITAM/ITSM solutions?
The expressions ‘investment’ and ‘long term’ have an uncomfortable partnership these days. Putting forward a business case that doesn’t increase the organization’s cash reserves inside 12 or 18 months is not a good career move. A business case founded on principles such as license compliance is likely to struggle even more, unless the organization recently had a skirmish with a vendor and the CIO/CFO is no longer willing to be personally associated with the risks of non-compliance.
ITAM/ITSM rental works for everyone
While it may be the current short-termism that is driving the move toward rental, there is a more solid and intrinsic case for IT Asset and Service Management to be supplied on a rental basis. The case is more solid because ultimately it works to the advantage of both parties. Rental demands that the vendor works harder to maintain the rental revenue stream, which is typically more than double the traditional maintenance charges. The motives to focus more continuously on customer service and customer satisfaction are higher. Ultimately this has to be a good thing for both parties. It encourages a more intimate understanding of how the customer is using the products and the consequent perceptions of value. That feeds back into development priorities and increased functionality and competitiveness.
The big challenge for the vendor is the first three years during which Rental is being ramped up as a percentage of new business, and the revenues are in theory way down on the equivalent new license sales. The compensation should come from an increase in new business wins by reducing the barriers to go-ahead. Customers should also be more willing to equip new PCs automatically with the ITAM/ITSM components, as the costs of true-ups are greatly reduced.
It’s hard to argue against the case for rental.