27th October 2022
What are the benefits of Opex- vs. Capex-intensive procurements?
Offering a subscription model for IT projects, i.e., spread monthly costs over a term rather than upfront costs, enables organisations to invest in technology more frequently. Opex procurements allow more flexibility and accurate annual budgeting for IT project expenditures. Having regularised IT spending means managers do not have to go ‘cap in hand’ to get a budget for new technology. Using this model gives the supplier flexibility to incorporate new features and service capabilities and respond to customer and market changes. Fundamentally, the organisation pays for what they need – removing shelf-life software they don’t want or use – clearly demonstrating the value.
What innovative licensing and/or procurement models are available to housing providers?
Traditionally, most licensing models are based on the number of licensed ‘seats’ or named users required. But many have moved to volume-based licensing, such as the size of the organisation or amount of data usage which gives more flexibility to the organisation. Today some suppliers provide SaaS – a subscription offer based on software bundles, with different service packages that align with customer needs and budgets. With SaaS software hosted in the cloud, it allows Housing providers to quickly access and implement software faster with tweaking configuration for individual customer needs rather than wholesale implementation. Offering a subscription model allows organisations to further invest in technology, at a fixed annual or monthly fee, removing the need to find a new budget to buy new features or modules.
What factors determine on-premise vs. cloud implementations?
Factors that determine on-previse vs cloud/hosted implementations are often operational rather than technical, for example:
- Recent investment in on-premise data centres and has not yet received value or depreciation on them
- Invested in skills and people to manage an on-premise operation
- Might want to retain some susceptible data systems on-premise to ringfence their security.
Other technical considerations may include existing software that is not cloud-ready, integration limitations with third-party software, lack of network compatibility, or a hybrid model of on-premise backups from the cloud.
How can housing providers use better procurement and new financing models to make their IT budgets go further?
The growth of frameworks and catalogues offers Housing Providers a credible and efficient procurement option as 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 choosing the right solution for their business, rather than focussing on the technicalities of procurement.
Using SaaS is generally more efficient than on-premise models. A monthly or annual subscription model allows IT expenditure to be accurately budgeted. It enables customers to foresee organisational change and allows ongoing planned investment. Implementing cloud software is quicker – which saves significant time and money which could be re-invested.
Could a housing provider move to a 'per user, per month' model for its core business applications?
Yes, Housing providers could move to a subscription model for their core business applications, and some software providers already offer this. Paying a monthly fee based on the business volume while delivering new capabilities and continuous development of new technologies provides more value in the long term.
Published in Housing Technology, September 2022